Como se combate o populismo? "Com eleições", responde Fukuyama

[Ulisses Pereira]

"Academic Questions Don't Apply to Taser"

By James J. Cramer
RealMoney.com Columnist
11/9/2004 9:22 AM EST


"You're short Taser (TASR:Nasdaq - commentary - research). You got stung by Monday's announcement that airlines might use Tasers to combat terrorism. You are at your wit's end. The stock won't quit. What do you do?

I'd invent something better than a Taser. Maybe a gun that shoots around corners. Or a gun that throws a stream of glue that paralyzes the victim for 60 seconds while you get the cuffs on him. Or perhaps something stuns but causes no lethal interaction with a pacemaker. I don't know.

But you can't just hope that the stock will go down. Not when you have these promotional honchos and airline after airline ready to cooperate in a press release on the adoption of Taser; they just might be too much to handle at this late date in 2004.

Monday's stunning $250 million market cap increase for Taser on the Transportation Security Administration approval for a potential Korean Air trial of Taser reminds us all how devastating the short game can be. Last night on "Kudlow & Cramer," Michelle Caruso Cabrera did her level best to try to probe the Taser CEO about whether such an increase on the news was absurd or not. Close readers of this column know that I regard the so-called "irrational" as "rational" when it comes to the market's inability to process information these days. Heck, I thought the logic behind it -- "bullets penetrate aircraft fuselages, Tasers don't" -- could be worth maybe 10-15 points for the darned thing. In fact, I was surprised by the muted reaction that the news brought. I figured more people were still short Taser than obviously are.

We are so conditioned by academics who have never bought a bond, let alone a stock, to think that the market's a rational place. Each time Taser has a "shocking" reaction to news, the rationalists try to poke holes in the move. Give it up, that's not what people want. Far better to just say, "OK, Taser's up real big. Unless there is more news from the company, it probably will slink back down, but I wouldn't put it past these guys to have more news."

The market only processes information correctly when there is one way to trade, the long side. As soon as you allow shorts, you change the dynamic dramatically because the mechanics of shorting -- you actually have to locate the stock you are going to sell before you do so, even though it is a short sale -- make any stock that is heavily bet against an instant long.

The reason this is so can be explained over and over again to people who simply don't get it. Crowded shorts are the equivalent of nitroglycerin. They can explode at any time on the least bit of provocation. So, for those who play this game, those who insist on a "rigorous" approach to valuing a contract, my suggestion is simple: There's no time like the present to go back to school either as a student or a teacher. That way you won't hurt yourself, and the rest of us can go make our money in peace, without the hectoring about what should have happened instead of what did happen. "

(in www.realmoney.com)