Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Do SIRI buyers exhibit Cult Tendencies?

|Includes: Sirius XM Holdings Inc. (SIRI)

It has only been 4 years since the beginning of what would become the Great Recession, with millions losing their homes and jobs. What I heard most often on "my street" was buy real estate now. At the height of the real estate boom, even my waiters were heard discussing flipping for profits, and everyone was an expert. Even when I protested this "buy at whatever cost" with clear arguments and fancy graphs, I was clearly looked at as the loser at the party. As time has passed, we know how it all ended.

Now Sirius Radio has the same fanatic following that real estate had 4 years ago and in the long run, will meet the same fate. Here is my theory about why:

When the market tanked in 2007 and 2008, many lost their life savings. Companies like AIG, Bank of America, Ford, GM and others all traded below $1/share. Perfect penny stocks, but with name recognition. All companies in this group are up quite substantially, including Sirius, which traded at $.05 at one time.
It seems like you are buying a Mercedes for Toyota money. Its the mother of all sales. Its better than a going out of business sale. The problem is, you ARE buying a going out of business, business. SIRI may not go out of business tomorrow, but it will be slowly replaced, and the stock price will continue to falter, as it has over the past 5 years, and more recently this month.

Listen to any mainstream investor on the internet today, and talk about SIRI, and you will get only one answer. Great CEO, subscriptions are up, Howard Stern is leaving blah blah blah. You mention that debt/equity is over 7, I dont hear you. Consumers have newer choices for radio programing, I dont see you. Subscription prices going up, flagging economy, but upbeat projections.

"When nobody is short, its time to short" WIth a P/E of over 70, there are MUCH better places to invest. And the market is beginning to take notice. SIRI is down over 15% from its 52 week high almost 2 weeks ago.

Would you buy Blockbuster today? Probably not. Your answer as to why you wouldnt, is the same with Sirius XM.  Crumbling distribution channels and cheaper more effective methods elsewhere.


Disclosure: Short SIRI since God said "let there be light"