This column was originally published on RealMoney on Nov. 18 at 9:36 a.m. EST. It's being republished as a bonus for TheStreet.com readers.
You don't know the pressure, unless you've been there. You're running a hedge fund, a darned good one, not like those lying or underperforming rascals you keep reading about in the
The Wall Street Journal
, where every hedge fund seems to be created equal in deviousness and stupidity, except if it is related to George Soros.
That means you are up maybe 8%-12%, and you are thinking, coming into November, "Maybe I'll just lock down, maybe I'll just go to the islands for the next two months because I am beating everyone."
Of course, you are beating everyone for one reason, and one reason only: You know how to short well. You shorted the financials and the homebuilders into the
shenanigans. You shorted tech until the fourth quarter, the preferred way to do things every year. You bet against big pharma, maybe hedged with big biotech. You bet against the semiconductor equipment bow-wows and you shorted the cell-phone component makers against a decent-sized long in
. You went long
against a short of
. You may have missed oil on the way up, but you have been short it ever since those big
prints that stunk up the joint, and you bet against the integrated oils with a long in the OSX or
And you made relatively good money while everyone else floundered.
Book the year and go home? Nah, got to keep something on, of the shorts that have made you so much money this year.
Then you start smelling it. It's in the air. A trend change. The
go down on a silly Merrill downgrade, but they don't stay down for the count. That silly Cramer comes on television and says buy Texas Instruments, and, fittingly, it goes down first and he has to take his lumps for hurting people, but then he says double down and it works! And works big. The oils roll over and the money spills into tech and the financials. We get a new Fed chairman who seems less set in his ways than the last one. We catch a cold snap and the
short, such a perfect one, backfires because it takes share from
, but Eddie Lampert's buying in so much Sears that maybe it doesn't matter and the bar's so darned low anyway, who cares?
( GP) gets a bid and your small industrial shorts start crushing you. The Japanese markets rally; no one cares if
going to go bust, they just buy
. Marvell and
blow the numbers out while
gets jiggy with
( SFA) and your media short, the perpetual
stinker, stops working. Holy cow, next thing you know
boosting its dividend, making it cheap in one early morning move, and
getting boffo orders out of China -- during expiration week, no less.
And you know what you have to do. You know that all of those long-side morons that you passed months ago now are suddenly putting on percentage gains in gobs. You have singled and doubled yourself to high single digits, and they are grand-slamming their way up to you.
What do you do?
I tell you what you do:
You panic and go long.
You cover the shorts. You say, "Give me some bulletproof exposure -- some
Procter & Gamble
, maybe some more Qualcomm and
( MOT). Take some
; Buffett just did. Oh drat, cover the short in Sears; if Eddie does anything better than the high teens in comp store
, that sucker will go back up, too."
That's where we are, right now. That's the snapshot of what is going on in hundreds of very good funds that are seeing their very good years go the way of being just OK because of the fourth-quarter tech rally and its broadening to other sectors.
How can this be happening?
Because it almost always happens. Because that's how the market works. Because, alas,
things aren't all that bad and stocks have done nothing for six years as real estate exploded upward. Now real estate is dead weight and stocks are where the action is.
How do I know this last point, you might ask? I have an edge, an edge that may be the most perfect, legal edge in the world: In a media firmament that thought everyone was bored with stocks and could not possibly care about them, I helped develop a TV show -- "
Mad Money" -- that is just about making money in stocks, plain and simple. Everyone told me my timing was all wrong, that no one was interested, that the market no longer possessed anything except the power to bore and that you only watched
if the battery on your remote died while you were zipping past the business channel in search of
And the show's a hit because -- guess what? Stock are fun again. That's what happens when you are making money in the market: It's fun.
That's how I knew.
I'd cover before it's too late. People are caring again. They just started caring, for the first time in six years. They won't stop caring in a day or two. It's not their nature.
You may not like the market, but I have to tell you, I believe the short side could be poison here for a time.
Back at my hedge fund, I used to say to my team, "OK, listen up: We've made too much money on the short side this year. We are done." People would greet that pronouncement with looks that asked, "How could that be possible?" And I would say, because it is.
That's where we are right now. Take heed.
Speaking of "Mad Money,"
check out the scoreboard. Tell me you don't wish that every brokerage house did the same for its people. In an era where everybody loves to dodge accountability because nobody likes to see the warts and the sweat, we are going the other way.
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At the time of publication, Cramer was long Yahoo!, Qualcomm, Sears Holdings, Boeing, Microsoft, Procter & Gamble, Motorola and Wells Fargo.
General Electric owns CNBC, for which Cramer is a featured commentator.
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