Publish date:



March 30, 2000

Market Data as of 3/30/00, 1:49 PM ET:

o Dow Jones Industrial Average: 11,109.62 up 90.90, 0.82%

o Nasdaq Composite Index: 4,520.12 down 124.55, -2.68%

o S&P 500: 1,505.58 down 2.94, -0.19%

o TSC Internet: 1,108.54 down 15.54, -1.38%

o Russell 2000: 535.94 down 7.06, -1.30%

o 30-Year Treasury: 104 19/32 up 24/32, yield 5.914%

In Today's Bulletin:

o Midday Musings: Nasdaq's Rough Ride Gets Rougher as Rotation to Dow Continues
o Wrong! Tactics and Strategies: Explaining the Opening Selloff

"" on the Fox News Channel:

Don't miss "" as guest Thomas Madden, executive vice president and chief investment officer at Federated Investors, joins our panel of writers for this week's show. "" is on Fox News Channel Saturdays at 10 a.m. and 6 p.m. ET and Sundays at 10 a.m. ET.

Also on

Wrong! Dispatches from the Front: Waiting Out the Margin Selling

The trader isn't buying the Nazzdogs until he's sure it's over. Until then, JJC's reading the broker survey.

Telecom: Microsoft, BT and AT&T Team Up on Mobile Multimedia Service

The mobile service will be based on Microsoft's technology.

Asia/Pacific: Mobius Trips Up Asian Dot-Coms

If emerging market fund manager Mark Mobius is so down on Internet stocks, why did he have a piece of

Mutual Funds: Fund Openings, Closings, Manager Moves: Untested Firm Launches Net Fund

The no-load fund will look for Internet and Internet-related firms whose values haven't been recognized by the market.

Midday Musings: Nasdaq's Rough Ride Gets Rougher as Rotation to Dow Continues


Tara Murphy

Staff Reporter

3/30/00 1:32 PM ETThese are better days for value investors, as the


tries to further its


-style comeback. Its once-beaten-down cyclical components are roaring as growth players cash in the small-cap tech darlings that once tugged on their wallets.

So is Wall Street putting its affair with tech on ice, or is it just cooling off from investments that may have gotten a little too hot?

"There is still a risk that we haven't made a low in the


," said Bill Meehan, chief market strategist at

Cantor Fitzgerald

. "The momentum seems to be creeping away from the Nasdaq and we're likely to see a move back to the stocks that have been in a bear market."

Lately, the Nasdaq was getting pummeled further after

yesterday's 189-point dive, down 134, or 2.9%, to 4511. The Composite is currently down 8% from its record close this month, but for the year, the index is up a solid 22%.

In Nasdaq trading, stocks were getting whacked across the board, with the wireless technology outfit

Research in Motion


losing its connection, down 14 5/8, or 13%, to 97 15/16, and



leading the declines in the biotech sector.

Elsewhere in techland, Internet Sector

index was losing 19, or 1.7%, to 1105, with





(ATHM) - Get Report

dragging the index into the red.

Yesterday, the revered

Templeton Emerging Markets Fund

strategist Mark Mobius cautioned investors on Internet-sector volatility.


Nasdaq Biotechnology Index

was plunging 3.5% and the

TST Recommends

Nasdaq Telecommunications Index

was faltering 2.5%.

But growth players are not worried by the Nasdaq's recent decline. Investors like Brian Gilmartin, portfolio manager at

Trinity Asset Management

, are confident that tech's strength will return with solid, first-quarter earnings reports.

"I think you're seeing a return to normalcy in the valuations of the Old Economy and New Economy stocks," said Gilmartin, a growth investor whose portfolio is heavy large-cap tech. "Tech's fundamentals are still great and any kind of trepidation in Nasdaq is going to go away April 18, when


(INTC) - Get Report

reports. Until then, we could see a choppy Nasdaq."


