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Cramer's Mailbag, Nov. 2000 publishes selected emails received by the publication and its staff members. To send an email intended for publication in this section, write to and include your full name and city. Letters may be edited for length, style, clarity and accuracy.

Tales From The Margin-side

James J. Cramer

: About

Reality as Told by the Trader, Part 4

Just wanted to say thanks for the 4-part series on the reality of the game now, it was really a nice perspective. As I've alluded to in a few emails before, I think I am not alone in young people who tried to jump on the ride last year before it ended, and was able to take a small amount of money and multiply it ten times over through lottery-type IPOs like

VA Linux


. Like anyone I knew I was margined fully, and built enough trading capital off the ipo-machine to start trading all the high-flyers throughout the summer volatility.

Of course now I'm cleaned out by margin, like many who stayed on and maybe thought these things would return to their unprecedented levels, only to ride their stocks down. I don't think there's ever a silver lining to losing all your cash unless you can afford to, but I have re-aligned my expectations, and now work like everybody else to build a balanced portfolio. I've learned enough and plan to actually study and learn more like I would any pursuit, and even hope to allocate a little as throw-away money for trading the technicals and piggy-backing off what you guys are doing. But now I realize the risks involved in this, and what realistic expectations should be. You have to remember many of us young people learned about this stuff in a bull market and never knew any better. Anyway, thanks for the pieces, they were a nice read.

-- John W. Virdin

(received 11/29)

Were the Banks Closing for Joe Margin?

James J. Cramer

: About

Reality as Told by the Trader, Part 3

In Part 3 you seem to say the catalyst for the dream ending was that the public could no longer afford to borrow money because there was no more easy money made available by the



I don't quite understand this argument. How large was the difference between the lowest and highest margin rates between the time the Feds injected liquidity and now? I don't really know, maybe 10% at most? I don't think the public would have borrowed less because of a sub-10% increase if they thought (probably until the last 3-4 weeks) that they could regularly make 30% in the market. Maybe the online brokers raising margin requirements would have caused the public to borrow less. (Is that a function of Fed decreasing liquidity?)

Or if


tightenings have been a catalyst through the retail investor, it's not because it costs incrementally more for the public to borrow on margin. Joe Margin doesn't say I'm paying 3% more in margin interest so I won't try to catch a 20% move in some tech stock, but Joe Margin might say Greenspan's tightening and the big boys on Wall Street don't like that for X reason and they'll cause the market to drop so I'll step back or go short with them.

And another reason the margin-using retail investors have become less of a buying force would of course be the big drops we've had this year that probably wiped many of them out.

So if the Fed-decreased liquidity, i.e. the cost of borrowing, was even a factor as far as the public goes, I'd say it comes far behind those other factors.

-- Revv Ayala

(received 11/28)

The End of The Beginning?

James J. Cramer

: About

Reality as Told by the Trader, Part 4

Thank you for a great piece. I do have an observation or two. I agree on the issue of tech company valuations, that we will never see them again at the levels at which they were during 1998-2000.

But, I'm not so sure that this bodes as poorly for venture capital and tech as the piece seems to point out. I believe that many out here don't want to acknowledge that the valuations will never return to their peak. However, I also believe that the Internet continues to create a substantial change in the way we live as did the railroad, the automobile, the television and the jet engine. I believe that this means continued opportunity even if it isn't as richly valued. I think someone at TSC accurately called this year "the end of the beginning."

To me, this means there is still a lot of money to be made in venture capital, at better returns than the stock market to compensate for the higher risk. Accordingly, I don't think that VC fund investors will be all that pissed, because deep down they knew, like we all did, that this was going to blow over and they would someday need to accept more realistic returns.

-- Michael Prozan

(received 11/28)

What Do They Call a Big Mac in Europe?

