Just Sold my Cost Plus Nov Puts
Cost Plus released quarterly earnings which were awful. They had to drop margins to grow their sales and that is a sign of struggling.
Hint: when you start receiving flyers in your mail box from retailers, notice the frequency. Bed Bath & Beyond went from monthly mailers to weekly, a sign of problems.
I have predicted havoc in the housing market to hit housewares and durables and I have been correct. Sadly, the market does not want to drop the stocks the way they should. And that's the general issue with investing: analysts tend to wait for the numbers to be released because they can release opinions based on facts and not judgement calls. This of course is less risky and more stupid, and this si where investing against the market makes sense.
I look at ILMN and UCCT and I see small cap companies with massive growth. I invest because I believe that the market will notice and reward.
I would rather put money down on companies to grow, but sometimes it is too tempting not to invest on the company going down. For example, JNPR & CSCO. This is a zero sum game: if JNPR is winning, CSCO is losing, and vice versa. CSCO's great release is not a sign that everyone is doing well - rather, it is a sign of JNPR doing badly. So when JNPR rose in sympathy, I considered buying puts. Same with RSH. If Best Buy and Circuit City are stealing the high end and Walmart is stealing the low end, RSH gets squeezed out.
Other times, it is not a case of one winner and one loser but all losers. There is no way on god's green earth that a housing slowdown is good for homebuilders and suppliers of things to a home. I searched for a long time for a door manufacturer and a window manufacturer to short. Think about it: there are dozens of doors in a house - cancel construction on a few thousand houses and a door maker loses hundreds of thousands of shipments. Cancel a few condo high rises in Florida, and window makers and glass makers are hurting. Compared to one refrigerator per home that gets unsold.
In the end, I found that these companies were privately held. So the best I could do is short BMHC, which has been incredibly resilient in the face of reports that they can expect 35% less business going forward. But we have to wait for the quarterly numbers to get released before we can do anything to th estock price......
That's why I shorted ETH and WHR - there are fewer places to install washing machines and a new couch. Growth will stall. It's a matter of time horizon - waiting for th emarket to accept and acknowledge.