Tuesday, January 15, 2008

Floyd Norris: A Bear's Questions

From a Floyd Norris post called A Bear’s Questions comes an excellent quote from David A. Rosenberg, a Merrill Lynch economist:

Finally, the question must be asked: if the first 7 percent downleg in home prices could manage to trigger …
1. Almost $100 billion in write-downs in the banking sector;
2. A 65 percent year-over-year surge in foreclosures;
3. The highest residential real estate loan delinquency rate in 20 years; and,
4. A 20 percent plunge in S&P financials …
… then what, pray tell, will the next 20-30 percent have in store?
I think this is dead on. There are tons of people out there catching falling knives.

I added new shorts since January 1 as a recession play: HOG, M, F, TIF, CROX. Short the consumer and long SHY and BIL is a great trade in my book.


fakepaycheckstubs.com said...
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Anonymous said...

The trouble is, just when a trade looks the most promising is often a bad time to make it.

Although you've had a bit of luck with HOG -- it was downgraded today.

CP said...

Actually, I covered HOG today at 37 for about a 10% gain.
Also sold most of my BKUNA and MBI puts at huge gains.
I figured there was a good chance of a bounce tomorrow.