Short plays?? Thoughts...

[Art G]

I'm interested in any short ideas, or more truthfully, I'd prefer Put plays. I've got to think that Google will be the all time short play of all time. The problem is, who wants to step in front of a freight train?
Stocks tend to fall a heck of a lot faster than they rise.

 

[Running_Man]

Citicorp - they stand a good chance of not existing anymore

 

[FinanceDude]

Citicorp - they stand a good chance of not existing anymore

That's pretty funny...........

 

[Art G]

Just to back up my point....
Google is the number one holding of the American Funds Group. Consider that for a moment, the largest family of mutual funds in the world, they've been around since 1925, they normally buy stocks for long term hold and dividend growth, however, Google is their largest holding. We are talking BILLIONS OF DOLLARS here. There will come a time when they consider Google fully valued, and then they will find a way to sell as quietly as possible. That's a whole lotta' Google being dumped. I'm just sayin'......
Just my opinion though.

 

[Running_Man]

The other short play I would reccomend would be natural gas stocks, do they sell puts on the AMEX index of natural gas stocks? Storage is at record levels and if weather is mild natural gas price could sink like a stone. It has been held up in sympathy by the oil increase but the fundamentals, if weather stays mild, are really bearish.

It is possible by February natural gas could be as low as 4.75 per MMBTU.

An individual name to short would be Questar (STR) which is currently at 55.35 . If it were to exceed it's alltime high at 58.00 I would then cover my short. So you would have a risk of about 6% before hitting a get out point. Total speculation but I like the odds on it myself.

 

[Art G]

The other short play I would reccomend would be natural gas stocks, do they sell puts on the AMEX index of natural gas stocks? Storage is at record levels and if weather is mild natural gas price could sink like a stone. It has been held up in sympathy by the oil increase but the fundamentals, if weather stays mild, are really bearish.

It is possible by February natural gas could be as low as 4.75 per MMBTU.

An individual name to short would be Questar (STR) which is currently at 55.35 . If it were to exceed it's alltime high at 58.00 I would then cover my short. So you would have a risk of about 6% before hitting a get out point. Total speculation but I like the odds on it myself.

The Natural Gas index is XNG. Although, in my opinion, it's not that over extended yet. I know here in Texas natural gas drilling has become the hot market. Everyone's getting money for gas under their homes. I wouldn't be shorting this industry just yet.

 

[brewer12345]

I think you are a little late to the game to be shorting, personally.

 

[Art G]

I think you are a little late to the game to be shorting, personally.

Well Google is down another $7 since I first posted about it. It may come roaring back, but when it corrects, it can fall a long way. Support is currently around $522.

 

[Art G]

Well, Google keeps on dropping, keeps on dropping, keeps on dropping....

 

[al_bundy]

That's pretty funny...........

why is their cash from operations negative then?

financials say they are still profitable, but the cash from operations has been negative for a long time. maybe someone experienced in analyzing bank stock can bring light on this. they have been borrowing like crazy in the last year. i haven't done the math but their earnings may turn to losses next year if they write down more loans as their revenue drops and interest expense increases

 

[Meadbh]

More short plays......oh, never mind!

Six Short Plays by John Galsworthy - Project Gutenberg

Script Archive: One-Act Plays

One-Act Plays:*Comedies

 

[brewer12345]

why is their cash from operations negative then?

financials say they are still profitable, but the cash from operations has been negative for a long time. maybe someone experienced in analyzing bank stock can bring light on this. they have been borrowing like crazy in the last year. i haven't done the math but their earnings may turn to losses next year if they write down more loans as their revenue drops and interest expense increases

The cash flow statement for banks as a measure of profitability is effectively useless.

 

[al_bundy]

The cash flow statement for banks as a measure of profitability is effectively useless.

care to explain?

i'm looking at the cash flow from operations since i want to filter out new net borrowings, etc.

at some point you have to have enough cash flow from operations to cover your interest expense. for every foreclosure the bank is losing a source of revenue while the liability and expense is still there. ARM resets just started so i'm still predicting a surge in foreclosures starting around march 2008 as they work their way through the court system

 

[Art G]

I've always been leery of bank financials. I mean if there is any company that knows how to finagle their books, it seems to be the banks. I take bank P/E's with a grain of salt. Just my opinion.

 

[poyet]

Shorting Google ?

Well, Google keeps on dropping, keeps on dropping, keeps on dropping....

