During the beginning of 2008, most of you thought I was nuts for being so bearish. My largest positions were [[FXP]] , [[SRS]] and [[SKF]] , following a late 2007 beat down being long Hansen Natural Corporation [[HANS]] , NutriSystem Inc. [[NTRI]] and Buffalo Wild Wings [[BWLD]] . After years of being bullish, I promptly switched to the dark side after seeing signs of excess in China, Europe and of course here in the states.
During the first month of 2008, I fucking nailed the market, making more than 20%, inside of a few short weeks. I was betting against ag and oil in a big way, via short Monsanto Company [[MON]] , Potash Corp./Saskatchewan (USA) [[POT]] and long [[SMN]] and [[DUG]] . My cost basis on SMN was as low as $27, same with DUG.
I was shorting POT at $220 and MON @ $135.
In addition, I had big bets against chinese stocks, including China Mobile Ltd. (ADR) [[CHL]] and China Life Insurance Company Ltd. (ADR) [[LFC]] .
After a rally in the markets, during Feb-April, everyone jumped back on the global growth train, bidding up shares of commodity and engineering stocks. They even bid up banks.
I got lit aflame during those months, giving back nearly all of my year to date gains.
However, with egregious fervor, I shorted banks stocks with impunity, including BSC, LEH, Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] and a variety of regionals like First Midwest Bancorp, Inc. [[FMBI]] , Valley National Bancorp [[VLY]] , Cathay General Bancorp [[CATY]] and PacWest Bancorp [[PACW]] . Also, I had heavy positions in all of the inverse etf’s, throwing some new ones into the mix: [[REW]] , [[EFU]] and [[EEV]] .
After some monster wins, following the Bear collapse, the market rallied again. Knowing it was all bullshit, I weathered the storm and kept averaging into my ag and bank shorts. Unfortunately, I could not deal with the fuckers who operate SMN or POT, for they were operated by the devil himself. I ended up closing out both positions for big losses.
No worries, there was still LEH to lean on.
I did a lot of research into the banks and selected “The Four Horseman of Certain Death,” which included [[FED]] , [[DSL]] , Corus Bankshares, Inc. [[CORS]] and First Horizon National Corporation [[FHN]] . Needless to say, over the next few months, I banked ridiculous coin, shorting the shit out of weak banks.
After that, the market tore my face off during an egregious August rally. I waited patiently and began placing big bets against ‘global growth’ plays, including Vulcan Materials Company [[VMC]] , Terex Corporation [[TEX]] , Caterpillar Inc. [[CAT]] , Martin Marietta Materials, Inc. [[MLM]] and Jacobs Engineering Group Inc. [[JEC]] .
When Fannie and Freddie got busted out, the market began to change. As a short seller, I was encouraged to press my bets, even making [un]fortune cookies for Legg Mason, Inc. [[LM]] and LEH—taking down monster short positions in both names, north of $40.
I levered up and shorted all I could in any bank that had exposure to FNM, FRE or LEH, thinking they (LEH) would go belly up. I shorted AXA (ADR) [[AXA]] , Pzena Investment Management, Inc. [[PZN]] , CapitalSource, Inc. [[CSE]] , PacWest Bancorp [[PACW]] , Janus Capital Group Inc. [[JNS]] and even a casino Las Vegas Sands Corp. [[LVS]] .
I ended up riding LEH down to the high single digits, before covering. Following the LEH collapse, the whole system was in jeopardy. There were rumors that Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] and Goldman Sachs Group, Inc. [[GS]] could be next. The gov’t cheese makers would have none of that.
Aside from Pzena Investment Management, Inc. [[PZN]] and Legg Mason, Inc. [[LM]] , I actually lost money on my last round of shorts, due to government fuckery. They banned short selling, offered a bailout and tried to manipulate the markets higher. In hindsight, that sign of desperation was a prelude of the crash to come.
Over the past month, I am batting like .666 on the ridiculous string of market crashes/massive melt ups. I had some shorts in a variety of auto plays, like AmeriCredit Corp. [[ACF]] , AutoNation, Inc. [[AN]] and Cummins Inc. [[CMI]] , but quickly ditched them, for fear of getting squeezed. I’ve maintained intermittent positions in [[SRS]] , [[SKF]] and [[FXP]] , in between crashes. I’ve been hurt just a few days this month, like yesterday, being long stocks—thinking we are at a level where it makes sense to build long positions.
However, after yesterday’s debacle, again, I was reminded of the unique situation this market and country is in. I cannot believe we will stop going lower, because “we are low enough” anymore. Looking back on my trading success this year, one thing is abundantly clear: do not trust the bull, for it is made from chocolate and it will begin to melt as soon as the temperature rises.
Thinking over the state of the markets, I have no intentions of building long term long positions. Any long on my sheets will be for a trade and trade only. Moreover, I will keep my bias to the downside, until we see legitimate signs of a real economic turn.
NOTE: This is sort of a rehash of my year or thinking out loud.