These Days, Gravity Fails and Troubled Stocks Rise
By James J. Cramer
12/23/2003 01:47 PM EST
2003 has been tough for the shorts.
Take-Two's troubles didn't stop the buyers.
We're in a benign mode -- remember it for later.
The gulf between what should happen and what ultimately does happen got very wide in 2003, much wider than in intervening years. Stocks that should have been killed on what looked to be fatal news came right back to life. In past years, that kind of Lazarus action was unimaginable.
Because of that gulf, shorts had a very tough time in 2003.
Let's take Take-Two Interactive (TTWO:Nasdaq - commentary - research). The bears turned out to be totally right about all of these accounting problems this company had. But it didn't matter. People wanted to own the darned stock.
In 2001, I think it wouldn't have made it out alive.
Or take Hollinger (HLR:NYSE - commentary - research). I don't think this stock would have traded up on Conrad Black's problems, it would have traded down! But not this year.
Or Target (TGT:NYSE - commentary - research). The company just reported another disappointing month. A real stinker, and it is the second-most important month in the year. The stock? It was up on the news.
Sometimes the most important thing to consider when you are trading stocks is to recognize whether we are in a benign mode or a vicious mode. For much of 2003, after the Iraqi hostilities, we switched to a benign mode. We remain in one now. It is where indiscretions like the fact that Ford (F:NYSE - commentary - research) and General Motors (GM:NYSE - commentary - research) make no money selling cars doesn't mean much to the buyers.
It is where Baxter (BAX:NYSE - commentary - research) can screw up for the umpteenth time, and people still give it the benefit of the doubt.
It is when Pfizer (PFE:NYSE - commentary - research) pays a huge amount of money for stock everyone is short, because the biggest accumulator of the stock is about to unwind his positions, and it seemed like a layup trade. It is where Research In Motion (RIMM:Nasdaq - commentary - research) reports a decent number and it goes up 20 points.
Soak this period up. Remember it for when things get difficult. In fact, bookmark it somewhere. We will need its karma at a later date when nothing works and everything is interpreted negatively. |
