Lehman Brothers Holdings, Inc. (LEH)

This bank is a ticking time bomb, and who knows how many pounds of explosives lay underneath it. Lehman was in this position once before during the LTCM blow up. They had a huge amount of problems and hid them, hoping everything would work itself out. Luckily for them, it did just in the nick of time. But this time they will have no such luck. The credit crises is not over...it is not even half through yet. I estimate we're about 40% of the way into this thing. Lehman is hiding things again, but this time they won't be able to hide them until a recovery. I'm shorting this stock with real money. They will eventually have to write down all the debt and derivatives they were caught with. They were pushing them through like all the other banks, but also like them they got caught without a chair when the music stopped. Now they have what I believe are billions and billions of the very worst loans (2006, 2007) that they purchased to flip but were unable to find a buyer and couldn't unload. They will have to write those down. So far, they have not. While all the other i-banks are falling, they want to project themselves to be like Goldman Sachs - too smart to get into the mess - but they are not. They're hoping the whole thing blows over, and it won't.

Warren Buffett warned that the problem with such a fantastic party like we had at Cinderella's mortgage ball over the last five years is that there are no clocks on the wall. He said the drinks taste a little better, the girls get a little prettier, and so you stay for just one more dance. But eventually midnight hits and everything turns back to pumpkins and mice. Lehman is caught holding a lot of pumpkins and mice, they're just trying to hide it a little while longer than everyone else.