Crow's Mouth(2): Do you believe in the fundamental analysis?
Again, let's share Jim Cramer's story. ------------------------------------ One day, after I had been trading alone for a while, I met an analyst who told me he felt that Noxell could be in for a disappointing quarter. As a young hedge fund operator, I jumped at the chance to show my shorting colors. After doing my homework, I started shorting Noxell gingerly. I short sold 10,000 shares at $50 andf then said I would short my next tranche of 10,000 every half a point up. The market quickly obliged, and two days later the stock was at $54 and I was short more than 80,000 shares. .... At $58, now up 8 traight points from where the stock was trading when I started the process, I was short 150,000 shares. On Tuesday, Noxell jumped to $60. To heck with the analysts, I said to myself, and I started calling anyone, everyone in the business to ask if they had heard anything positive about what the heck was opropelling Noxell. Nobody had one. The very next day the stock traded through $63. Now I was asking traders at the big stock houses what was happening, calling all the honchos who made markets in Noxell asking them what they are hearing. As I was making these desperate calls, I saw the stock shoot through $64 to hit $65. Finally I broke down and called Karen Backfisch (The future wife of Jim Cramer). I was too embarrassed to tell her that her boyfriend was shorting the darned Noxell. But I know I could not figured it out without her. Karren tapped into her nextwork of short sellers. These guys know where every short was buried; they probably even di some of the killing. The news I got chills me to this day and remind me always how tough being short can be. She said, and I will never forget these words: " Some little joker hedge fund's been shorting Noxell and now the traders are all spreading the word to anybody that Procter and Gabble is going to bid ninety dollars for the thing. He is gonna capitulate and buy it back. They are going to put the little guy out of business, or force him to cover. Get on board!" Of course little joker hedge fund guy was me. I couldn't stand the pain any longer. Not one second. I called a major trading desck and told them I had 250,000 Noxell shares to buy. With the stock trading at $64, I would be willing to pay up to $69 for it all. Anything to take away the pain. One hour later, battling a collecting short squeeze of my own making, I took the niggest loss of my carrer. Noxell $69; Cramer zero. That's right, I paid $69 to bring the whole position in. I was relieved, I could breathe now. But the loss was simly unfathomable. Crushed, Just Crushed. Not long after I covered, Noxell reported extremely disappointing earnings. much worse than I expected. The stock plummeted right back to low $50. Noxell was later acquired by Procter and Gamble---the rumor has gravitas, but the bid came at a price not much higher than I covered. -wang-lao-wu(钻石王老五) 2007-4-21
Crow's Mouth(2): Do you believe in the fundamental analysis?
market can be wrong, but it can be wrong for longer than your money can last.
-hilo(still mellow) 2007-4-21
shorting is so dangerous!
-diaocaobi(diaocaobi) 2007-4-22
Going long is not dangerous! :-)
-wang-lao-wu(钻石王老五) 2007-4-23