shorting JAS, winners & losers

Upon selling Penn West Energy at today's open, we actually profited 36% on the shares after holding them only since Friday. Much better than the 26% we were hoping for as detailed in last night's entry. Those who held on found themselves 13% lower at the close vs. the opening price.





With the sale of PWE we have this to report :

We have so-far entered 25 positions per this blog in 2008 (26 once JAS is shorted), with a current average gain of 28%.

17 are currently winners, for a current success rate of 68%

Of those, 14 have already been sold. The average profit on those sold has been 19% with an average holding time just short of 8.5 weeks, which suggests an annualized return of 118% on the winners.

8 of our 2008 entries so far are losers, all of which are still open. Most were said to be highly speculative, or we'd said we expected to soon see them at lower prices due to the continuing bear market or possible failure of support levels. Sadly that's what happened though a few of those should become winners before we sell, most likely VZ and VLO, while some will simply be the cost of being in this business.

The average on the open positions is -53% at present. That's a horrible figure, yet it looks good in relation to the performance of some so-called "blue chip" stocks even over the past few weeks.

Indeed, Iceland's entire market was down 77% today alone ! We're not sure that could happen here, but we're sure many said it could never happen there. Certainly this news underscores the importance of always being hedged, along with events such as the crash of '87 and the crash after "9/11".

We also closed 13 positions in 2008 which were purchased prior to 2008. All were profitable on average gaining 35% after an average holding time of 7 months, suggesting an annualized profit of roughly 70%.

Attempting to ride out a bear market can be ruinous for those who don't take the proper precautions or worse yet average down their cost on the losers, especially if using margin. "Riding the gravy train" is a relatively smooth ride and comperably quite pleasant & profitable.


We continue to hold the PWE December $20 calls, some of which traded for $2.40 today which is 243% higher than our cost on Friday. We can only hope to be so lucky to sell ours for the same or a higher amount. We believe that time will come, as we've written recently :

"There may be massive rallies, perhaps on futher meddling by the so-called authorities. Certainly sparking a market rally is [the government's] main concern at the present time. We cannot blame them for trying to cover-up, however history both long past and relatively present teaches us that this meddling only makes things worse."

Keep this in mind, no matter how high the markets go in the near term.


In case we do not see further rallying however, we feel naked without adding shorts to hedge. Thus we endeavor to short Jo-Ann Stores Inc., JAS, last at $18.34

If it goes higher, we'll probably add shorts so long as the price remains below the old highs circa $26. We believe the retail environment will be very poor for some time to come, especially for such frivolous items as those which Jo-Ann Stores specializes in.





Click these words for a note, regarding our recent purchase of BUD & sale of related put options.

"The Brazilian-Belgian brewer still expects to close the deal by the end of 2008 and said [this news] will not affect completion."

We can only hope, despite the neverousness such assurances causes us.




Perhaps the poor ghost received stock in restaurants such as CAKE, CBRL, DRI, or CMG? These are generally not bouncing as well as the general markets, though we hope the shares show some sign of price recovery as we'd very much like to short them again before too long. We enjoyed excellent short-term gains after shorting CAKE and CBRL in August



Amusing and quite right. Jim Rogers on CNBC discussing the continuing bail-outs.

It is indeed sad to see the "experts" in government flailing helplessly and cluelessly at such a serious problem they so obviously created and which was so clearly forthcoming.

They are being reactive not proactive, and they will continue to flail and fail thus making matters worse.




U.S. President Bush "Bank buyout needed to preserve free market".

That certainly makes sense ! Please forgive us the extreme sarcasm.


"Government owning a stake in any private US company is objectionable to most Americans, me included," Mr Paulson said today."

"In addition, Mr Paulson said, nine banks he described as "healthy institutions" had agreed to accept government stakes "for the good of the US economy". Those include such names as JP Morgan Chase, the nation's largest bank by deposits and market capitalisation, Wells Fargo, Bank of America and Morgan Stanley."

That also includes Goldman Sachs, a bank which of course Paulson "earned" hundreds of millions of dollars as the CEO of.

If these institutions are so "healthy", why are they being handed hundreds of billions of taxpayer dollars? So they can then lend those dollars to taxpayers for profit?



Click the image to see the cartoon in a legible size.


Of course if the officials simply stopped meddling then the truly free markets would ensure plenty of liquidity and lending from those who have managed their risk properly to those who are worthy borrowers, while the rest get what they deserve by which we do not mean bail-outs and massive bonuses and retirement packages for their incompetence.


“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.”

– U.S. Treasury Secretary Andrew Mellon, 1928



Views Expressed by Paulson as Secretary of the Treasury

In Spring 2007, Secretary Paulson told an audience at the Shanghai Futures Exchange that "An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention."

In August 2007, Secretary Paulson explained that U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades.

On July 20, 2008, after the failure of Indymac Bank, Paulson reassured the public by saying, “it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

On August 10, 2008, Secretary Paulson told NBC’s Meet the Press that he had no plans to inject any capital into Fannie Mae or Freddie Mac.

On September 7, 2008, both Fannie Mae and Freddie Mac went into government conservatorship.


Bush, Paulson, and Bernanke continue to fail to understand the problem or continue to lie about it. Take your pick. We care not which, we only care to know that they will continue to fail miserably and at some point that will be reflected in the markets so we act accordingly by hedging with shorts.

We may be early but that's much better than being too late as many found out the hard way last week and are doomed to find out after they purchase all the way back up, however higher that may be ... if higher at all?



We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

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