Cramer Knew He Had a Good One With Lucent

To Cramer, what matters is beating the psychology of the market.
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Short and cover. Short and cover.

Lucent

(LU)

reports a good number, not a blow-out number, not a super-de-duper number, but not a disgrace. And it goes up. It goes up because the hedge fund community was short it, in part because of all sorts of Y2K issues that still weren't addressed.

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To which I say "So what?" What matters is beating the psychology of the market.

Last week, I

said that Lucent was so over-shorted, so leaned against, that I didn't even care what it reported, I knew I had a good one going. (Shared it with the site, for the record.)

Lucent comes under two separate trading tenets I believe in: When too many people are short a good company, and Lucent is a good company, you can make money by taking the other side of the trade, and when a good company drops big ahead of the quarter, the risk is taken out of it. (I touched on the latter on our

TV show as a way to make money.)

These methods, as

Dave Kansas

, our editor-in-chief, points out, won't work for just any old company. A poor company that goes down ahead of a quarter doesn't mean much to me.

But for a company like Lucent, the risk reward at 56 was simply too great not to play.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Lucent. 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.