Topic: Exchange Traded Note

An investment in a "double short" oil exchange-traded note (ETN) issued by Deutsche Bank serves as a case study for complex financial vehicles. The prospectus for the instrument is described as being the size of a phone book and intentionally convoluted. These types of derivatives are criticized for their lack of transparency and "house of cards" structure.

John C. Dvorak reveals that his entire retirement fund is invested in DTO, an exchange-traded note that bets against the price of oil. As oil prices dropped to $67, Dvorak's investment increased in value, and he predicts oil could fall as low as $40 or $50. They discuss the noticeable drop in gasoline prices at the pump, which have fallen below $3.00 a gallon in many parts of the United States.