As John Maynard Keynes once said, “in the long run, we’re all dead”. However, when it comes to shorting stocks, it doesn’t take very long to make a boatload of money as many a hedge fund has demonstrated. The questions are always which stocks to short and when?
Okay, so just over a month ago I wrote about that peculiar “knights of the round table” advertising IBM is running to support its corporate services business and suggested I would keep an eye on its stock to see if there’s any connection between errant advertising and errant management in general. And what do you suppose I found?
At the time of the posting IBM was trading at $76.70. Last Friday, it closed at $73.26. So, shorting the stock for just a month would have yielded a gain of 4.4% (before commissions and whatnot), or an annualized return of 52.8%. That’s certainly in the hedge fund league. But here’s something even more interesting I came across.
According to a chart that appeared in the Sunday Business section of The New York Times last weekend, guess what’s been the worst performing stock in the DJIA so far this year?
Yep, IBM. That’s some accomplishment considering that to achieve this dubious distinction, IBM’s stock had to perform even worse than General Motors and A.I.G., which took “place” and “show” in this trifecta of losers.
I’ve seen more executions in this IBM campaign, so I guess they’re sticking with it. So I might as well do the same. I’ll take my month’s hypothetical gain and then short it agaiin at $73.26 and we’ll see where things stand in another month or so. (Although if I keep making 4.4% a month, my postings may start getting few and far between.)
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