Editor's note: This is the third part of a four-part series on investors' miscalculation of the impact of the Nasdaq's crash. Don't miss
Part 1 and
Part 2!
When tech stocks crashed, the public took the hit in stride. It basically gave up all the gains since 1996 and not much more than that. The public sighed and stopped looking up stocks at work and went back to doing its job.
But the tech corporations didn't know what hit them. They were so busy making equipment and running ad budgets and getting up Web sites and hiring and merging like mad to keep their market cap growing that they never figured it could come to an end.
I keep thinking back to a conversation that
Matt Jacobs and I had with a fantastic
Cisco (CSCO Quote - Cramer on CSCO - Stock Picks) executive one year ago this month. Matt and I were worried that demand might slip because of all of the turmoil in the telco world. We were worried. The executive's face turned red, he reached over -- I thought he was going to grab Matt's neck -- and said, "Demand? Demand? There is no demand problem. Do you understand that?" I had to say that Matt was just doing his job, he meant nothing by it. He was just being diligent.
Things were so great we were actually defensive about asking that question! Things were so great that the exec's reaction was a Dresden-like firestorm! I thought my clothes were on fire, it was so hot in that room after the demand question came up.
Six months later, it was all over. The stocks correctly predicted what would happen six months later. All right, heck, they caused the decline! Once the stock market could not sustain the high prices, the market, like an athlete who cut the steroids cold turkey, just collapsed. And with it all of that demand.
Editor's note: Be sure to check back later today for the final installment of this four-part article.
Jim Cramer
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