GOOG would certainly be the last one I would go short on. C since suggested by Running_Man has lost 21%. That was a good short and probably still is ! It was much easier to make 700% on GOOG going long than it will probably ever be to make 25% going short on it...

Remember that you never make more than 100% on a short (and making 50% is already damn good), that you only short weak stocks, that timing is critical as your stop buy must be pretty close to where you enter short otherwise the risk/reward is bad and my suggestion is to read Stan Weinstein's (old) book before making your first short.

Funny enough, the first short I ever made (a long time ago) was on a very bullish stock (like GOOG) which (in my opinion) would never pass its all time high. Of course, it easily did, triggerred my cover stop in some days and left me at a loss so quickly that I could not comprehend why I had been so wrong )

 

[Running_Man]

Citicorp - they stand a good chance of not existing anymore

Update : At this point after the 75 point basis cut by the Fed and a decline to 23.54 I would cover the Citicorp short. This would represent a 10.50 point gain from the 34.04 Citicorp was at the time of my post

Questar in my opinion is still overvalued and I would keep the short on but lower the stop to 50.75.

 

[clifp]

GOOG would certainly be the last one I would go short on. C since suggested by Running_Man has lost 21%. That was a good short and probably still is ! It was much easier to make 700% on GOOG going long than it will probably ever be to make 25% going short on it...

Remember that you never make more than 100% on a short (and making 50% is already damn good), that you only short weak stocks, that timing is critical as your stop buy must be pretty close to where you enter short otherwise the risk/reward is bad and my suggestion is to read Stan Weinstein's (old) book before making your first short.

Funny enough, the first short I ever made (a long time ago) was on a very bullish stock (like GOOG) which (in my opinion) would never pass its all time high. Of course, it easily did, triggerred my cover stop in some days and left me at a loss so quickly that I could not comprehend why I had been so wrong )

Here during 98 and 99 I shorted Amazon and AOL (before the merger..) I knew the internet space was overvalued, but I didn't want to buy a pets.com only to see it bought by Yahoo, AOL, Amazon or Microsoft. Well to make a long story short when my short losses reached $100K, I covered short, in Jan 2000. At the same time selling all my tech stocks (except 1/2 my Intel). Of course 6 month or year later I would have been a genius, keeping the short. My max profit if both AOL and Amazon went bankrupt was less than 20K!

Citi my go down further but keep in mind this is a company that made $22 billion in profit in 2006 (or basically their write offs this quarter) and the cost of money for them just dropped 16%.

As for Google I am sure there are people who shorted Berkshire Hathaway at $700 also, just not rich people if they stayed short

 

[Art G]

Well Google is down another $7 since I first posted about it. It may come roaring back, but when it corrects, it can fall a long way. Support is currently around $522.

Well, haven't checked in on this site in a while. I hate to say I told ya' so, but I'd say I hit the support line pretty well, considering at the time, the stock was trading almost 200 pts. higher.
BTW, for what it's worth, GOOG has already broken one support line. The next is around $420. However, I currently doubt the stock will continue dropping right now. I think there are some nice trades right now with caution. MELI should be a great buy around $32. JMO. Do your own homework though.

 

[CCdaCE]

On 11/9, GOOG was about $664. Right now it's about $562. Off 15.5%

QQQQ was about $50. Right now it's about 45.5. Off about 9%

So, the market went down overall.

-CC

 

[Art G]

Well first off, I show the stock traded between $661 to $681 on that date, so taking the low end of the price seems a bit unfair, however, if you had played puts on Google as I recommended at that time, you'd have made a killing. I'm not trying to toot my own horn (well perhaps I am), but just taking note that I called it a day after the stock hit an all time high. Not too shabby.

 

[CCdaCE]

Yeah, I think Google Finance gives you closing price. It was falling off a cliff around the 9th. Closed at $741 on 11/6.

My point was... the stock was relatively similar to the market.

-CC

 

[Art G]

Well I'd say it was closer to doubling the downside of the market from $681, but nonetheless, it's getting killed in after hours trading as well.

 

[Art G]

Well it seems GOOG busted quickly through its first support. Next one currently around $417. This sucker may fall quicker than JDSU!

 

[Art G]

GOOG still falling!

 

[al_bundy]

I think you are a little late to the game to be shorting, personally.

and we may get another chance to short once the market moves out of this dull phase