Use Bellwethers Better Than Cisco

Memo to all hedge funds, mutual funds and the press that covers business: Cisco (CSCO - commentary - Cramer's Take) is no longer a bellwether for the market; heck, it's not even a bellwether for tech anymore.

Many of us have bought into business press speak, accepting as gospel the notion that some stock is so important that "all eyes are on it" or that "on the heels of it, many things will follow." This stuff is laziness, cliché at best, helping the handicapped thinkers who don't understand how the market really works.

At its worst, though -- and Cisco is its worst -- we corrupt the bellwether concept entirely. We are looking, at all times, for bell cows, because cows are herd-instinct animals; they follow the herd. If you find the one with the bell, you should get some insight into where the herd is going, literally and figuratively.

But what does Cisco tell us? How telco spending's holding up? I can tell you the answer to that and spare you the John Chambers West Virginia twang: it isn't. We know that from the dozen telco vendor companies that just reported, and reported disastrously, I might add.

Perhaps you think Cisco's a bellwether for how networking spending's holding up? I can tell you that better from F5 Networks (FFIV - commentary - Cramer's Take), which already reported and said that if you have something that better handles Net traffic, that's indicative of growth, or if it handles network security, you may have something. But the interstate, oops, the Internet, excuse me, has been built so you can dispense with Cisco's version of events. Cisco, in this metaphor, is nothing more than a merchant of steamrollers and rock crushers with some dandy new tarring and macadam machines that are good for fixing potholes, but we aren't building roads anymore. They're overbuilt; let's wait until demand catches up again.

But history's a tough and stubborn foe when it comes to market mindshare. We will have to hear about Cisco's soon-to-be-reported numbers all day and it will make us pass up opportunity after opportunity to stop, listen and learn how to make money away from Cisco.

If you don't believe me, of if you demand a bellwether replacement, let me tell you what cowbells I will be listening for as the day progresses. You can join me and make some money, or you can wait for the Big Cisco jet to land on the tarmac, with nothing inside for you buy but the ghost of stock markets past.

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At the time of publication, Cramer was long Cabela's, Pentair and Yahoo!.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."