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.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

selling PWE +26% in one day on the stock

The chaos in the world's equities markets continues unabated with as much madness in evidence today as was in evidence any day last week, if not more.

No one of consequence in any government has addressed the core problem, and in fact the "solutions" cheered today are more of what caused the problems to begin with and these "solutions" will quite possibly make the situation worse in due time.

Today the DJIA posted the largest percentage gain since the 1930's and we prefer to be sellers into this kind of general panic to buy, just as we were buyers while others sold in a panic. Despite today's historic gains, the markets and most stocks are still no higher than they were Thursday morning. Sad, but true.

Does that mean the markets have much higher to go? In the short term markets may well bounce higher with the DJIA eventually reaching perhaps the 10000-11000 range, but currently we feel certain that markets and most stocks will be much lower by this time next year and perhaps even early next year if not sooner.

In the meantime we'll trade based on what's happening in the present and ensure we've cash in-hand to either buy when markets are irrationally down 11% in a single day rather than up so much, or to short once stocks are irrationally pushed back up to compelling shorting levels.


PWE opened at $13.97 Friday after our posting we'd be buying it, and closed today at $17.64 which we hope to secure in the morning if not a higher price on any gap-up due to today's momentum. At today's closing price, we enjoy a 26% profit in merely one day!

Some may say we're selling too early, while we say we're prudently speculating while preserving capital and "riding the gravy train".

Waiting a year for the effective 25% dividend on PWE and the potential for greater gains on the stock price is one thing, however the certainty of booking such a large profit overnight for us is that much better so tomorrow we'll sell the shares bought Friday per our last update.


Factor that we also hold the PWE December $20 call options, which we'll keep for at least another day. We paid $0.70 for the call contracts on Friday and the closing bid today was at $1.45 which is very luckily for us already over 100% higher. Should the stock continue to climb, we'll enjoy greater gains on the options. Should it fall it's likely we'll still enjoy large profits upon selling the call options plus we'll be glad we booked the gains immediately on the stock. A win/win situation with effectively no risk.



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 your broker or investment advisor before making any investing decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

buying PWE, bidding on VZ, and VLO

Current market conditions are nearly unprecedented, and the scope of the crisis suggests things could still get much worse very quickly.

Or perhaps not. Perhaps finally governement will do something that works. Perhaps they'll merely spook people further.

"President George W. Bush will address the nation this morning to tell Americans they should remain 'confident' amid falling stock markets and a worldwide credit crisis."

We reiterate what we wrote on September 15, that "President Bush announced that the markets are fine, a clear indicator that things are much worse than they seem." This is no comment on President Bush. It is simply obvious to us that any time a head of state takes time to broadcast nationally that all is well it means in fact all is not well. Severely so.

We reiterate what we've been saying all along - that the markets can and possibly will go very much lower at some point. Perhaps without even a bounce.

Currently markets overseas are selling-off again severely. If there's no turnaround in sentiment, and nothing from government to allay fears, the North American markets could open significantly lower. That may be "the" low. For now. Or just the start of another very bad day in the markets.

Certainly fear is pervasive and widespread, so of course we'll go long. We hope to have come across a relatively safe idea. Just in case.

In case of what? We suggest that no one should be surprised to find any of their holdings as much as 50% lower by the close Friday or Monday, or at some other point in the near future, with no chance to sell before it happens if at all.

As we also wrote on September 15, "We will not be fooled into the idea that these markets offer "investment opportunities" or "value"."

May 7 - "While the DJIA has recently tentatively breached 13000, we continue to see significant resistance above that level thus we have not turned away from our bearish stance and we proceed with caution since we continue to believe that the general markets, commodities, and the majority of individual stocks are considerably overvalued and overbought at present."

It's frightening looking back at the chart.




June 11, 2008 - "It would not surprise us to see the general markets much lower in the coming days, weeks, or months."

June 26 - "Our outlook remains unchanged. Bearish the general markets, bullish gold and silver, expecting a coming deflation in the pricing of nearly everything else."

