(Update July 17) I went to Fazoli this evening to take some food home. Surprisingly there are many people again. Another sign average people are feeling the pinch in this recession.
(Original) Fazoli has been my favorite lunch places for a while. Recently it got more and more crowded during lunch time. This seems strange because in current economy recession, one would think people would bring their own lunches more and eat less outside. So, what’s the reason?
Fazoli did a smart premotion. The promotion was every Monday they have this Meatball Madness special, for $2.99, one can get the spaghetti with meatball (3), plus garden salad. So every Monday Fazoli is always crowded during lunch time. More recently (a week ago), I noticed they changed the promotion to $3.99, but it’s available everyday. Now Fazoli is always crowded during lunch time in weekdays. Another sign the economy is in trouble. People just want to squeezze every cent in the wallet.
Short sellers
Yesterday SEC started restricted naked shorts on Fannie, Freddie and some primary brokers. Read this from Bloomberg for more details. Arguably some people think it’s the short sellers (including naked shorts, and rumor spread by short traders) took down the Bear Stearns, that’s why the regulators stepped in to help prop up Fannie etc. But that’s just one side of the story.
Today, after Wells Fargo (NYSE: WFC) reported better than expected earning, its stock shot up more than 30%. In other words, the shorts got killed on this one. I think the short cover is part of the reason for big pop. So the lesson learned for the shorts: never short a fundamentally good stock. What is fundamentally good? My simple rule: if it is owned by Buffett, it may be solid.