Our good friend Jim Cramer went on a rant on Thursday night on Mad Money about the shortcomings on the United States Oil Fund (
USO).
According to the digest at TheStreet.com:
"Cramer took aim at the United States Oil ETF in particular, calling the fund simply a travesty.
Cramer said the United States Oil Fund is not what it promises. The fund does not track the price of crude as it claims. Since the fund's [inception], crude oil has fallen 23%, yet the fund is down almost twice that at 54%. Just this year, oil is up 18%, but the United States Oil Fund is down 6%. This fund has nothing to do with oil at all, he said.
Cramer said the problem with the fund is that it doesn't buy oil, and instead buys oil futures. Since oil futures expire, the fund rolls over its contracts every month, incurring costs and expenses it'll never recover. Cramer said while the operations of the fund are legal, and listed in the [prospectus], investors need to steer clear at all costs."
As anyone who reads my blog knows, for better or worse, I've been writing extensively about the differences between USO, its sister fund
USL and spot crude oil. As a general rule, I like that Cramer is at least talking about the fact that USO will not perfectly track the spot price of crude. That's an important message to get across.