James J. Cramer

: About

Stayin' Alive With the New High List

I liked the story in your column today. Your observations on restaurants certainly make a lot of sense. Having said that, I don't agree on



in this particular case. McDonald's expansion area is not going to be in the U.S. Due to the very strong U.S. dollar, the company's European business is not going to perform that well. Even if there is a lot of local content being bought in Europe, repatriated management and franchise fees are all in local currency, i.e. euro.

While the euro problem is pretty obvious, another problem has surfaced in the form of BSE. BSE, or mad cow disease, is an animal sickness, which has managed to jump from affecting cows to affecting humans in the form of vCJD, or variant Creutzfeldt-Jakob disease. Up to a few months ago, European consumers saw BSE as a purely British problem since the sickness started in Britain. Now there is a massive food scare in all of Europe, causing consumers to be turned off beef and especially ground beef. In France the BSE scare started in October and since then beef has been cut from the school menus, restaurant menus and consumption has dropped 40%. In Germany, the biggest European market, the food scare started over the weekend. This may affect restaurants that rely heavily on turnover in beef products.

I know you are looking for something nice to say about McDonald's. You will probably not find it in Europe, in my opinion.

-- Thorsten Moos

(received 11/27)

Stretching the Greenspan Mythos

James J. Cramer

: About

Big Al's Got a Message for Buzz and Batch

Very entertaining piece, but to even consider

Mr. Greenspan

as the


who stole technology is a huge stretch. To kill a business cycle because people are buying too many shares of

JDS Uniphase


? That is something only Oliver Stone would screenwrite. We're not in Tokyo anymore, Toto! Inflation is what he smells, and it's what he will always smell. He seems to look for it under every used order slip on the market floor. I think Andrea's husband simply needs a refresher course from the most venerable

Milton Friedman

to waylay

sic his fears.

-- John Hemphill

(received 11/25)

Grin and Bear It

James J. Cramer

: About

What to Sell When Things Get Ugly

Thank you for today's article on good companies being crushed by mutual fund redemption. I am a bit heavy in

Inktomi Corporation


, but not as heavy as a few weeks ago! I love this company and think it will be one of the big performers down the road.

But the pain is becoming unbearable. I woke up in the middle of the night and decided to take a good look at selling half of every stock I own this morning. Then I read your article and came to my senses. It is foolish to sell at the bottom, and if I am waking up in the middle of the night thinking about selling good stocks because of a temporary imbalance in supply and demand, then I am really hoping this is the bottom.

I will hang in there. I have enough cash to support me for five years, although I had hoped that would be my war chest for buying at the bottom. Now, I am not confident that I will know the bottom when I see it. I am on the sidelines for the interim. No buying. No selling. Just keeping my head down and my back to the wind.

Thank you for being the voice of reason in a sea of confusion and despair.

-- Claudia Dickerson

(received 11/24)

Something to Chat About

James J. Cramer

: About

The Tragedy of Chat

Chat lives in private clubs. Sick of the



board type of garbage on the main board, we started a private chat with over 100 members. We own about 750,000 shares of

Vion Pharmaceuticals


, an upstart biotech. Our club got a tour from the company, and they are aware of our club. We have an oncologist who did drug trials earlier in his career giving us insight into the process. We also have a bond trader from a major Dutch bank, generally good info. The only negative for this type of board is that the members are not very tolerant of dissenting views to perceived negatives from/about the company. I like/need to also hear the potential pitfalls.

-- Steve Schlader

(received 11/20)

Chat is indeed the cesspool you describe, but mainly for stocks. There are chat groups and newsgroups out there (for jazz musicians, backcountry skiers, etc.) that are wonderful places to learn and share what you know. The one thing the good sites have in common is they all have pretty small, highly focused user groups. Just like how the Web is good for buying books but not clothes, the chat world is good for small interest groups. What made stock chats so miserable was that people were talking ultimately about money, and there is no quicker way to scratch the surface of someone's psychology (good, bad, negative or vicious) than to have it be about money. Once they started losing money, it really got ugly as you have noticed.

