Too Late to Short Subprime

This column was originally published on RealMoney on Feb. 15 at 2:21 p.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Every market participant knows that the subprime mortgage industry is struggling and that many marginal players are being shut down. In the past several months, 22 subprime mortgage companies have been closed or acquired. The cost to insure against losses in subprime loans has soared.

And most people who own a house, live in a house or want to buy a house think they know everything about real estate. However, that doesn't mean they should go all-in shorting these mortgage stocks now. While short interest in the group is tremendous, I believe short sales are now too late.

I want to go through why I bought some shares of New Century (NEW Quote) after its recent decline from above $30 to below $20, sparked by a warning of an unexpected fourth-quarter loss. ...