CLF: The Ultimate Momentum Stock

For those people who follow the most common advice in the Market Wizards books, CLF could be a dream come true. It is the definition of a momentum stock. It is also the ultimate bubble stock. It is showing technical strength and pushing new 52-week highs everyday. Valuation and fundamentals are thrown out of the window and a castle is built in the air. You can surely choose to play with fire in the later stages of this stock market bubble and the poster child of it, CLF, and possibly make some money, but eventually if you overstay your welcome, you will lose your shirt. I've seen it happen to people with this stock. My choice for the last couple months has been buying a small amount of puts and am I glad to have played this bubble that way. I think that is actually the best way of shorting - especially bubbles. Otherwise imaging being short a stock that went from yesterday's low of $61.91 to $67.50 today on no news and despite bad news in the economy. This stock is "acting" "great" if you are a momentum guy - one of those people who do well for a while and then lose their shirts, the people profiled in Nassim Taleb books such as Fooled by Randomness. Either way, I think this stock is going to be a great short at some point, but I might be early, which is why I have been shorting it using puts that I will systematically roll further and possibly higher if this frenzy continues. If you think it will be taken over, I have to tell you you are a fool. Funny how history repeats. I said the same things to other people who did not believe me a couple years ago and this stock cost them a lot. It will do the same again. No board that has half a brain will agree to taking this company over at this valuation. If they do, I'll be shorting them. Enjoy the bubble while it lasts because like all other bubbles, this will end very ugly.