I am the only relative newbie investor that I know who has a profit this year or has any knowledge of the economy and the business cycle (mostly thanks to the education I got from you guys). I used to go to investment clubs, options clubs, etc., but I quit when they deteriorated just like the chat rooms, and when I realized that these folks were looking for a guru and had abdicated all responsibility to think for themselves. I guess I needed the companionship since this is a fairly lonely job. I have moved on to getting my needs met there outside of the individual investor world, and it has sure lifted the fog generated from the blather I used to listen to. It is just like you described at Vegas, all into a few tech stocks that they know nothing about and now praying for a miracle.

Without you,


and the rest of the

bunch, this year would have been half as educational and about 1/10 as fun and insightful as it has been. Thanks again.

-- Kit Cohan

(received 11/20)

What Would Rockefeller Do?

James J. Cramer

: About

A New Economy Jeremiad

Good job on articles trashing the new economy. Here's the analogy I use with friends who "invest"

Buzz and Batch

style: In the 1910s and '20s, businessmen everywhere learned to use the phone. But, they didn't justify super-high market caps by saying, "We use the phone!" Nor have I read that

John D. Rockefeller

was asked, "What's your phone strategy?" for running

Standard Oil

. Or told to create a Standard Oil phone subsidiary to unlock/create additional shareholder value. (You laugh, but what about



now defunct Web-based gasoline marketing venture?)

As you pointed out with the classified ad Web site: It actually makes for (gasp!) a reasonable business model. And what about

General Electric's


early use of the Web as efficient communication with suppliers? Isn't that the way the Web gets used most, by old economy companies that have revenue and profits?

-- Jonathan Bernstein

(received 11/18)

Precise Incision

James J. Cramer

: About

Autopsy of a Trading Era

Excellent piece! I wish every person with an online account could read this and get the overview so they realize what the hell they have been doing.

One thing I would add to the "too easy and anonymous" issue about margin: Out here in non-Wall Street land there has been a real industry in so-called "investor training" seminars, of obviously highly variable quality. My realtor even told me recently that he took a daytrader seminar last spring that had him daytrading using an


account and 20-minute delayed quotes! Of course, he blames the guy who did the seminar, not himself for basically gambling, but not getting the free drinks you get in Vegas. And worse yet, he went to yet another daytrader seminar recently and was so dazzled by his first real look at a Level 2 screen that he is sure that this time he'll make money. I tried to convince him that risk management is where it is at, but these seminar guys tell them that having the discipline (and using their proprietary system of course) to sell when it goes against you is all the risk management you need.

From what I have seen in the various investor clubs I used to attend, that discipline is rare. The most egregious trainings of all seem to be the "me too" ones that have realized how little people know and how much they will pay for the same bit of information you can get from a book (and that is still not enough, as you well know). I wonder how many of these folks have lost it all since risk management is not on the agenda.

I am seeing a lot of fellow at-home investors heading to the want ads in the paper, looking for a new job. The common thread? Not reading your site! I am still standing (and profitable for the year) based on what I learned and assimilated reading the amazing stuff posted here. I feel extraordinarily lucky to have found

when I did, and I know that I am up this year rather than terribly down because of it. My best to you and all the staff!

-- Kit Cohan

(received 11/16)

Ahead of Its Time?

James J. Cramer

: About

Reality, Delivered Online

I read you often and generally agree with your points. I think you went overboard with this article.

The grocery business has been a crummy low-margin business since inception. Does









, et al have the solution? Maybe not. However, if and when the Internet grabs hold of our consciousness for consumer purchasing and consumable consumer purchasing, groceries may in fact be one of the better e-commerce models. The OFC vs. store-front cost model favors groceries better than any other retail distribution channel that I know of so far.