Dow Jones Industrial Average

was up 75, or 0.7%, to 11,094, after ending yesterday's session up 83 points. The Old Economy index has made up for some earlier losses but is still down 4% for the year. Its cyclical giant


(MMM) - Get Report

was the Dow's big winner.

The tobacco and insurance sectors, which predominantly consist of NYSE issues, were being bought during mid day trading. The

American Stock Exchange Tobacco Index

was lifting, and the

S&P Insurance Index

was soaring 4.5%.


strides toward boosting production have fueled the oil sector, and given growth shops like Trinity a new sector to keep its eye on. "Oil services look really good," said Gimartin. "The assumption in terms of price per barrel is still much lower than the market price so you'll see capital expenditures by the integrated oil and gas companies start to ramp and that will drive the earnings for oil services."

Lately the

Philadelphia Stock Exchange Oil Service Index

was climbing 1.4%, while the

American Stock Exchange Oil & Gas Index

was bouncing 4.1%.

Value's return to favor didn't come soon enough for the hedge fund giant

Tiger Management

, with


emerging yesterday that it would be closing its Jaguar fund at the close of the first quarter on Friday. Tiger, which stuck with its once winning value strategy suffered losses in 1999 for not chasing after the hot tech stocks that growth investors had their paws all over.

So is this a signal to growth investors to maybe dabble in some Old Economy stocks that might not have seemed their bag? "Absolutely not," said Gilmartin. "Because of substantial GDP growth last year, it paid to be a growth investor. The value players stayed with valuation during a period of growth. It would take a very predominant macro shift, a very substantial change in the environment (to change my investment strategy)."

Final fourth-quarter

gross domestic product

was revised upward to 7.3% but inflation indicators were little changed, lulling fears that the


would raise rates before it convenes in May. The 10-year Treasury was up 10/32 to 102 28/32, its yield easing to 6.11%.

The broad S&P 500 was down 4, or 0.3%, to 1504, while the small-cap

Russell 2000

stumbled 9, or 1.6%, to 534.

Market Internals

Breadth was mixed on moderately light volume.

New York Stock Exchange:

1,548 advancers, 1,291 decliners, 703 million shares. 73 new 52-week highs, 36 new lows.

Nasdaq Stock Market:

1,155 advancers, 2,922 decliners, 1.1 billion shares. 33 new highs, 125 new lows.

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

Wrong! Tactics and Strategies: Explaining the Opening Selloff


James J. Cramer

3/30/00 8:17 AM ET

Why is this selloff happening? Why do people talk about a meltdown opening? Two quick reasons: One is the natural irony in traders -- the O. Henry in them -- which says the ultimate Value Guy gave up his battle with the Momentum Hounds, so it must be the top in momentum and the bottom in value! That's the current dibs on the great Julian Robertson's legacy. Remember, I don't invest on irony. I invest on fundamentals.

The other more accurate reason for the decline is margin, because the stocks that are going down the hardest are the ones individuals borrowed lots of brokerage money to buy, and the brokerages don't want to lose that money to a declining market. So they sell the stocks out underneath you.

How brutal can this process be? How about this little confessional I got last night from a manager of a brokerage firm about my recent tirade against margin:

I am the bad guy when the clearing corporation calls me with a list of victims in the a.m. as they will today. I will tell people that they must pony up the dough by 3 p.m. ... The list of Nasdaq names that must be sold will be massive Thursday because a lot of stocks that have higher than 50% margin requirements got bashed yesterday ... The opening here will be ugly, as well as every other retail trading office/desk.

In other words, margin clerks are telling individuals that stocks bought on credit have declined so much that they have to put up more collateral. The betting is that these people won't have it. So the close-outs will be swift.

That's how you really get the dislocations. We know from the last two times this happened that the selloff is swift, brutal and ultimately an over-reaction.

That's what we will see today.

Be ready for this unnatural selling. You have to buy them when you can, not when you have to..

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. 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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