Thursday, August 14, 2008

The bears hear "Who"

Who is naked in Sears?

Let's take a look.

Institutions own 151.1 million shares. Sears only has 132 million shares outstanding. If we assume that not a single individual owns Sears stock, then Sears has been diluted by 15% by the selling of "naked'" shares.

On NASDAQ's figures, they show that Berkowitz's Fairholme Capital owned 9 million shares. However, the latest SEC filing by him showed that he actually has 16,110,090 shares. Throw that in, and now we have 20% dilution in SHLD by the shorts.

Sears has 37.3 million legal shorts on the stock. At it's current price of 93, $3.5 billion is bet against Sears by the shorts. And Sears isn't an isolated case.

Who is naked in Sears?

Who is naked on the street!

So these shorts that pretend they don't have a problem, have a huge problem. I've said that the banks will be back to old highs even though their earnings will be only 60% of what they earned before.

It's the same with a ton of stocks.

The shorts, are going to help with the PE expansion. Japan's growth contracted.

How about Europe? German and France shrunk.

Go to the Kiwi countries and check out New Zealand and Australia.

So where are you going to put your money? The US led the world into the housing recession/depression and they will be the first out of it. It is happening now. And the money is coming into our markets, and our dollar, as this cardinal fact is recognized by the world.

But not by the bears. They are to busy talking about events in the rear view mirror!

All they talk about is banks and housing. Get over it. It's not the Sistine Chapel, or it's not the Mona Lisa, or it's not the bible.

But let's take a look at housing.

Maybe the bears disregard Bob Toll and his latest conference call. Three years of pent up demand in housing. Maybe they don't look at the sale increases in Florida or California. Or that in 13 out of 50 metro areas housing prices actually increased. Maybe the bears haven't seen the multiple offers on short sale properties. Maybe they haven't been to FL and seen the stream of buyers looking through pre-foreclosure sale. They would just as soon believe the bearish prognostications of of Roubini, and be entertained by Mr. Mortgage on YouTube! These bears are just rubberneckers!

But they will be wrong. Just like the bears on the automobile industry. Has anyone checked out prices on SUV's lately? These aren't affordable? My brother just picked up two F150 quad cabs for his business that retailed for 50K. He picked them up for 35K. My sister just picked one up for $10,500 that booked at $17,000. Maybe the bears think that prices don't matter, but they do. And now they mistakenly assume that these inventory clearing prices in homes and autos will stay around.

Stay around? They'll soon be gone! And so will those prices.

I've seen pre-foreclosure homes with multiple bids, and 50 couples trampling through an open house in Florida. You have all these Wall Street types putting funds together to buy distressed merchandise, yet Wall Street thinks that the average American won't buy a house on sale.

When things are cheap, inventory moves. I called up a large dealer to pick up some Palladium Maple Leaf coins today, now that Palladium has fallen from $585 to $310. He didn't have any inventory to sell. So I went to my second source:

Click on it. They were out of stock also. Lower prices brings out demand.

Now in the market, we have had shorts, pressing their bets, because only on Wall Street, does lower prices scare people, and bring out supply. But that game is now over. Money is shifting here, and the shorts are understanding their games are no longer working. Maybe Wall Street doesn't quite see it yet, but I do.

I just have to dilute it in information so they'll miss it!

Then it begs the question. Where are they going to get the stock to cover their shorts? From another short hedge fund? Maybe they can get it from an owl. From who?

See that's the problem. Owls hunt by themselves and in darkness. They don't share the same playbook. And they are far-sighted. The bears are so short sighted they can't see past the next day.

But the most famous "Who" is Horton. And isn't he an Elephant? And isn't there an election coming up? Did the bears already discount the effects of that?

But if we get back to housing, here's one of the bears telling you about Florida.

Check it out. He'll even advertise how he made 30% on puts on Toll and 42% on puts on Wachovia!

Check him out and then see if you can make money by what he says.

And then when you want to get serious, get back to reading this blog.

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