Fools for the Dip

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The semiconductor cycle is crashing. Which semis do we buy? Cell-phone inventories are choked. Which operators do we buy? Telephone networks and equipment business seem to be falling off a cliff. Which ones do we scoop up? Personal computers are slowing dramatically. Do we buy Compaq or Dell or Gateway, or all three? Tech's busting up all over. Do we just buy a tech mutual fund?

Oh my, what a bunch of crazy-nut-job-devil-may-care-stupid Dip Buyers we have become. No matter how bad the news is, our solution is to buy more Applied Micro Circuits and Worldcom and Broadcom and Microsoft. Why isn't our solution to buy Merck or Bank of New York? Why isn't our solution to check out ConEd or Enron or Schlumberger?

Why isn't our solution to minimize losses and maximize gains? How did we get to profligate and glib and foolish? Why won't anyone at these mutual funds come out and say, "Heck, man, maybe we were wrong about this stuff." Why don't some of the top-down analysts say, "Wow, things have really gotten worse in tech, but things are getting better at Campbell Soup and Heinz and General Mills? Are they not on any of these conference calls where the companies are starting to bare their souls? Are they going to let us ride our Lucent and AT&T to zero before they tell us that $15 and $16 is better than nothing?

Reputations are at stake here. Credibility is at stake here. Retirement savings and pensions are at stake here. Yet, most of the gibberish I see from Wall Street and hear from the other sites out there in our space is as if this market is BUSINESS AS USUAL. Some of the more shameless among us are pushing seminars that tell us how to pick more stocks that are down 50% for the year. Others are just plain ignoring the pain and saying, "If you just factor in 1998, you are still up nicely." Still others are not updating their performance beyond last quarter because it allows them to show September to September, when performance wasn't so bad.

All share the same disconnect: Buy the bad news. The bad news is a huge opportunity. It is only an opportunity when it is a prelude to good news. Lucent shows you that the bad news begets more bad news which begets more bad news which begets more bad news. And yet people held on because the dip is the message. One of the reasons why I love stocks is that there is always a bull market somewhere you just need to know to look for it. I will give you a big hint that you won't get on the other sites: It is not in tech.

Random musings: I see that Raging Bull is for sale at CMGI. If CMGI pays me a couple of million dollars to take Raging Bull of its hands, I will run it in my spare time when I am done with Cramer Berkowitz. But I won't take less than a couple of million. It's somewhat comical, I find, that people are trying to sell things these days that they really should be paying you to take, don't you think? Last time I looked, I have to pay Waste Management, they don't pay me. What's wrong with this picture?

Also, beware of mutual funds talking about "extreme volatility." That is industry code word talk for "losing big money." Putnam takes a full page ad in the Journal talking about what they "believe." It is filled with the language of volatility. Nowhere does it mention that the Putnam OTC Emerging Growth fund, once the standout of the IBD Mutual Fund Index, is down 56%. Man, that's some powerful volatility, there!