I often fail, and am no good at identifying short candidates because I am not good at timing.? I can spot a bad balance sheet easily, but often companies with the worst balance sheets soar during the bull phase of the market.? What that suggests to me regarding shorting is:

• During the bull phase identify bad balance sheets, but don’t short anything.? Make your list of future failures.
• Watch for when junk yields rise over 500 bps, then start shorting the names you identified.? There is a risk that you can’t get a borrow, but then buy puts if you can’t get the borrow.

So, maybe I could do shorting.? I’ve gotten a lot of names right, but timing is problematic.? You don’t want to short names too soon, or you won’t be able to carry your position to its demise.? But one name you could not short (using stock) was Tribune after Sam Zell took it private.? I wrote twice about Tribune, and for two reasons:

• Employees were coerced into financing the acquisition.
• The economics of newspapers are horrible.

As I have said elsewhere, it stinks that Sam Zell influenced Tribune employees to invest in a failing business.? It is usually a bad idea to invest in the company that you draw wages from, because it lacks diversification.? Beyond that, if the buyout by Zell had lasted five years, I could argue that the employees had gotten their money’s worth through wages.? As it is, after one year-plus, they got hosed.

It’s sad, and it may get sadder still, as other newspaper holding companies die.? Will the New York Times survive?? Maybe.? What I do know is that its economics are poor, and that they are borrowing against their last solid assets.? Does that sound like a recipe for success?