Made in China = Short Mattel Inc. (MAT)

Unless you've been hiding in some remote cave or maybe at a Starbucks with your pal Bin Laden, then you most likely heard that Mattel, Inc. (Public, NYSE:MAT) announced their 3rd major recall of lead painted toys made in China.

This time they are recalling 800,000 toys, including 675,000 accessories for one of the company's biggest sellers, the Barbie doll. Mattel's last recall, announced on August 14th, accounted for around 19 million toys. The toys either had excessive amounts of lead paint or had small magnets that could easily be swallowed by children. On August 1st, Mattel's Fisher-Price division said it was recalling 1.5 million preschool toys featuring characters such as Dora the Explorer, Big Bird and Elmo because of lead paint. That action included 967,000 toys sold in the United States between May and August. Who doesn't like to eat a little lead paint off a Big Bird or Elmo, I know I do?

In June, toy maker RC2 Corp. voluntarily recalled 1.5 million wooden railroad toys and set parts from its Thomas & Friends Wooden Railway product line. The company said the surface paint on certain toys and parts made in China between January 2005 and April 2006 contained lead, affecting 23 retailers.

In July, Hasbro Inc. recalled Chinese-made Easy Bake ovens on reports of second- and third-degree burns to children. It was the second time the iconic toy has been recalled this year.

My friends, its official, it's not safe to leave the house or play with your toys, never leave your bedroom again.

The Masters latest theory, any toy company that has their toys "Made in China" = Short the Stock.

It's that simple. Take out a few short positions, buy a few puts, because all these clowns are going down in flames, just like how you used to set your Star Wars action figures on fire. Of course if you had this Boba Fett figure and didn't paint it or burn it and make your own 'crash-landed-boba' you could sell it for over $3,500 on eBay (I'd trade every stock I own for say 5 of those).

Chinese toy makers and officials are pissed and scrambling because they don't want to lose any more money and my friends, the hard times are coming for them and the American toy compaines. The European Commission said today it may ban Chinese-made goods deemed unsafe unless China demonstrates it is effectively dealing with dangerous products.

The European Union is not satisfied with the Chinese government's response when it was alerted by the EU about dangerous Chinese-made goods, said Commission spokeswoman for consumer issues Helen Kearns. She went on to say "'Frankly, if we don't see a very substantial improvement by the end of October ... then we will look again' at the possibility of bans. Our first preferences is not bans, our first preference is to work with the Chinese."

Wake up call for America, no one is going to buy any toys. Unless you have a death wish for your kids to which I say - to each their own.

Have you seen all the discount tags at your favorite local toy department? DISCOUNTS, DISCOUNTS, DISCOUNTS!! That's because no one wants them, and parents would rather feed their kids potato chips then lead chips from Barbie or a Dora doll. Then again, would you eat lead chips off of Barbie? No I didn't say Tequila shots. Get your head back in this story please.

So here are some short plays:

Hasbro, Inc. (HAS)

RC2 Corporation (RCRC )

JAKKS PACIFIC INC (NasdaqGS:JAKK)

Walk into Toys R Us, pick up a toy, if its made in China, find out the company that makes it and either short the stock or don't go near it.

Will this crisis blow over?

Of course it will, America is too lazy and cheap not buy crap from China, it's just a matter of time. Get on the band wagon Masters, 'MADE IN CHINA' = Short the Stock. It's so much fun, you can get your kids into the game!

Once all these stocks hit rock bottom, then we'll buy them all back and play the next game.

Article written by: Frank Lara Jr.
Article posted on: September 5th, 2007

Disclaimer: The Author does not have any positions in any of the securities mentioned in this publication.