Short City: GameStop, Telefonica

Posted May 20th 2009 4:20PM by Joseph Lazzaro
Filed under: Short Stories, Stocks to Sell

Some contend that shorting stocks is un-American. Hardly. Selling short provides liquidity to the markets, aids in price discovery, and provides an extra check -- some argue the only check -- against ill-conceived business ideas and incompetent executives.

New York Stock Trader Dave Fischer is a short king, and has made most of his money over the past 15 years shorting stocks. His favorite phrase is, "With those fundamentals, that stock can't hang on for long."

Short these shares if you can tolerate high-risk and are an experienced investor that does not remove Buy/Stop Losses.

GameStop (NYSE: GME). It's hard to make the case for growth in high-end / sophisticated games amid a slowdown in consumer spending. The era of the "frugal consumer" is upon us: basic games are in, pricey games are out. Cover Short on a bounce off $20, $17, $15, or $10. Buy / Stop Loss if you were to sell shares in this company: $33.

Telefonica (NYSE: TEF). It looks like mobile/PDA service gains in Germany will underperform, competition is intensifying in key markets. Technically, the stock looks like a bear hug. Cover Short on a bounce off $50, $46.70 or $45. Buy / Stop Loss if you were to sell shares in this company: $73.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: GameStop, GME, inthenews, TEF, Telefonica