Herb's right as rain
today. The shorts have been taken out and shot.
For example, we played
to the long side. Oh, excuse me for using that word "played." How about we "long-term invested in Terayon for 100 points, except it happened in a couple of days." There, purists, is that better?
During that period the short interest went from about 2 million shares down to about a million shares as short sellers got stomped, rolled over and crushed. The move took place on the backs of the shorts.
Now there is no one left to sell Terayon to. Gilder has already recommended it so you can't sell to those people. The chart now looks crummy, so the chart hounds won't be back any time soon. Earnings breakout? Hello? That was never the point of the exercise. Most important, there are no shorts who need to cover to book a profit.
Same thing happened with
. They had pretty much been cleaned out after the
article didn't lay a glove on the company -- even though it should have, in retrospect.
You get these gruesome declines when all of the shorts have been taken out and shot.
Still one more reason to go right now with seasoned stocks. At least they have a bit of a net underneath them.
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