Here's a lesson in staying short. A painful one. Last Halloween, my kids wanted me to go as Gumby. Heck, their wish is my command. We have a

Party City

(PCTY) - Get Report

nearby, and I'd seen the company's ads on TV that say it has the widest selection of costumes. The guy who runs it was on


and said this was the company's big season. Obviously the

Home Depot

(HD) - Get Report

of costumes. I'm headed there.

So we went. First we stopped in the racks for the kids. We diligently took the numbers of the costumes my kids wanted, all generic Darth Vader types of things, and in every case, they were out of them. With two weeks left to go until Halloween. No, they didn't expect to get them in on time. (Like they would be any good come November.) No matter what costume my kids asked for -- or even what costume the store featured -- Party City didn't have it.

My kids were screaming, and they are usually well behaved in stores. Then I decided that, at the least, I was going to get my Gumby. I pulled the number for Gumby off the rack and went in the back where the inventory is supposed to be. They said they didn't have Gumby in my size.

Maybe a larger size than I wanted, I suggested plaintively. Nah. Something smaller? Nope. I looked at the guy who was handling the inventory and asked him, "Who's in charge here?" I swear it was like that scene upriver in

Apocalypse Now

, when

Martin Sheen

visits some wild outpost at night and asks who is in command, and the soldier looks him up and down and says, "Ain't you?" The clerk shrugs his shoulders and says, "Beats me."

So I started looking around in the back where I wasn't supposed to go. Sure enough, they had a ton of Gumby costumes. All sizes. Right there. I pulled one down and took it. Fit perfectly. There were costumes all over the place back there -- on the floor, scattered in the wrong boxes, some unpacked from crates, some in garbage bags. It was pure chaos. I couldn't wait to get out of there. I vowed never to go back.

The next day I called analysts, figuring I had the short of a lifetime. And wouldn't you know it, they all loved Party City. They said it had the big mo, that it was the category killer, that it was going to take over the world. I put the short out anyway. My eyes had seen the un-glory of the coming of the collapse. As we got closer to Halloween, the analysts kept bulling it, and it kept going up. And I started getting squeezed. Two points. Three points. Four points. Next thing I know, I am on the

Owl Creek Bridge

with a rope around my neck, standing on a chair. Down five points on the short.

I put it out and put it out and put it out until I had doubled down. I am sweating bullets, but the stock starts coming in post Halloween hype. Right when the stock starts dropping into the black for me and I think I am going to make some money back and get out of the noose, a young analyst -- whom I will spare the embarrassment of naming -- slams it on the buy list. Strong buy. Super-de-duper strong buy. Strong buy with a cherry on top.


The chair gets kicked. I'm swinging in the breeze. I cover for no gain.

This morning, Party City announced it was in default on its credit agreement. The problem: inventory control. The company doesn't know where it is. Enough said.

James J. Cramer is manager of a hedge fund and co-founder of Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to