We've been asked why we don't buy gold stocks if we're bullish gold. It is simply because we are bullish of gold and not of stocks. Stocks, even gold stocks, in a true bear market liquidation falls under "everything else" as we have recently seen. Perhaps the time will come to speculate in gold stocks again, but for us that time has not yet come.

We're happy enough with our holdings of physical gold, though we understand that gold too could sell-off rapidly at any time. True liquidations are about panic, not logic or inflation hedging.


The last time we entered a trade on the long side was in early July, at which time we wrote :

"We finally add long holdings, with an initial entry in refiner Valero and telecom giant Verizon. These last traded at $36.79 and $35.43 respectively. Our simple view is one of near value, given the market and economic environment, and of somewhat oversold conditions.

However we remain in a bear market and it'd not surprise us to see these trading much lower in the coming weeks, at which time we might say they've become true "value plays" and enter additional long positions. Should there be a near-term market bounce however, or especially should we prove to now be at a market bottom (which we very much doubt but must prepare for all possibilities), the upside move in these shares should be quick and very profitable.

In any case, we shall continue to accumulate relatively attractive "blue chip" holdings as the markets wither."


At times it is painful to be correct. The markets are nearly 30% lower, as is VZ while VLO is lower still. These are possibly good entry points for someone that has no, or very little, general long exposure already however we seldom like to add to losing positions and certainly not given current market sentiment. Instead we'll bid as low as $20.20 on VZ and $12.20 on VLO.

Those figures are not typos. Just in case they get that low we'd be buyers, though perhaps even then reluctantly if markets are selling-off so badly that we see those prices for shares in these companies. We'd like to hedge by selling uncovered "naked" puts up-front, but find no strikes that low. Instead we simply lowball bid, though any bidding currently makes us nervous.


We barely have enough faith to enter this relatively secure idea. Penn West Energy, PWE on the NYSE and PWT.UN on the TSE, is an energy trust. We trust investors understand what that is and how they are taxed, or not, on its dividends. For us, those dividends are currently the main attraction, and at the current stock price the dividend is nearly 25% per annum and it is paid monthly.

We believe that might attract others to the stock, along with its valuation, if or when buying returns to the markets. If so, there is the potential for excellent capital gains on the stock as well as the dividend. Read more about it here.

PWE last traded at $15.41

To those who are also options speculators we note that $20 December calls on PWE are currently under $1, last ask at $0.85 A significant market rally would likely lift the majority of stocks a fair bit higher and in the case of PWE could result in a significant spike in the price of these options. Of course, as always with options and too often recently with even "blue chip" stocks, these could soon be worth zero. We currently hold some of these calls.

Options traders of course realize that there are no dividends collected by call option owners. Further, we trust that to options traders our BUD idea yesterday was clearly an uncovered "naked" put idea. Some believed it to be a typo, perhaps that we meant "call" rather than "put". We indeed meant "put". Those unfamiliar with the strategy may read about it here and note the caveat : "While the premium collected can cushion a slight drop in stock price, loss resulting from a catastrophic drop in stock price of the underlying can be huge when implementing the uncovered put write strategy."


We applaud the Canadian Banking system.

We hope for panic to ebb from the markets.


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 your broker or investment advisor before making any investing decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

covering MCK +15%, buying BUD

Over two years ago on the first day of posting this blog we shorted MCK and wrote :

"We've followed this stock for a few years, and feel we know it well enough to be intuitive about it. It looks tired to us, and we expect US markets to do poorly going forward along with a general credit crunch including for McKesson's clients.

On a technical level if it reaches a new 52-week high above $55 we should cover and probably will, perhaps going long."

We were certainly correct about the market, and so too about the stock given its price went above $55 and eventually reached nearly $70 but we never did cover.


In mid-September of this year, when wrote of MCK :

"We're still short, with the stock 12% higher. Not a great call, but we remain optimistic."


