Don't Short Consumer Staples

 | Dec 06, 2013 | 3:42 PM EST  | Comments
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Stock quotes in this article:

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,

pg

Clorox (CLX) shows the hazards of short selling great American companies.

Here is a stock that is always getting slammed by the Street because of the company's low growth rate and the competition from bigger companies, but it is extremely well-run and there is always a restructuring lurking. Plus, its Burt's Bees division (originally a very bad overpay) is now leading the growth.

We saw the same thing in Procter & Gamble (PG) today. Heavily shorted. Good bet to roll over in an interest rate spike.

What's incredible to me is that these stocks are very stretched when it comes to historic valuation, but it just doesn't seem to matter.

Perhaps we truly are in a new era in which costs are going down and growth, even slow growth, is loved. Perhaps these two are doing restructurings.

No matter what, if you are going to short these stocks, you have to do it in ETFs. The one the Street hates the most, Clorox, just hit an all-time high.

Miserable short. Great long.

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