I've noticed a similar pattern in the long-term stock charts for the big credit insurers like MBIA (NYSE: MBI) and Ambac (NYSE: ABK). If you think I'm about to tell you how you can jump on a bullish spoon-in-the-cup reversal pattern, you're dead wrong. What I've noticed is that they all resemble the cliff that Wile E. Coyote inevitably falls from in all of the Road Runner cartoons.
The final verse certainly hasn't been sung on these stocks, though. While there are some really sharp investors like Bill Ackman who think the companies are doomed, other, equally sharp investors like Marty Whitman are standing behind them. In fact, because the outcome has been so up in the air, these stocks have been bouncing around like basketballs as of late.
While Ackman may well have seen this unraveling coming years ago, I don't have any record of his thoughts back then. What I do have, however, are the thoughts from another investor who foresaw the bond insurers' demise -- in November of 2002.
Who is this Nostradamus of the investing community? Well, I don't exactly know. What I do know is that his thoughts have been on The Motley Fool's discussion boards for more than five years now. And because the boards were made free to the public in July of last year, anybody could have seen them.
Do you think I'm pulling your leg? Check it out for yourself.
Today, I'd argue that the risk/reward on a new short position on MBIA might be a little tight, but if you had shorted MBIA at the time of this board post, you'd now be riding a gain in the 70% range. Why should you care? Though the time to take action on this post may have passed, there are countless posts just like this still floating around on the discussion boards, and the Foolish community is adding new insight every day.
Curious about how Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) stack up? Check out this recent thread. Or you can see some investor reactions to the love-hate triangle among Microsoft (Nasdaq: MSFT), Yahoo! (Nasdaq: YHOO), and Google (Nasdaq: GOOG).
In short, don't miss out on the outstanding analysis going on in The Motley Fool community.
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