The Short and Winding Road

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"Please tell us your favorite shorts," says one email Monday. "Could you tell us what puts you have?" asks another. "How do we short this market right now?" asks a third.

Yep, the market's turned bad and everyone wants to make a killing on the short side. While I am more than happy to share with you the mechanics of how to go short and protect yourself from unlimited losses, I'll be darned if I am going to give you my hard-earned list.

As I am about 10 times more open than the next fund manager about what I do for a living, please forgive me if I don't play that part of my game with an open hand. An incident revealed Monday tells you why. For much of 1995 and 1996 I was short a little cell phone distributor named

Cellstar

(CLST)

. This short seemed to have everything going for it: revolving-door chief financial officers, missed numbers, a banker that was less than enthused about its own offspring.

To make things even juicier, the wholesale cell-phone business is about as hard a business, with margins thinner than a microchip, as they come. The word on Cellstar was that it had all the wrong inventory; I figured, how could I lose? Maybe I would even hit the real jackpot, with rumors of a secret warehouse of cell phones somewhere in East Asia turning out to be true.

I battled and battled this short. I was not alone. In fact, during this period so many of us were battling it that I think the company got fed up and decided it would take us on, no holds barred.

At least that's what it looks like from the announcement the company made yesterday that the

Securities and Exchange Commission

is looking into the way it handled its reporting during the period that I was shorting the stock.

I made a little money, but eventually got blown out, along with others, as the stock rallied on what looked to be better-than-expected numbers. The SEC suit had me wondering whether those numbers were really and truly better than expected.

No matter. I can't file a class action suit on behalf of short-sellers. The law doesn't work like that. All I know is that when you take a company on from the short side, the rules are simply not the same as on the long side. The company is your enemy, a powerful enemy, other shorts are your enemy, as they may cover and ruin your short, and the market has been your enemy, because other than a few times in the last 16 years, it's been right to be long.

With enemies like that, why share ideas that will definitely come back to haunt you even if they were right, as they were at Cellstar? That's why I don't tout; I try to show you what I am doing and why I am doing it, but not recommend to you what to do. I want to be your window into the game as it is played on my level.

I don't want to be your short-selling adviser. That's a job I wouldn't wish on my worst hedge-fund enemy.

Random musings

: Make it as tough as possible on us:

Buffett

blows out his zeroes, but buys

General Re

(GRN) - Get Report

? Interest rates are near their lows but might lap up the

WorldCom

(WCOM)

deal? Holy cow is it getting hard ...

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com.

At the time of publication the fund was long WorldCom, though positions can 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 by sending a letter to TheStreet.com at

letters@thestreet.com.