Cramer: Why Tech Is Still Wrong

This column was originally published on RealMoney on May 16 at 1:54 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

The truth is coming out about tech: It stinks out there.

For weeks on end, we have had to put up with the notion that the semiconductor-equipment companies were doing fabulously, even though the end markets were awful. Then, we got the truth from Applied Materials (AMAT Quote).

It was like a reality check that no one expected because the analysts have been recommending this stock left and right, even as recently as this week.

To make an analogy to this silliness, these upgrades and praises were happening in a way that would be as if the auto-parts makers were doing great while the auto companies were cutting back, or if the aerospace suppliers were on fire while Boeing's (BA Quote) orders were plummeting.

The analysts in this segment could not resist getting behind a stock that they saw going up every day. This was the worst kind of non-rigorous thinking. Painful, costly and stupid.

There will come a time when tech is right -- probably three months from now. Until then, they -- and you -- should sit on your hands with the exception of Hewlett-Packard (HPQ Quote), Cisco (CSCO Quote) and maybe Apple (AAPL Quote) now that it has run so much.

Otherwise, stay away. And stop believing the hype; other than Texas Instruments (TXN Quote), no semi company is in a position to buy new equipment nor needs it. To me, it looks like Texas Instruments would rather buy back stock and increase the dividend than give Novellus (NVLS Quote), Applied Materials, KLA-Tencor (KLAC Quote) and Kulicke & Soffa (KLIC Quote) more business.

Random musings: There's craziness in Buffett-land today. As I have been saying for some time, if you buy after Buffett discloses he bought, you have not outperformed the S&P. ... Johnson & Johnson (JNJ Quote) is not doing well, and I would sell it up here.