The problem with Webvan, Peapod, Streamline, et al is not the lousy business model. It's the timing of the business model, too early. My point is that WBVN is the only one who even has a fighting chance to last while high-speed connectivity gets into households in volume, and, hopefully, consumer behavior changes. In summary, it's not about the grocery business. It's about the challenge of changing buying patterns.

Keep up the good work.

-- Tom Coyne

(received 11/14)

Chutes and Ladders

James J. Cramer

: About

How the Game Works: Part 3

I wanted to compliment you on this latest series. In my opinion, it is one of the best series of articles that you have ever written. I've seen how so many of my fellow investors have been wiped out by this recent downturn because they were trying to play the big name or the hot sector. What so many have failed to see (and you put it perfectly) is that when you buy a stock, you are buying a stake in that firm's future earnings. You are voting with your wallet that management can and will continue to execute the goal of any firm: to make money. Trendy names and posh sectors can inflate a stock's price in the short run, but when it's all said and done, it's a company's ability to generate profits that sustains its price and growth. Thanks for the incredible article and please keep up the good work.

-- Brett Duke

(received 11/14)

This Market Fad Is Over

James J. Cramer

: About

How the Game Works: Part 1

I couldn't agree more with your column. It's been extremely disconcerting to see everyone and their uncle jump into this game and yet not really understand how it works. It can't be as easy as most everyone thinks it is, not if this is going to be a real stock market. If it was as easy as just buying your favorite stock and then waiting, why have CDs, money markets, or even bonds?


George W. Bush

seems to be playing this dangerous game with his Social Security plan: Just have the young people invest in safe stocks to improve their rate of return? You and I both know there really isn't such an animal. He seems to want to combine the illusory predictability of the recent stock market with the surefire dependability of government bonds.

The other day at the gym I heard a young woman telling two other women, "I'm just waiting for my stock to split." The implication being, I suppose, the stock would then skyrocket and she could sell, or whatever. Sadly, the two other women nodded vigorously in agreement.

Who was it,

J.P. Morgan



, one of the titans anyway, who knew it was time to sell when the guy who shined his shoes started giving him stock tips. The last five years have sort of felt that way to me.

And, of course, this is not to pull an elitist thing and say all these folks shouldn't be in the stock market. I think it's great that so many are interested, and that so many want to talk about it, but you have to acknowledge that it's not an easy game to play, and that's the way it should be. In fact, I realize I keep referring to the market as a game, and I think that's the way a lot of people see it. Spin the wheel and pick up another 100G's with

Art Linkletter's

picture on the bill. Maybe those little blue and pink pegs sitting in the back seat of your plastic car won't be able to go to


after all. Maybe we all need to experience the Day of Reckoning first before things make sense again.

-- Tom Beatty

(received 11/13)

No Room for Games

James J. Cramer

: About

You Can't 'Invest' in a Crapshoot

I think your piece is completely accurate. I have been fighting on the long side for the last 10 weeks and obviously not done very well. My premise was

that we were trying to end a correction and that the trading range would hold and ultimately the basically strong economy and optimistic future fundamentals would limit the downside risk, if looking at a longer-term perspective. Wednesday and Thursday, I exited all positions. There is limited, if any, upside and the risk of a complete debacle is large.

That is not really why I am writing. I just wanted to let you know that I am thankful for you and your site. I am overeducated in economics and finance, but that means nothing when it comes to markets like this. During the last year you have taught me so much and I feel confident I can make it on my own as an individual investor/trader (I started doing this full-time a year ago). I am pretty sure if I can survive this year, I should do pretty well in the future.

I understand game theory and can set up scenarios and estimate probabilities, if not explicitly in my mind. The problem is that you can't consider the outlier or the 6-sigma event. If there ever was one this is it. I think the market is holding up for three reasons. One is what you mentioned about people looking/hoping for the


concession (I don't see that or want that to happen). Two, people are secretly or not so secretly looking for

Alan Greenspan

on a white horse to save it on Tuesday. I don't see Greenspan using his capital during political events, it would be unlike him and could be a very bad move because there is no way to predict the outcome. Lastly, the $4 trillion fund market just can't get out; it is impossible, so they wait, hedge and hope.

