Continuing the equity build-up...selling WaMu:

Sold £10/cent of Washington Mutual...mid-price of the stock was
$43.29...so selling ~£43,000 worth of stock.

Why? Well 1) I dont like the smell of the US housing market, read
Roubini or the Big Picture for some good commentary on it, it seems to
me like the US is way over-leveraged, far more so than even here in the
UK. Whilst the Bank of England slowed the boom by taking rates to 4.75%,
then brought it to a halt without letting it drop by taking rates back
to 4.50%, it seems that with the more "exotic" loans available in the
US, there is more potential for Joe Public to struggle to meet payments,
even if the FED does try to cut rates to support the market (negative
amortisation, optional payments, etc).

2) Hat tip to Mish for this awesome post on how lending
guidelines were tightened by the regulator this weekend...this has HUGE
potential to massively slow the housing market since fewer people will
be able to get mortgages they cant afford to buy a house that is
over-valued.

3) I also think that as this "crash" unfolds, we will start seeing
class-action suits targetting banks/brokers who sold them mortgages they
couldn't afford, in a similar way to the lawsuits we saw on the back of
the dot-com crash.

So then it falls down to: Who should I short? WaMu seems an obvious
example, being the largest pure-play mortgage bank out there. I'm sure
that despite securitisation, they will still have risk on their balance
sheet, and also if the above scenario unfolds, the revenue slowdown
could be drastic. Also having a close look at Countrywide, but this
short will do for now. And also interested in the Mortgage Insurance
players, such as PMI/MGTC/Radian, but don't feel I know enough about
them yet. Any thoughts appreciated.