Bloomberg is reporting that condominium developers have continued building very quickly, despite the Florida real estate market's sell-off in the past year. This ignorance to the needs of the market forced the market into recession in October, becausethe Floridian economy has become very dependent on the strong housing market from 2002-2005. One expert in the article even went as far as to say that Florida is the "epicenter for all the problems that exist in the housing industry."

Bizarrely, 20,000 new condo units are being developed despite the recent sell-off in the market and lack of demand. I guess the developers missed Economics 101 -- when there is no demand, there's no reason to flood the market with supply. These ridiculous actions are only exaggerating the area's already-significant supply glut.

These events could force any companies with exposure to the Florida condo market to further write-down its book value. The ramifications of this entire debacle are becoming more and more clear, and once investors realize that a recession is developing in Florida, they will quickly become very leery to invest in companies based in Florida.

Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and I seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

Monday the Wall Street Journal noted that two of the worst performing stocks in the first quarter were NovaStar Financial, Inc. (NYSE: NFI) and Bally Total Fitness, Inc. (NYSE: BFT) -- both of which I suggested shorting last year. Looking for some new short ideas? Last month I was in Florida where the real estate market is tanking.

Reading about a busted residential real estate development there in the Sarasota Herald-Tribune gave me another idea for short stories: Coast Financial Holdings, Inc. (NASDAQ: CFHI). Although its market capitalization has tumbled 59% to $44.9 million in the last year, CFHI could file for bankruptcy. How so? In a nutshell, Coast lent money to Florida real estate developers who are going belly up. As a result it's at risk of not having enough cash to pay a $12 million portion of its long-term debt which is due this year.