Staying diversified is just as important on the way down. Shorting homebuilders may seem like a sure thing, but crap like government intervention and desperate mutual fund managers can get in the way of a profitable short position.

So I added XOM as a new short yesterday, after hours at $77.95. Exxon has a LOT of meat left on its bones. And I don’t see how they can maintain that valuation with oil demand shrinking and gas stockpiles overflowing.

My basket of shorts is getting more diverse, still needs some work: financials (GS, JPM), homebuilders (TOL, CTX), commercial real estate (SPG), energy (XOM). I don’t have a tech, but am OK with that for now. I also own two bear mutual funds which provide good diversification, as noted here.