Speaking of thesis, right before the crash upon the crash (mid Sep to late Nov 2008) the thesis mongers were running up all things housing related because "housing will rebound in 6 months". I outlined many of these names with the (ironically) strong charts on Sept 11 (
Sep 11: Hot Money Says a Housing Turn is Coming Soon) I wrote
The data points say "no recovery" and the executives in many cases say "no recovery" but that doesn't stop hot money from piling in, assuming a "recovery in 6 months". Maybe it's true, maybe it's not. If March 2009 marks the bottom in housing I'll come on and say "I was wrong - what an idiot I was, the American consumer is far better than I imagined." But it really doesn't matter if March 2009 will be a bottom because people are making money assuming so today - perception is reality.
Well we are now just 5 weeks away from March 2009 and I don't think I will be apologizing to anyone. Ahem.
Among those names was
Sherwin-Williams (SHW) who obviously provides paint; but not just for homes... also heavy into industrial. This is a name I've been looking to short but I don't make bets ahead of earnings - unfortunately (for those who want to short it) the stock is getting blistered off a
gosh awful earnings report and (all together now) lack of clarity into the future. In fact, unlike the sirens singing of 2nd half recoveries and "look through the valley, it's going to be better and you need to own the stocks ahead of the turn" - the CEOs seem to be living in a completely different world. A world we call reality.
- Sherwin-Williams Chief Executive Christopher Connor said that "during the fourth quarter, the demand contraction in the end markets we serve became more severe and widespread as the U.S. economy rapidly deteriorated further and global economies quickly weakened."
- "We anticipate that the deterioration of the U.S. and global economies experienced in 2008 will continue to worsen in 2009, although the rate of decline may moderate somewhat over the course of the year," he said.
- However, "we see no immediate, meaningful improvement ahead in the end markets we serve, and we are unable to predict when any noticeable improvement will occur."
Yes Mr. Connor - as a CEO you cannot predict improvement because all you do is live, breathe your industry. But really what do you know - you just deal with your customers all day. We are stock mavens and we know better than you. Our crystal ball sings of recoveries. You just can't see it - only we can.
If the hope mongers can somehow get Sherwin-Williams back up to $54, I have a limit order waiting to short this. I have many similar orders waiting in everything consumer related - but the stocks in these sectors cannot get a sustained lift. So we're still stuck without the correct individual short exposure.
No position
