March 28, 2000

Market Data as of 3/28/00, 1:05 PM ET:

o Dow Jones Industrial Average: 11,026.47 up 0.62, 0.01%

o Nasdaq Composite Index: 4,894.09 down 64.47, -1.30%

o S&P 500: 1,517.10 down 6.76, -0.44%

o TSC Internet: 1,235.21 down 25.76, -2.04%

o Russell 2000: 565.11 down 8.54, -1.49%

o 30-Year Treasury: 103 15/32 down 10/32, yield 5.971%

In Today's Bulletin:

o Midday Musings: Cohen's Call Exerts Pressure on Tech; Dow Around Break-Even
o Smarter Money: A Penny for Your Stocks?

Also on

Tech Savvy: Judge Jackson Looks Ready to Delay Findings Release

Responding to signs of progress, Jackson is likely to postpone his ruling today to buy the negotiators a little more time.

Software: Judge in Microsoft Case Agrees to Withhold Verdict

Sources say the verdict will be withheld for up to 10 days in order to allow the firm more time to reach a settlement.

Wrong! Tactics and Strategies: When the Guru Speaks, Listen Up

Abby Joseph Cohen has made a brilliant call.

This Week's Secondaries: A Sorry Crop of Secondaries

This week's offerings aren't about to set the world on fire. But keep an eye on them all the same.

Midday Musings: Cohen's Call Exerts Pressure on Tech; Dow Around Break-Even


Thomas Lepri

Staff Reporter

3/28/00 12:55 PM ET

Abby Joseph Cohen





(MSFT) - Get Report

. For a day without much news to speak of, the heavy hitters certainly were out in full force near midsession, which found most proxies on the dark side of break-even.

The immediate catalyst for the morning's (technology) selloff was provided by

Goldman Sachs

strategist Abby Joseph Cohen, who recommended that clients cut their exposure to equities to 65% from 75%, putting that money into cash. Cohen's balanced aggressive portfolio now breaks down to 65% equities, 27% fixed-income, 5% cash and 3% commodities.

Cohen reiterated her 1575 year-end price target for the

S&P 500

, but noted that "as a consequence of relative performance, we no longer are overweight in technology or consumer staples."

Not surprisingly, tech took the biggest hits early on. The

Nasdaq Composite Index

had sunk as many as 97 points shortly after 10 a.m. before buyers started moving in.

"It's bizarre," said Peter Boockvar, equity strategist at

Miller Tabak

. "I think the Abby Cohen news was a short-term reason to sell off. But her allocation is back where it was prior to last year. It's a nonevent."

Indeed, the Comp was decently well off its lows by midsession, down 62, or 1.3%, to 4897. The broader big-cap market was faring considerably better, with the

Dow Jones Industrial Average

up 2 to 11,028 and the S&P 500 down 6 to 1517 1/2.

In general, stocks were seeing the same sort of choppy trading the market saw yesterday amid uncertainty over the outcome of this week's OPEC meeting and the Microsoft antitrust case.

Venezuelan oil minister Ali Rodriguez has said that OPEC member nations have reached "an agreement in principle" to increase oil production. Though no details about the size of the production hikes were disclosed, the price of oil was falling modestly. Crude for May delivery on the

New York Mercantile Exchange

was off 29 cents to $27.50 a barrel.

Oil and oil service stocks were mixed. The

American Stock Exchange Oil & Gas Index

was up fractionally, while the

Philadelphia Stock Exchange Oil Service Sector Index

was down 1.1%.

Airline issues were soaring amid expectations of easing crude prices and in sympathy with

United Airlines


TheStreet Recommends


(UAL) - Get Report

, which was up 3.7% following the company's positive

preannouncement last night. The

American Stock Exchange Airline Index

was up a considerable 3.5%.

Meanwhile, any investors itching for a ruling in the Microsoft case will just have to hold their horses. As

joint newsroom

reported earlier today, Judge Thomas Penfield Jackson has agreed to delay his verdict for up to 10 days as the company continues to seek a settlement. That news helped spark a reversal in Microsoft, which was lately up 1 5/8, or 1.6%, to 105 11/16.

