Why You Should Not Dump Tech

So, what happened yesterday? What caused the totally chaotic selling that intensified until the day wore on?

It all started Wednesday afternoon, when the normally ebullient Cisco (CSCO - commentary - Cramer's Take) CEO John Chambers talked gloomily about a sharp slowdown for network equipment in the U.S. banking and auto sectors.

That was followed by continued bad news on subprime and the housing and credit market troubles.

To put the icing on the cake, along came Ben Bernanke with his gloom and doom on the economy in the near term and acknowledgement that the subprime fallout would lead to $150 billion in writedowns between the banks, broker-dealers and mortgage companies.

A highly skittish market completely came apart with indiscriminate selling across the board until some rationality set in during the last hour of trading and the indices were able to cut their losses in half.

Let's take a look at the folly of selling tech (albeit temporarily), given the above backdrop.

Chambers did say in no uncertain terms that the banking and auto sectors have seen a sharp drop in orders, but on the flip side he said that growth in sales of network equipment the BRIC countries (Brazil, Russia, India and China) was the best he had ever seen in his lifetime, and that that would more than offset weak U.S. enterprise orders in those two sectors. No one wanted to hear that, given the sell-for-the-sake-of-selling mentality that gripped the Street yesterday.

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Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.