Why do you think there’s plenty more downside to come?
“I think there’s a lot more, says Gartman. “The re-sets on so many mortgages don’t reach their apex until January or February of next year. It’s going to take 6 month to a year to find ways to get people out of houses they can no longer afford or find ways for the government to take them out of it… and before it’s done I suspect you’re going to see a great deal more of the mortgage backed companies like Countrywide (CFC) in very difficult positions… That stocks is making new lows and making new lows with the worst still ahead.”
But doesn’t Countrywide stock already reflect that bad news?
“It’s very possible,” says Gartman. “However, when (a stock) keeps making newer lows… and when the management of the company continues to sell large sums of stock into every rally, that’s not one of the better bets in favor of that company’s future.”
How do you determine a time frame for shorting a stock with The Fed looming?
“Of course The Fed is going to do more,” speculates Gartman. “Whether The Fed cuts at the next meeting or the one after, that’s not what’s important. … I just don’t think we’re anywhere near the end of the bear market and I think we’ve only just begun to touch the problems with the re-sets in all of these mortgages.
What’s another name you’re happy to be short?
“You can be short Wachovia (WB) or almost any of the financials,” says Gartman. “All the charts look a like. This is a problem that’s not just endemic to Countrywide. It’s endemic to the financial sector in general…. Right now the trend is clearly downward.”
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Trader disclosure: On Sept, 5, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC); Pete Najarian Owns (BMY); Pete Najarian Is Short (GS); Finerman Owns (GS); Finerman's Firm Owns (KFT), (WMT); Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts
Gartman Is Short (CFC)