Let's talk about the best trade I didn't do last week. On Monday Hong Kong took it on the chin, as part of a worldwide pasting of that once-exciting bourse.
Didn't get any better on Tuesday, when the
got trashed once more and had now declined substantially from where it had been a few weeks before. There was talk that a new East Asian crisis lurked.
On Tuesday night I flew to San Francisco. Early Wednesday, while watching
TV -- Michael, call me, you guys are much better than your TV shows -- I saw a headline about
saying that East Asia was due for another tumble.
simultaneously called me and said a lot of hedge fund guys he knows and some currency pirates were beginning to take big short positions in Hong Kong, betting on a quick -- and total -- unraveling.
Immediately I thought about shorting the Hong Kong Webs, a device that mirrors the performance of the average, or getting some puts on that would benefit from a crash through 10,000 on the Hang Seng. Mobius, currency, hedge guys, hey, how can they all be wrong? Lay-up. No, make that slam-dunk.
I priced out the puts on
, and thought about taking down a slug. Wager a couple of million against this teetering market. And then I said to myself, whoa. Mobius, who is even more of a "faceman" than people think I have become, is telling us it is going lower? The guy who got his head sandblasted by those markets last fall? He's now giving us the big heads up? And hedge funds and currency guys are letting us in on their best trades? Did they sign up for the Salvation Army when I wasn't looking? Have the big bad money guys turned altruistic?
I don't think so.
I told Jeff, "This is a classic bear raid. Everybody gets short and then puts out the word. I'm not biting. I'm not buying puts. If I had my druthers, I should take the other side of the trade."
Alas, I didn't. I just went to the sidelines. But had I bought those puts or shorted that market, I would have stood a better chance coming out alive from the Sunken Road at Antietam!!
Remember, when you get the call to do something, unless it is from your mother, think, "Why am I getting this call?" Once you have figured that out with a maximum amount of skepticism, then think about placing the bet. And if you want to be a real contrarian, if you don't trust the guy making the call, maybe even take the other side.
Friday was the first day of the summer. The volume dropped dramatically. That means going forward, look out for Friday bear raids. As many of this year's winning portfolio managers will be able to take off more Fridays than if they were losing, you can bet that the bears, who have to keep working, will perform a little of their reverse alchemy in the futures pits. Be careful out there.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. 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 welcomes your feedback, emailed to