The Trader Goes Truth-Seeking

When I was a frizzy-haired pauper of a journalist just out of college I took a job covering murder and mayhem at the Los Angeles Herald Examiner, a scrappy Hearst paper that doesn't exist any more. I took the job because I wanted to change the world. I took the job because I wanted to tell the truth.

Fortunately, I had an editor who knew better -- Don Forst, who became a boss and a friend immediately. Don felt terrible for me, coming out of Harvard as president of The Crimson, full of ideals and desires to make things right. He felt terrible because he knew what was coming my way: massive disappointment and disillusion. Don, who later went on to manage the Village Voice, filled me in on the two principles I never forgot: Journalism is commerce; truth is saved for novels. Journalists write because it is a business. We can't always get at the truth because the law protects the truth from coming out through journalism because reporters have no subpoena power, so people don't have to tell the truth to journalists. Sources can lie and never be exposed. Subjects can posture and get away with it. It's wrong, but journalism is what it is, a severely limited form of truth-seeking. So if you want truth, he said, go read some great British novelists.

This blast of personal history is relevant because I am about to give you the truth by using its natural medium: fiction. I have now read every single (thanks to the Web) interview with every money manager that has transpired since last week's obliteration and I know that Don Forst's wisdom is more true than ever. The interviews all have the same cast: Everything is fine, there are plenty of bargains, we are staying cool, picking among the rubble, we haven't lost any money and it is business as usual.

Wrong! What a stinking pile of fresh cow manure! (We own a couple of longhorns, so trust me on that repugnant analogy.)

So, without further ado, here is a fictional interview with "Buzz" Gould, a portfolio manager at a fund that just went from plus 47% to minus 14% in the four weeks since March 10. He has just had his worst week ever.

(This fictional interview is a worthwhile companion piece to Brett Fromson's unbelievably honest and fantastic TSC Streetside Chat with Robert Wilson, a legendary investor who continues to know more about investing than just about everybody. You must read this interview.)

---

Cramer: So how was the week overall?

Buzz: This was a week of massive opportunity. Stocks came down from lofty levels and we had plenty of cash and we put it to work in our favorite names which we expect to rebound immediately. In fact, this may have been the best single buying opportunity I have seen since I got in this great business.

People were coming in here with idea after idea and I couldn't wait to put it to work with all of the cash I had and the cash that was coming in over the transom. I couldn't be more pleased. We bought Vignette (VIGN Quote) and Sycamore (SCMR Quote) and MicroStrategy (MSTR Quote) and Microsoft (MSFT Quote) and Motorola (MOT Quote) and a bunch of others at fabulous prices. A great week, just a great week.

Cramer: Gee Buzz, that doesn't jive with what I know from the inside of your firm. My understanding is that you were invested to the hilt coming into this week and that you had to sell some things to buy others.

Buzz: Well, you know, that is true. We run 100% invested around here, so you are right, any buying we had to do we had to sell first.

Cramer: So how can you regard it to be a good week if your fund lost 25% of its value, even more than the Nasdaq?

Buzz: When I described it as a good week maybe I was being a little glib. But the company is very much intact and we are not concerned about the losses.

Cramer: If somebody came into your fund at the top in March, he's seen his assets more than cut in half, right?

Buzz: We are a long-term fund and it will always come back. Dollar-cost averaging is a great method of investing.

Cramer: But haven't a lot of those people just been completely creamed and, in retrospect, shouldn't you have been selling when you were buying?

Buzz: Sure, hindsight is 20/20, but understand that we are a "long-only" fund and we are not expected to have any cash on hand. You can't just say, "Hey, time to raise cash," because if the bull keeps going, you will fall behind the NDX average, the real benchmark, and the marketing people will be in here riding my butt, wondering why I am not keeping up with the Quints and the Algers and the go-go types at Janus. Those competitors would smoke me if I didn't play as hard as I could. They would get on CNBC and the cover of Money, not me. They would get all of the assets, not me. We have a big ad campaign right now that touts the upside of performance. I can't shake that off. It is better to lose a lot of money with the market going down and just blame it on our "no-cash" charter than it is to fall behind the market if it keeps roaring. That's how you lose your job around here. That's the imperative. It is a business, you know.

---

To see "Buzz" continue to squirm in the rest of this fictional interview, click here!