November 2005 Archives

Doug Kass of Seabreeze Partners Short L.P. Kass Katch of the Week (subscription required) wrote a compelling article at Street Insight on why he is bearish on retailers. Because Kass's comments were given on a subscription site, I will not provide a thorough recap of his arguments. However, I must tell you that his arguments are compelling. If you are not a subscriber, I encourage you to become one. Kass's comments alone are worth the subscription price.

Earlier this month, I described about researchers who conducted a set of lab experiments in which mice were daily given a discrete choice between cocaine and food. If the mice pressed Bar A, they got food pellets for the day and if they pressed Bar B, they got cocaine-infused water for the day. Over time, these hedonic rodents repeatedly binged on the cocaine and actually slowly starved themselves to death by choosing to feed their addiction over sustenance. Over the last several years, the mortgage brokers were the cocaine dealers and teaser, interest-only and adjustable-rate mortgages were the crack, leading to an epidemic of consumption which belied the underlying income levels.

Fearing that the end of the housing ATM will slow retail sales is nothing new. But I like how Kass expressed his viewpoint.

My cautious outlook is less severe than Doug's. I continue have a few defensive stocks—namely, GLD and PAAS—that have certainly helped the portfolio's performance recently. And I do have some higher octane stocks should the market surprise everyone.

As a follow-up to my earlier post Royal Tyrrell Museum - Dinosaurs Part I, I am informing you that I have finished my Royal Tyrrell Museum photographs.

For those interested, you can see my photographs of the dinosaur exhibt at Kevin Stecyk's Photos at the Royal Tyrrell Museum on Flickr. You can also view my other photographs at my Flickr account here.

I look forward to any comments, either on this weblog or at Flickr, that you might have.

The above image is hosted on Flickr and by clicking on the image, you will be taken to a larger image on Flickr.

Doron Levin wrote an excellent article Some Things Never Change, and GM Is One of Them: Doron Levin (subscription is NOT required) on Bloomberg.com. He discusses General Motor Corporation's (GM) cutbacks. For those interested, I recommend this article.

General Motors Corp., (GM) is going to slash 30,000 jobs by 2008, according to a Wall Street Journal article GM to Cut 30,000 Jobs by 2008, Expects $7 Billion in Savings (subscription required) by Joseph B. White And Lee Hawkins Jr.

Out of the gate, GM was up but the stock fell later in the day to close down $0.47 to $23.58 for a loss of 1.95%. In my view, this is all window dressing. The real question is, Can GM sell cars profitably? Toyota is looking to increase its production in the United States while GM is cutting back aggressively.

I continue to remain short GM shares.

Overstock.com, Inc., (OSTK) continues to be an interesting stock. Back on 11 August 2005, the stock was at about $44. Then it bobbed and weaved falling to about $33. In fact on 15 November 2005, it closed at $32.91. And yet today, the stock has rocketed upwards closing at $41.59. Because of its unpredictability, I am staying on the sidelines—even though I am much more supportive of Jeff Matthews's arguments than I am of Dr. Patrick M. Byrne's.

Sometimes the best trade is the one not taken.