Move Away From the Dichotomy of Old and New

Stop it with the Old Economy/New Economy stuff already.

It is a dichotomy that makes you no money. We think the world is divided between companies that rely principally on the Net to make money, and companies that rely on the whole economy to make money.

Sometimes they intersect. Oracle(ORCL), for example, gets most of its earnings away from the Net but gets its buzz from its B2B work. So we think that Oracle is an important tell. But LSI(LSI) and Texas Instruments(TXN) are not principally Net, so they might be okay.

We can't be in Commerce One(CMRC) now because it is total Net infrastructure, which is in the hands of the most margined players. We can be in Bank of America(BAC), even though some of the earnings might come from the Net. It has no buzz from the Net whatsoever to lose, even though it has the most online accounts of any bank.

For us the toughest is Exodus(EXDS). We are long it. We think its prospects are great. We think that its business is not susceptible to the kinds of pressure the analyst at Prudential was talking about when it comes to B2B. But it is owned by margined players, so we can't be aggressive in any purchases of it. So we use a very wide scale to leg in.

Keep in mind, by the way, that the panic level among the mutual funds and hedge funds who are in these highfliers is extremely high, because they have gone from wanting to show they owned these stocks to wanting to show they are short these stocks or not in them -- in five days!

Now that's a rotation.

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