Buying Into the Rumors

The trader snorts at the gossip on the Street about hedge-fund trouble. What's more, he's buying.
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No, some big hedge fund is not going under. No, there is not a fire sale going on in the hedge-fund world. It is the mutual-fund world that is imploding, not the hedge-fund world. In fact, my friends at hedge funds around the Street seem to be faring quite well.

We think that when we hear that there is systemic risk and panic like this we have to do another round of buys. We don't like to do it, but we have to because it is just too darn hard to buy them once they turn. We figure that there could be a redemption problem at a mutual fund, but that it will be met and we aren't sweating it.

We are adding another 10% of our cash reserves. Have to. Have to have them for the whoosh up after we hit the level we hit last week on Tuesday. You won't be able to buy them when they hit that level because they will blip right back up and you will have to pay up three.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. 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 at

jjcletters@thestreet.com.