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Commentary: Wrong! Tactics and Strategies *New* Alerts! Please click here... 
How does it end? What makes markets go to where they have to go and then stop? One way it happens, a default way, so to speak, is that an industry group ceases to be important. I know, it seems inconceivable that tech could ever not be important to the market. But it is happening, right now. Rachel Andrews and I have been trying to come up with graphic representations of the importance of tech. One way to do so is to examine the top 25 capitalization names in the S&P 500 now vs. a year ago.
You can see how tech is becoming less of a factor in the S&P 500. I would argue that when you see only a handful of tech companies in the top 25 capitalized companies, we will be closer to a bottom than we are now. We are certainly getting there, though. This representation shows several things. The massive collapse of Cisco (CSCO:Nasdaq - news - boards) -- timed perfectly from when John Chambers predicted the company would be the first trillion-dollar company -- coupled with the tremendous shedding of value in Microsoft (MSFT:Nasdaq - news - boards), Oracle (ORCL:Nasdaq - news - boards), EMC (EMC:NYSE - news - boards) and Intel (INTC:Nasdaq - news - boards) makes sense to me. It is right. Tech was too big an overrepresentation in the S&P vs. what it was to the economy. It is now getting in line with its role in the economy. That's rational. So, why not pull the trigger? Aha! Here's something you have to think about, as it is deadly for tech and will cause us to swing from radical overvaluation to the possibility of severe undervaluation. Billions upon billions of dollars are indexed to the S&P. It has a tremendous lagging impact, like an anchor on the companies that have been getting smaller in the S&P. Firms that index money will be allocating fewer and fewer dollars to the shrinking names, once the S&P rebalances its stocks based on market capitalization. It is a self-fulfilling prophecy: The smaller get smaller. It is what happened to oils, to foods, to drugs and to industrial America year after year after year while tech gained in value. That process is in reverse and will stay in reverse for some time. In other words, don't wait for a bang to get into tech. It will end with a whimper, the way all declines really end. 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. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@thestreet.com.
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,291.26 | 1,098.51 | 2,166.90 | 34.74 |
Oil *
77.90
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UP
44.29
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UP
5.50
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UP
15.82
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DOWN
0.08
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10 Yr
3.47%
SPDR Gold
109.60
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+0.43%
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+0.50%
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+0.74%
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-0.23%
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