Mr. Cramer, I just wanted you to know how disappointed we are that you have left technology and changed it for cyclicals and nondurables ... If we wanted advice of that nature, we would read Alan Abelson ... There are a lot of us out there who believe in you and get great ideas from you ... Lately you have been scared and, instead of helping us with information about companies that have been beaten down and have the potential for long-term growth, you are giving us
Colgate (CL - Cramer's Take - Stockpickr) ... I have four friends that subscribe to
TheStreet.com and they are saying that you lost the edge. We will probably all discontinue our subscription, we always thought of you as a respected and knowledgeable source of information, but now you have become another talking head making predictions ... We wish you well on your retirement and thank you for a lot of great moments in the past.
Wow, of all the email I received yesterday during my first day at the new job, this one made me feel the best. If I have really gotten people to readjust as this lost reader says, if I have really gotten you to forget about the
Vignettes (VIGN - Cramer's Take - Stockpickr) and the
Scients (SCNT - Cramer's Take - Stockpickr) and the
Efficients (EFNT - Cramer's Take - Stockpickr) to focus on the Colgates, then I have done yeoman's work and I am proud of myself.
Seriously, do you think I would have left owning tech stocks if I could make a lot of money in them? Last I looked, that was the objective regardless of your time frame. And I am proud of the fact that I focused on Colgate when it was beaten up rather than when it was at its 52-week-high, although I still think it represents some value.
What is it about tech that so scared me? It is worth going over this again for those of you making your beginning of the year investment decisions: earnings and fund flows. The two things I pay attention to before I even think of buying a stock are the prospects of the company and the supply and demand of the company's stock. Remember, these are two very different beasts. How a company is doing is a function of its products, its management, its cycle (a personal computer company wouldn't be doing well no matter what right now, even if it is extremely well-run). How a stock is doing is a function of its fund flows.
In technology, right now, both prongs are going against us. The earnings are being walloped by the slowdown in personal computers, the breakdown of the dot-coms and the sudden plunge in corporate and consumer spending. But that's not nearly as bad as the fund flows. These are downright horrid. Earlier this week
Janus announced that the monies coming out of its funds has picked up speed. The
Investors Business Daily fund index is already down 5% and the
(JAMFX - Cramer's Take - Stockpickr)Jacob Internet fund starts the year down 15%. The
Motley Fool Rule Breaker Portfolio -- oddly a microcosm of momentum fund holdings -- fell 6% in the first day.
I don't think figures like this inspire buying. In fact, they inspire more selling. The dirty secret of the mutual fund business is that when you are cold, you get colder because the money comes out, not in. Which is why I am glad I abandoned tech. If the earnings were good and the fund flows were bad then I could afford to invest in some situations. That was how I spotted the trend into the food and beverage stocks. The earnings were good
even though the fund flows were bad. If the earnings were bad and the fund flows were good, then I would ask how fast can the earnings turn around? With financials and cyclicals, they can turn rather fast when the
Fed eases.
But when the earnings are bad
and the fund flows are bad, then I may disappoint people, but I am not going to invest in that environment. Hence, the decision to avoid tech. There will come a time when the earnings will be good and the fund flows will still be bad and we can make a move. But we can't anticipate that the earnings are about to get good in tech, because they just turned sour! Let's wait -- we will do better. And to those I have disappointed with this view, let me just ask, are you playing with real money?
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