Today we finally cover. It took quite some time, and the position caused us some regret along the way, but we are well-rewarded for our patience by the enjoyment of booking another profit while the markets implode.


Speaking of imploding markets, it appears some good deals are emerging due to irrational selling. Bud closed today at $62.92 With an all-cash offer from In-Bev of $70 per share for the stock, and the deal expected to close later this year, we find what appears to be effectively a "sure thing". If for some reason the deal doesn't go through, BUD is a great stock to own in a recession so we like the trade either way.

Read the relevant news here :

News 1

News 2

News 3


Options traders may note that the bid for December $55 BUD puts is currently $3.00 Considering the $70 offer on the table, that seems like a great deal to us.







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 your broker or investment advisor before making any investing decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

covering CBRL +19%

From this blog, last Thursday : "How low can we go? Much lower, and so we shall go."

Today's intra-day low just above 9500 on the DJIA might mark "a" bottom, however not likely "the" bottom.

We fear further government meddling imminently in the markets which could spark or support a rally, so today we cover our CBRL short for a 19% profit in just under 7 weeks.


It is important to find consistency and exploit it to profit among the market chaos.

We remain calm and consistent winners while others panic and lose. A key trait for success.



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 your broker or investment advisor before making any investing decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

How low ?

"The fate of empires is very often sealed by the interaction of war and debt. America is no different."


On September 29 we wrote : "The spectre of government intervention looms large despite today's brave and correct defeating of Paulson's shameless proposal. Is this a turn in government sentiment towards proper management of the markets & economy? We doubt it ..."

To what depths can our "leaders" sink? Seldom in the passage of time has there been such a profundity of idiocy and irresponsbility so prominently and prevalently on public display as this past week.

"Insurers knocked by Sen. Reid comment"


And the general populace must share the shame.

How many people believed, or even considered, that the economy was on the very brink of total collapse before our "leaders" started proclaiming it in pathetic displays of panic?

How many are selling their equities due to the fear spread by our "leaders", most of whom are completely unqualified to even discuss the economy and markets much less make proclamations of impending doom?

The same "leaders" who only days and weeks before were stating there was no problem at all.

On September 15, we wrote that "today President Bush announced that the markets are fine, a clear indicator that things are much worse than they seem."


The same "leaders" who recently encouraged people to borrow & spend.

If these "leaders" truly felt they need to "do something" we'd all be better off if they would choose to shut their mouths and get out of the way. Instead those in power create the problems, then in great displays of grandstanding enact self-serving utterly and obviously flawed "fixes" in the hopes of looking good for re-election while fattening the pockets of their cronies and masters.

More sad is that so many sheeple believe it wholly that this is being done for their own good. Land of the fleeced, where all that remains to be taken from the voters is the wool before their eyes.

History teaches us that the wicked and the dumb need scapegoats and thus sheeple come to believe that shorts are somehow at fault for all of this, yet the markets continue to collapse despite the shorting ban. If there had been shorts covering, the damage in the markets today and on Monday would not have been so extensive.

But pigs are pigs, and they do piggish things, thus the shorting ban was today extended which further prohibits sorely-needed liquidity from entering the market. Instead it goes into put options while the retirement dreams of millions have trouble finding a bid.

The fact is that shorts provide extensive research and put their own money where their informed sentiments are, yet they are villified as crooked rumor mongers. By contrast our "leaders" spout off with no clue or qualification whatsoever and put the money of innocent taxpayers into a black hole, all the while spreading the very confusion and fear which causes the selling in the markets, and they are cheered as good men of action.

It is as pathetic as the beatific visages of the dumb as they rush to dive into these massive gaps in logic, as would a man dying of thirst dive into a desert oasis.


How low can we go? Much lower, and so we shall go.

September 2007 - "We respectfully suggest investors do not put too much on the line based merely on hopes of eternal share price increases and hype. Check the stock listings from 10 years ago and notice that many - most in fact, if small caps - of those companies are now long gone along with the funds of those who held the shares too long."




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 your broker or investment advisor before making any investing decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.