On November 13, 2007, I wrote an article for The Tycoon Report, entitled "Stocks to Short For the Recession". In that article, I predicted that a slowing economy would lead to a decline in prices for several stocks that are geared towards upscale pricing. I recommended selling them short.

Several of the comments disputed what I was saying. Some people said that Upper class people frequent these establishments, and they are not as likely to be hurt by recessions. Another said that international sales would support some of these stock prices.

So I want to give you an update today. I do this not to gloat, or to childishly say, "ha, ha, I was right", although I do feel good about my selections. But basically, I just want to reinforce the idea that the slower economy, and very possibly a recession is not just coming, but may have arrived. You may not see it in the government figures yet, but it sure is showing up on Main Street!

Here is the link to my previous article, or you can just click on my name to get the list of past articles, and click on the link there.

http://tycoonreport.tycoonresearch.com/articles/831231609/stocks-to-short-for-the-recession

These are the six stocks I identified then as being ripe for shorting. Their previous day's closing price, and current prices are as follows:

SBUX 11/12 23.14

SBUX 12/19 20.11

COH 11/12 33.69

COH 12/19 30.14

DRI 11/12 39.37

DRI 12/19 29.99

RUTH 11/12 12.32

RUTH 12/19 9.60

HOT 11/12 52.60

HOT 12/19 45.81

PIR 11/12 4.27

PIR 12/19 3.80

As you can see, those predictions turned out very well. To be fair, PIR was not a shorting candidate at the time, because it was below $5.00, and I should have realized and indicated that. However, all of the other stocks were fair game for shorting, or for using puts, for those readers who prefer to use options.

This morning DRI was clobbered after reporting weaker earnings amid a "difficult consumer environment". Translation: Empty seats in their restaurants, Olive Garden, Red Lobster, and Longhorn Steakhouse. Higher food costs were also blamed, as those costs could not be passed along to consumers who are spending less on dining out.

Incidentally, kudos to Lynn, who pointed out as an insider that things were not going too well in the Casual Dining business. A true Peter Lynch play!

Going forward, I continue to see weakness ahead for this group. However, many of them are much lower now, so caution on further shorting is needed. If you are currently short any of these stocks, congratulations. You may want to tighten up your cover positions at this point. One idea is to put stop limits about 10-20 cents above recent highs, so as not to give back too much of your profits, should things turn around.

I know right now its way too cold outside to be wearing "shorts", but these shorts still seem to be pretty hot!