No Accounting for Taste

You can't play these accounting-irregularity stories anywhere but from the short side, the trader has decided.
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One of these days one of these accounting frauds is going to snap back and make someone a fortune. In the meantime, please, please, please keep those ideas to yourselves.

A few weeks ago, with the knowledge that

Waste Management

(WMI)

was going to announce the results of its investigation into the firm's second round of discovered chicanery, I had the bright idea of speculating on the stock by buying some calls.

I figured that if the company got a clean bill of health, I would be sitting pretty with a $30 stock. If it didn't, I would only be out the amount of my calls. (The August 25 calls at the time cost about 3/4 with the stock at 24.)

Sure enough, the stock drops another dollar by the time the news is about to come out. At this point the stock is too far away from the 25s for a payoff, so I average down by putting on some 22 1/2s. Now, on a position that I intended to have very little capital in, I had about $100,000.

And what happens? Just what the stock was telling you would happen. I got crunched on all the contracts when the news came out that things were even worse than anyone thought. I got suckered by more accounting shenanigans.

I blame myself, of course, not Waste. This stock has been terminally ill for so long that that I had no reason to believe it could just jump out of bed, like some sort of

Hard to Kill

character. I have promised over and over again to play accounting-fraud discoveries only from the short side. One day I will get wallopped for my stand. In the interim, I would have just coined money as over and over again a second and a third and a fourth shoe dropped. I'd rather bottom-fish in a

Just for Feet

(FEET)

.

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.