Maybe this will help..
Subject: DELL
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To: Flamethrower (29577 )
From: Gabriel Dubois Wednesday, Feb 11 1998 10:16AM EST
Reply # of 29617
Flamethrower, not wanting to create any antagonism - since you're about the only bear left on this thread and we don't want to drive you away - but I thought you'd enjoy reading this article from street.com that I copied below. The article is from July, 97, at the peak of DELL's run last summer.
Wrong!: Cramer Excoriates the Growing Army of Dell Shorts
7/30/97 7:00 AM ET
By James Cramer
The next young turk who comes into my office and tells me to short Dell Computer is going to get his lungs ripped out. I can't tell you how many times people suggest this to me with a straight face, like they know something about price or valuation that I don't.
Tuesday was typical. A terrific trader visited, guy from my hometown, no less, which automatically earmarks me for a sucker for whatever wares he might be peddling. We talk Flyers, we talk Phillies, and now I am really on board, although the '64 collapse of the latter would have been strictly antediluvian for this chap.
And then he hits me with it, right in the kisser, when I least expect it, right when I am thinking I like the guy: "Don't you think Dell's a great short?"
Barely hiding my scowl, I look up from my screen -- which, of course, is frantically scrolling my Dell August 65 call position, on the move after a couple of days stall-out -- and say, "whadya say?" The "whadya" was anything but neutral.
"Dell, aren't you shorting it here?"
"Look," I ask him, "you know something about Dell I don't? You got some sort of edge?"
"No," he says, "it's just that it has had such a run and it is so high that it is ready for a fall."
"Oh that's just great," I say. "You've really got something proprietary there."
But he persists, thereby making me believe that he couldn't really be from my hometown, "How can you not be short it?"
I can't, I explain, because I am too busy being long Dell.
"But it sells at an astronomical price-to-earnings multiple," he pleads.
"So what," I say. "So did Cisco some $47 billion in market cap ago. So did Tokyo for a dozen years. So what, I don't give a &^$%74754654$#$%$ about valuation."
When it blows up, he says, it will be a monster hit.
Again I respond with "no edge." Dell is a fundamentally sound company, I tell him, "when it blows up it will have to blow up without me. I use a Dell. I like it."
"But when it blows up," he says, by this time clearly overstaying his welcome and getting in the way of my buying more Dell calls, "millions will be made."
One more time I explain to him that unless you actually had an edge, you knew something about Dell's competitors that Dell didn't know, price cuts, inventory bloat, whatever -- or you knew that Dell PCs cause cancer -- the short would kill you before it would make you a dime. Shorting on a price basis is the quickest way to the poorhouse.
And I ended the conversation.
As soon as the young Philadelphian left, it hit me what this Dell short stuff is all about. It must be some sort of bogus macho thing, something that makes these younger guys think they are Errol Flynn or Brad Pitt, or whoever they want to be these days. They just can't get enough juice from the long side, so they've got to prove their mettle at something more daring, more hard core. As I tell my staff, "It's like some tough young thug saying, I have had enough of Juvenile Hall, I gotta get to the big house. The big house of pain."
"Sing Sing of pain," one trader said. "Rikers of pain," said another. "Brooklyn House of Detention," said a third. And we all laughed as Dell crashed back up through the $80 mark, sending more than a handful of young traders scurrying to serve a few more points of hard shorting time...
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