I don't think you can overestimate the danger of this period in history, and I am glad that you are willing to put that out in public.

-- Mark Shefsiek

(received 11/11)

Web Myth: More Bang Equals More Bucks?

James J. Cramer

: About

State of the Web: The Wealth and Power of Eyeballs

I am a doctor who has used both the Web and more mundane venues for advertisements. I can tell you that your view of the demographic is skewed. Web advertising overwhelmingly attracts bargain hunters, not well-heeled, cash-rich, potential patients like you. Don't get me wrong, it is essential to have a good Web site. Complex issues of health care and modern techniques require more patient education than ever before. The old "Doctor knows what's best for me" attitude is going the way of "My broker knows how best to invest my money."

But today's surfer thinks that the Internet means low-ball prices for high-end services. They imagine that they will find the Mercedes for the Yugo price, and feign high dudgeon when their hopes are dashed.

Secondly, Web advertising automatically lacks credibility. Surfers intuitively know anyone can say just about anything on the Web with little fear of having to prove up. They think, rightfully or not, that print has a greater requirement for truth. Finally, tell me, while you're watching your ticker and executing gigabuck trades, would you really take the time to click through to my site? It seems on this end that most of the people who do click through have a lot of time on their hands and we know what that means...

Eventually, the Web will grow up, but until then, it is difficult to commit large resources to low-yield billboards.

-- H. D. Sloane

(received 11/7)

Future of Web Advertising?

James J. Cramer

: About

State of the Web: The Wealth and Power of Eyeballs

Yes indeed, the market doesn't appreciate the tidal change in advertising revenue ebbing slowly but surely into Internet companies.

Your point cannot be underestimated: Web advertising is moving to "brand awareness" and "brand confirmation", rather than "click-throughs." Branding, not selling, means the huge budgets of global brands from







Proctor & Gamble


will be directed towards (well-read/well-seen) Web sites.

When this change is perceived, investors' confidence in revenue models of Internet companies will jump.

-- Todd W. Johnson

(received 11/5)

Could Reg FD Lead to More Volatility?

James J. Cramer

: About

Fido in the Doghouse; or, One for the Press

I know you have been focusing on all the positives of

Regulation FD

for the individual, but I would point out that one result is much higher volatility in stocks (you have mentioned this) which is harder for the individual, since institutions have the ability (financial wherewithal) or staying power (ability to sustain short-term hits) through volatility, which is not necessarily true of the individual. Also, the cost of options will increase (pricing in this volatility), once again hurting the individual.

-- Simon Wolf

(received 11/3)

Reg FD Does Not Replace Good Research

James J. Cramer

: About

Fido in the Doghouse; or, One for the Press

Being an analyst at one of those big mutual-fund firms, I don't think the loss of access to private meetings is all that significant. To be honest, if you really believe what these companies tell you, you're going to get screwed! We focus our research on looking at the entire food chain and linking together any disconnects. This has helped us avoid disasters in









and countless others.

The bottom line is that if you listen to what these companies tell you, you're going to get left holding the bag during blowups! Just one person's opinion.

-- Ted Lynch

(received 11/2)

All for Playing Ball on Level Field

James J. Cramer

: About

Here's a Web Way to Level the Playing Field

I agree with your idea of having companies post disclosures or announcements on their Web sites, but I actually prefer

. A few companies that I follow have been making public releases via


and every time they hit, sends me an email telling me about the press release. The companies have to be on your watchlist, but that's extremely easy to set up.

I wish more companies would do that for their FD requirements.

I'm very happy that you are getting back on

Squawk Box

. They were talking about you this morning. Congrats! There is no way you will disappoint your readers.


David Collon

(received 11/1)