These are not the only signs, just a few examples of when to bet against a company, all of which would have worked out great over the past year:1. Right when management admits a massive fraud over many years, Satyam Computer Services (SAY)
2. Companies lie about the health of management: Apple Inc. (NASDAQ: AAPL)
3. Arrogance and greed blinds management to excessive risk-taking: General Electric Co. (NYSE: GE), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Bank of America (NYSE: BAC), General Motors Corp. (NYSE: GM)-pick an over-leveraged financial, any financial...and yes, considering all the messy financial instruments these companies took on, they are all financial stocks.
4. Excessive internet company valuation: Google Inc (NASDAQ: GOOG), Priceline.com (NASDAQ: PCLN), Amazon.com Inc. (NASDAQ: AMZN)
5. Over-aggressive product marketing: Vistaprint Ltd. (NASDAQ: VPRT), Baidu Inc. (NASDAQ: BIDU), China Finance Online Co. (NASDAQ: JRJC)
6. Being the Nasdaq's top annual performer : Travelzoo Inc. (NASDAQ: TZOO), Dell Inc. (NASDAQ: DELL), Hansen Natural (NASDAQ: HANS), Taser International (NASDAQ: TASR) and Nutri Systems (NASDAQ: NTRI).
7. Excessive commodity price runups: Schlumberger Ltd. (NYSE: SLB), Chevron Corp. (NYSE: CVX), NGAS Resources (NASDAQ: NGAS)
And bonus sign--when you think the overall market will tank, because as most of us need to realize--you can make all the assumptions based on all the research you can dig up, but in the end, three out of four stocks follow the market.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund.
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Reader Comments (Page 1 of 1)
2-20-2009 @ 8:56AM
Beltway Greg said...
BTW, I love you folks that keep buying that SKF! Time for me to sell this a.m. though and I'd expect you should do the same. Get back in if it drops below $140 again.
2-20-2009 @ 3:08PM
Beltway Greg said...
Suckers and you were warned! See you at $140.
2-22-2009 @ 10:31PM
Beltway Greg said...
You better dump this at open; possible $150 by COB tomorrow. Thank you to all of the suckers that bid this piece of crap to $200 again. I truly, truly love you folks.
2-24-2009 @ 6:36PM
Beltway Greg said...
Sorry, off by a day and $10 bucks. Cramer is 100% correct about this stock. If it truly tracked the indices perfectly it would be at $300+. It is a tradable instrument and therefore subject to the same problems as any other openly traded equity. It should be outlawed. Till then only outlaws like myself will profit. Check the action from 2-2:30. It was propped up by people who thought it was going to bounce back to $200. They were wrong.
2-27-2009 @ 8:36PM
Beltway Greg said...
Run-it up again. See you at $140. The Dow is at 7100 and SKF is at $175? What gives. The upside is growing smaller.
3-05-2009 @ 12:19PM
Beltway Greg said...
SKF@$240. Start a small short position, whatever you can bear. It may go to $300, but when this sucker breaks.
3-10-2009 @ 4:47PM
Beltway Greg said...
And at $178.00 in the after-hours on 3-10 I does believe it's time for me to saddle up my pony and head on across the range. Thanks for doing your job partners.
The "does" is intentional.
3-12-2009 @ 5:32PM
Beltway Greg said...
With SKF at $138 the crowd goes wild.
3-17-2009 @ 4:17PM
Beltway Greg said...
Okay chuckleheads, you can buy some FAZ
tomorrow at the open but dump it after three points. Don't hold either FAZ or SKF into Thursday. If you have a large portfolio you can park some in with your holdings but always set a sell limit four points above your purchase. That way you constantly hedge against losses. Stay away from SKF. It's a time bomb and most folks don't have EOD training.
3-23-2009 @ 10:32PM
Beltway Greg said...
Here's the trade. Buy a small amount of FAZ and harvest, harvest, harvest. Just keep it as insurance. Dump at $27.00 if it ever gets that high again.