Sneak Preview: Get the Right Rally Fit

If you look at the time frame of the tech rally, which I said would occur mostly in the fourth quarter of 2005, but could also stay strong into 2006, Microsoft and Cisco were both disappointing picks. On June 22, when I wrote its ticker symbol on my hand, Microsoft was trading at $25.07 a share. Cisco, on my other hand, had closed at $19.20. Fast-forward to the peak of the rally, which occurred almost exactly where I called it, on February 1, 2006. Microsoft closed that day at $28.04. That's more than an 11-percent increase from where Microsoft closed on June 22.

At first glance that looks a whole lot better than a sharp stick in the eye. Cisco was at $18.53 on February 1, roughly a 3.5-percent decline. If you looked at just these numbers, you'd think I was right to recommend Microsoft and that backing Cisco was at worst a minor mistake. But remember, we're dealing with a rally, and you have to compare these two stocks to the stocks that actually participated in the Cramer tech rally. If you saw the writing on my hands you probably bought Microsoft or Cisco instead of a much better stock.

Microsoft and Cisco were huge mistakes if you consider the opportunity cost. For example, Broadcom(BRCM - Cramer's Take - Stockpickr) was at $36.43 on June 22 and $68.33 on February 1, an 88-percent gain. Marvell Technology(MRVL - Cramer's Take - Stockpickr) closed at $39.15 on June 22 and went up 73 percent to $67.70 on February 1. Apple(AAPL - Cramer's Take - Stockpickr) went from $38.55 to $75.42, a 96-percent increase. Even if you look at a less impressive performer like Qualcomm(QCOM - Cramer's Take - Stockpickr), which went from $34.92 on June 22 to $47.93 on February 1, you're still dealing with a 37-percent gain.