"As long as they're still talking, that's good news for Microsoft," said Peter Coolidge, managing director of trading at

Brean Murray Foster Securities


News remains very scarce outside of Microsoft and OPEC. Not surprisingly, trading was relatively light, and market participants found themselves looking forward.

"I just don't see any great catalysts moving this market one way or another," said Coolidge. "People talk about how we're coming into a record earnings season, but a lot of that is already in the price of stocks. Overall, a lot of the positives are already in the market."

"It looks like a market that's drifting," Coolidge continued. "We've reestablished the high end of the trading ranges for the Nasdaq and the Dow, and we're bumping up against that now."

The bond market was little changed, with the benchmark 10-year Treasury up 4 ticks to 102 13/32, putting its yield at 6.17%. The 30-year Treasury was 3/32 higher to 103 28/32 and yielding 5.97%

Banks were performing well, with the

Philadelphia Stock Exchange/KBW Bank Index

up 0.8%. But brokerage stocks were taking a much-needed breather from their recent tear. The

American Stock Exchange Broker/Dealer Index

was down 1.3%.

Small-caps and Net stocks were taking it on the chin. The

Russell 2000

was down 8, or 1.5%, to 565, while Internet Sector

index was slumping 26, or 2.1%, to 1235.

Market Internals

Breadth was negative, especially among electronically traded issues. Volume, meanwhile, was light.

New York Stock Exchange:

1,338 advancers, 1,488 decliners, 529 million shares. 45 new 52-week highs, 37 new lows.

Nasdaq Stock Market:

1,441 advancers, 2,497 decliners, 829 million shares. 44 new highs, 48 new lows.

For a look at stocks in the midsession news, see Midday Movers, published separately.

Smarter Money: A Penny for Your Stocks?


James J. Cramer

3/28/00 6:56 AM ET

Do you know that you could have bought


(CSCO) - Get Report

for 6 cents a share ten years ago? Does that inspire you to go to the bulletin-board portion of the


and find the next Cisco?

If it does, you would be Wrong!

There is a word that doesn't get mentioned enough when we look at the fantastic performers of this era; it is "split-adjusted."

Cisco has split nine times. That means its current price of 80 has to be adjusted nine times to figure out what it came public at. It did not come public at 6 cents. It never traded at 6 cents. In fact, I remember the day it came public, and it never traded at 18. It was hot (meaning it went to a premium) from day one.

(As an aside, I used to go to quite a few hedge-fund dinners with other managers before the

Trading Goddess

explained the facts of being a dad to me -- very hard to quiz daughters about the multiplication tables while you are at the Remy table talking stocks. After a while I got tired of having to defend Cisco from the ceaseless "overvalued" attacks of my colleagues and I would just doodle, or whistle or do something disruptive to voice my displeasure. I can't believe how hated this stock was by the intelligentsia during the 1990s.)

But people persist in thinking that they can find the next Cisco by looking for penny stocks. If there is a theme that rivals "taking something off the table" for my passion, it is the desire to make you realize that penny stocks are a joke, often a fraud, and a huge mistake to own.

People who push penny stocks prey on the notion that you won't understand what "split-adjusted" means and you will just cruise around looking for the next Cisco among the 6-cent litter pile. I know this stuff goes on because periodically I sneak in to these chat rooms and sites to see what stock people are pushing.

It revolts me. I don't think you could give the


enough dollars to shut down all of these scams. Sure somebody is going to win at this game. Somebody wins on the slots too. And there are winners in football pools and the numbers games.

But that's not what trying to beat the market is all about. That's not what picking winners is all about. Most of these penny-stock games are rigged games, and only those who get out while the pumping is going on make any money.

If you think you can find the next Cisco in the bulletin-board stocks, may I suggest that you at least stop lying to yourself? Own up to the fraudulent nature of the pursuit.

Oh, and while I am dissing your investment skills, please play 754 tonight. That's my lucky number.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at Community:

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