Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Heads you lose, tails you lose
You know there's something wrong in ETF Land when a pair of exchange-traded funds that aim for polar extremes on returns both stink.
Direxion Daily Financial Bull 3x Shares
The problem is that they stink in tracking the index for extended periods of time. Through yesterday's close, Bull 3x was off by 69% and Bear 3x has surrendered 85% of its value. So Direxion executed a 1-for-5 reverse split for Bull 3x and a 1-for-10 reverse split for Bear 3x.
When both indexing extremes fail you, it's time for a new Direxion.
2. Sirius misinformation
The nerve of Mr. Market! Sirius XM Radio
Sometimes it's not what you say that counts -- it's what you don't say. The download is free, so the real tallies to pay attention to are the number of activations. How many of those downloads resulted in new paying subscribers to Sirius XM's premium streaming service? How many existing subscribers decided to kick the tires through free weeklong trials?
These are the material questions that needed to be answered. Sirius XM may have figured that it had the mother of all press releases when it was issued on Monday morning. All it did was cast doubts over the meaty details that were left out.
3. New on the dollar menu: netbooks
Work the math and chumps are paying $1,441 for a $389 portable computer.
Now, I have nothing against mobile broadband. I've had it for years. However, who wants to commit to a two-year connectivity contract with an entry-level netbook that may be sorely outdated soon? The way to go is with a USB card that can travel with you from device to device. Besides, if someone is buying a netbook as a cheap alternative to a full-featured laptop, does that person really have the $60 a month to spend on portable Web access?
4. Fitch or cut bait
June was a brutal month for most retailers, but it's hard to get worse than Abercrombie & Fitch
Isn't this the same company that's shuttering its RUEHL stores because they weren't up to snuff? What do you do when comps at each of your four concepts plummet by 30% or more?
Maybe it's not too late to dust off a concept store that specializes in preserving archived copies of disbanded newspapers. I'd call it Abercrombie & Microfiche.
5. We built this CityCenter on rock and turmoil
Poor MGM Mirage
Some of its early condo buyers are regretting putting down big deposits as Vegas real estate prices were going through the roof. Now that condo prices in the area have fallen precipitously, nervous owners are angling to negotiate lower prices, suing to get their down payments back, or just walking away from their deposits.
Wasn't it Kenny Rogers who sang about a gambler having to know when to walk away from the table -- or when to run?
Let's beat the Dumb Drum:
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Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves alike: Investors can learn plenty from both. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.