MacroShares Suffer Another Body Blow

The MacroShares Housing shares IPO auction process has failed, dealing another body blow to the MacroMarkets team.    According to an article by Index Universe, the IPO auction process failed due to an imbalance of demand between the Up shares and the Down shares.  The company says it will now launch the products in the next few days under a traditional, market-maker-driven process.

How many setbacks can MacroShares handle before going down for the count?

1. The first MacroShares Crude Oil pair had early termination in 2008 when one of the pair went to zero.
2. The second MacroShares Crude Oil pair had trouble gaining traction and had a 4:1 split in January 2009 in a last-ditch effort to increase volume.
3. The second MacroShares Crude Oil pair traded at huge premiums and discounts in February.
4. The MacroShares Housing shares auction IPO ran into problems and the auction was extended by 10 days until May 15.
5. The second MacroShares Crude Oil pair hit its early termination trigger due to lack of interest.
6. The MacroShares Housing shares IPO auction was declared a failure.

In my view, the largest problem with MacroShares is that they are not ETFs, but the sponsors are trying to use the popularity of the ETF industry to their advantage.  The market appears unconvinced.

Disclosure:  no positions