If You Trade Online, Invest in Funds or Hate Cramer, Read This Article - 500 Beiträge pro Seite

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If You Trade Online, Invest in Funds or Hate Cramer, Read This Article
By James J. Cramer

10/30/00 8:11 AM ET




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If you got into the stock game in the last four years, this article is about and for you. If you`ve opened an online trading account since 1996, this article is for you. If you got into a go-go mutual fund in the last four years, this article is for you. If you`ve sent me a nasty email about my column because it`s too short term or too trading oriented or too stupid, this article is also for you.

You`re lucky. You`ve gotten involved during a period of perfection. Every dip has been a fabulous buying opportunity. Almost every underwriting worked. Almost every tech company and tech fund made you a huge amount of money. Your predilection to be long was dead right.

You came in during a blessed period of wealth creation. You`ve seen companies that are just white boards with some scientists get billion dollar bids from huge, established companies. You`ve seen tech companies make you fortunes year after year after year.

You came in during a period when selling was always wrong. You came in during a period when guys like me, guys who are cautious and against leverage and who, periodically, do some selling, looked dumb as wood. You came in during a period when prudence was the enemy and cash was trash. You came in during a period when anything less than 200% long marked you a coward, a wuss and a loser.

You came in during a moment when the economy was picture perfect. The employment levels were always strong. The rates were always low. The Fed was always hospitable and inflation was always under control. The president was pro stock market and the guy who ran the economy had run Goldman Sachs and had been the greatest moneyman in the Treasury since Hamilton.

You came in when layoffs were an aberration and technology could solve everything. You came in when restraint was for losers and you made more money watching television than you did at your day job.

You started out when the Internet and wireless and fiber and optical and bandwidth became the be-all and end-all. You came in when you could buy anything tech and win. Every tip worked. Every whisper turned out right. Everything you touched made you look smart. You came in during a period when, if George Gilder touched it, it turned to gold.

You came in when it was more lucrative to be a blind amateur than a smart professional.

Now you`re in. You`re in big. And the circumstances have changed. The stocks that worked don`t work any more. Owning some tech is a ticket to the poor house. People are losing millions of dollars, millions! Now the people in the nail salon with their email bulletins seem like sweet little lambs ready for slaughter. Al`s back driving his tow truck. The brokerage firm repossessed Al`s island when JDS Uniphase (JDSU:Nasdaq - news - boards) and Nortel (NT:NYSE - news - boards) crashed. Those English-as-a-second-language students who were all trading? They`re swearing off the market. Stuart? He got fired for checking off on Mr. P`s purchase of Kmart (KM:NYSE - news - boards).

It`s brutal out there. Just brutal. What worked a week ago now kills you. What was awful a month ago is now great, until you buy it, when it`s bad again.

Guys like me, I`ve become the enemy to you. I liked JDSU and then it stopped working and now I don`t like it. That`s not supposed to happen. You`re supposed to be able to buy and hold forever. Oh, so now I don`t like Nortel? What kind of war criminal does that make me? I`ve suddenly turned on PMC-Sierra (PMCS:Nasdaq - news - boards)? I`d probably burn the flag and throw the apple pie in mom`s face, given half a chance.

To which I say: Welcome to the real world. In the real world, business gets bad. The business at Nortel gets bad. The business at JDSU gets bad soon after. And the stocks go down, not up, well ahead of everyone knowing it.

Welcome to the world the way it was before the Net boom and the individual traders and the online outfits where people coined millions. Welcome to my world, where there can be no religion and stocks are dangerous pieces of paper, not lifelong friends. In this world, if you make a wrong buy, a false move, you`re dead. In this world, running money is something only crazy people do, people who have so much faith and confidence in themselves that they can brave the playing field each day and still come home without exploding at their wives or husbands or children. Because the job is so hard.

Yeah, I can sit here and tell you that I think it`s getting more constructive and better as the economy cools, but you`re just worried about staying in the game long enough to see it. And I don`t blame you. I`ve been adamant that you should be off margin because I want you in the game. I don`t want you to get kicked out, as hundreds of thousands of you have been since March of this year. I want you to understand that I switch on stocks on a dime because if I didn`t I wouldn`t have a dime. Sure, for four years that wasn`t the case, but it sure is now.

Every once in a while I get a note about how I blew October 1998 and I say to myself, "Yep, this is another one of those guys who got in during the halcyon days when any selling was wrong and making a little money was sinful because there was lots of money to be made."

And I laugh now. Because I know this game has gotten real hard, where you have to game things like how many people are short a really crummy stock that the public loves, knowing that it`s going lower but could be squeezed up in the interim. I thought it might have turned that way in 1998 if Long-Term Capital went under. But instead the Fed set in motion the greatest liquidity boom, the one that made it so that the dip turned out to be the last great buying opportunity, the real inflection point for idiot wealth to be made.

I now increasingly sense that I`m being read mostly by professionals, but not because that`s who wants to read me; it`s just that that`s who is still left in the game. The amateurs, the margined fools who thought that debt was the key to riches, aren`t reading me much anymore. They aren`t reading much of anything anymore. They got blown out of the game. I am as grateful as anyone to have had those years under my belt. They were a terrific boost to the bottom lines of millions of Americans.

But this is a new kind of market. It`s not for everybody. It`s much harder, and it`s one where knowing how to sell and how to short will make you more money than knowing how to buy and how to hold. It`s an unforgiving market that may simply be too hard for many people who got into this game during the virtuous period. That`s no sin. Maybe it`ll get easy again and everybody will make a ton of money just picking any old tech stock and riding it to the stratosphere.

But I wouldn`t bet that way.

It`s a new ball game now, but it looks mysteriously like the one that I stared at when I got into this game 20 years ago. Treacherous, hard to fathom. Needed a ton of luck.

Sound familiar? It should. It`s what you see on your screens every day.

We can figure out this period together. I`m confident we can. But understand that the easy money has been made and is no more. And if you keep waiting for it to come back or if you criticize guys like me for being proactive in attempting not to lose money, I have no sympathy for you. The period you got in was the aberration.

Now we are in the norm. And the norm is one rough business.



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James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer`s writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to send comments on his column to James J. Cramer.

[Fra Diabolo]

inv.007 liest Du Cramer auch regelmässig?

ich habe den Artikel gestern auf RB gefunden und den Eindruck, dass auch C. nicht so genau weiss, wohin die Reise geht...

mal spricht er von seiner Checkpoint list -

heute geht ihm die Düse.

Aber jetzt ist erst mal Winter. Und das Wachstum in USA flacht viel schneller ab als erwartet. Bald müssen die an die Zinsschraube.