Editor's note: This column by Chris Laudani is a special bonus for readers. It first appeared on Street Insight on Nov. 7 at 8:08 a.m. To sign up for Street Insight, where you can read more commentary like this in real time, please click here.
I don't understand why Doug Kass is saying that
short-sellers have gone the way of the dodo. Lighten up!
(To see Doug's response to this, please click here.)
Sure, if you look at the
Dow Jones Industrial Average
, you probably want to reach in and pull out a kidney. But as I see it, there have been plenty of opportunities to short all year long, and it seems to be getting better.
Tech Is Dreck
As Doug would say, tech is dreck. The PC business has been a total disaster, and just about every PC company missed consensus expectations in October.
Advanced Micro Devices
got chopped in half.
is down 24% year-over-year.
guided down, and
missed. Both stocks were savaged.
It's only been the past few months that
up days. And despite the cheerleading, Dell is still down 20% year-to-date.
Those were easy shorts. Heck, you didn't even have to do any work to find those.
The whole "Vista is gonna bail us out" crowd is setting you up to short 'em again. It doesn't get easier than that.
How about the semiconductors? Which other group is more fun to short? The analog names have been a mess.
is down 30%.
is down 15%.
is down 23% year-to-date.
Right now, a whole bunch of names have out of-control inventory. Those babies are going to fall to earth faster than Skylab.
Shop for Downside Potential
There is a blowup a month in the specialty retail business.
is down 50% year-to-date. Talk about out of fashion!
You don't want to short specialty retail? Too dicey? OK, how about the discounters? Take
-- please. The stock is down 26% year-to-date. How about
, which is having another year of underperformance with a drop of 10% year-to-date?
Or how about
? You think those margins are going to hold up into the holiday season? Think again. Target has underperformed since 2004. It's a widely held stock, but still a clunker. I don't know how anyone could beat the market over the past two years with Target in the portfolio.
What's holding up
? Nothing. It will get creamed when investors figure out that flat-panel sales are slowing and margins are about to circle the bowl.
'Tis the Season
I could go on and on, but why bother? It's been a great year to short and to be short.The bulls should enjoy their few months in the spotlight because earnings growth is slowing. Next year, the slope of the second derivative of
earnings estimates will be negative. It will become increasingly difficult for long-only managers to make money in the market. Live it up.
The economy continues to slow. When this is over, the Special Victims Unit is going to have to investigate the death of Goldilocks. Talk about being ripped from the headlines.
At time of publication, Laudani was short Target, Best Buy and Intel, though positions can change at any time and without notice.
Christopher R. Laudani is the founder and publisher of Short Ideas.com. He has 10 years' experience in the financial markets -- the past eight as a professional equity research analyst. Before publishing Short Ideas, he covered technology for the New England Trust Company, a subsidiary of National City Bank. Laudani is a member of the New York Security Analyst Society (NYSSA), the Boston Security Analysts Society (BSAS) and the CFA Institute.