Publish date:

A Question of Style

Readers offer their own opinions.

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Style Changes

James Cramer

: In response to your column

Substance Over Style, a style may work for some time but you can't count on it working forever. One's style must change when it stops producing the results it once did. Do you actually develop your strategy or criteria for picking stocks, or do you take every situation as a standalone investment based on various sets of parameters?

-- Jim Coale

(received 6/1)

Marriage of Opposites

Erin Arvedlund

: Your piece

Where the Almighty Meets the Almighty Dollar on the

Trinity Bookstore

was charming. When I was a

Witter

trainee wandering Wall Street, the store also struck me as an unusual marriage of opposites. But the more I thought about it, I came to realize that the two religions, investment and faith, are dominated by the same sorts of arguments: How far is predestination from grace vs. good works, from momentum and value? Isn't even the best stock picker dealing with what folks from the Middle Ages called "future contingents," and, as any pilgrim, always exercising faith that is the belief in things unseen? Thanks for jogging my memories of that unusual bookstore.

-- Steve Horwitz

(received 5/31)

Doing the Math

James Cramer

: In response to your column

235 Points Later, the End Is Near, the Net stocks may break every short-seller on Wall Street, but in the end they will lose due to mathematics of growth vs. price. Everyone with a brain knows this. I don't mind if a person makes a trade to make a buck. I have myself, although after making money on a Net stock long, I almost felt like I did something wrong. Weird.

What upsets me is people disclaiming what may happen to Net stocks in the short run. What if they are wrong, and saying what a great long-term investment they are? If you can add, you will see these stocks don't work even if they work. End of story, the laws of physics.

One of these days, someone will go on television with a blackboard, a pointer and charts and slowly explain that the deal won't work long term. Every great mind on Wall Street can't be wrong. I know I'm not. I'm so certain that I would bet a large sum of cash.

-- John Amabile

(received 5/28)

Broker's Defense

James Cramer

: In response to

Defending the Brokers, I have to say I agree.

The boat/car wash guy is infuriating. He complains about his broker being wrong for 10 years! Who would deal with a bad broker for 10 years?

We have spent the last 20 years training brokers, and the legal doctrines have moved us toward: Suitability based on

NYSE

rule 405 -- know your client. How do the e-brokers do that? As a "live" broker, I can be held accountable for what you do to yourself, even if it's marked unsolicited -- because I didn't stop you.

What about the e-brokers' excessive trading? As you know, there is a well-established legal doctrine on "churning." Thus even if the client made money, excessive trading is a bad thing and one can be sanctioned for it. The e-brokers seems to be encouraging the very thing the

SEC

has been fighting against for years. Where are the NYSE, the

NASD

and the SEC on this one?

-- Charlie Temel

(received 5/28)

James Cramer

: I've been actively trading (not directly online) for two years. I have yet to find a "good" so-called full-service broker. As a small Main Street investor, I honestly feel that they are extremely rare vs. the number of people investing. Sure, you talk with good brokers all the time. You're on Wall Street.

I know some very savvy traders, and they are constantly looking for better brokers. They don't hesitate to drop them if they don't perform. My feeling is that most brokers don't understand the market, how to consistently make real money. They are not motivated enough. The ones who are start their own firms. Sure the average broker can "churn 'em" and "burn 'em," but it's not their passion -- it's just a crummy job. Whereas, with many active investors, it is their passion and who is going to look after your own money better than yourself? Online trading facilitates that.

-- Keith B. McKellop

(received 5/28)

Heavyweights Falling Like Feathers

Suzanne Galante

: In response to your article

Internet Heavyweights Fall the Hardest, I'm not sure I see that the data really support the thesis that the Internet "blue-chips" could ever have been considered a "support system." For example, declines in

Amazon

(AMZN) - Get Amazon.com, Inc. Report

and

Yahoo!

(YHOO)

of about 44% to 55% in January, before reaching new highs in early April, hardly seem like support for the Internet sector. In April,

AOL

(AOL)

declined more than 30%, then came back to near the old high before declining again. There have been other times in the past year or so when these stocks have seen declines of about 50%.

Further, the argument that small investors lead the Internet rallies is somewhat dubious as well. The biggest gains I saw in the "blue-chip" Net stocks seemed to include significant institutional sponsorship. For example, one of my biggest days trading America Online was Dec. 31, when all the institutional investors added it to their

S&P 500

portfolios. I often see a lot of pretty large prints in those bigger Internet names.

-- Jerry Clayton

(received 5/26)

Suzanne Galante

: Aggressive

spending by Amazon is why it's becoming the

Wal-Mart

(WMT) - Get Walmart Inc. Report

of the Internet and

barnesandnoble.com

(BNBN)

(with its ridiculously long domain name) is not.

This is a new way for out-of-luck fund managers to say they don't understand the Net. They've been saying it in different ways for years. Yahoo!'s stagnant traffic? Did someone miss Yahoo!'s most recent earnings report? Give us a break! The Net is booming; it's the market that's volatile.

-- Mike Nicosia

(received 5/27)

Suzanne Galante

: Trying to put fundamental factors behind Internet stock price movements is sheer folly. ... The fundamentals of stagnant traffic at Yahoo! and other such irrelevant short-term facts existed two months ago when the stock was at its high. Let's call a spade a spade in Internet stocks. Internet traders are just happy it's summertime and are going outside. They don't want to hold a position while they are enjoying the summer. Hence the prices move down.

-- Ignacio Fanlo

(received 5/27)

The Tax Factor

Tracy Byrnes

: About your piece

When Lockup's Over, Factor Taxes Into Your Sell Decision, as a tax adviser and a financial consultant, I am faced with these decisions for my clients all the time. Just want to point out that regardless of short-term or long-term gain, the taxpayer's adjusted gross income (AGI) will be affected. This will in turn affect all other tax benefits such as itemized deduction limitation, miscellaneous deductions subject to 2% limitation, education credits, child credits, AMT, EIC, etc. In short, any capital gain affecting the AGI will have tax impact on other areas of the tax return.

So, as you can see, the decision to take short-term or long-term gain really comes down to how much gain you realize in the tax year rather than what kind. This is especially evident if the taxpayer collects Social Security.

-- Edward Cheng

(received 5/26)

Raising the Rates

James Padinha

: Your

No Need to Argue: Focusing on the Right Fed Utterances piece strongly implies that the

Fed

will be raising rates soon in response to a U.S. economy that continues to expand rapidly. How about the question of how higher U.S. interest rates will affect the fragile economies of the recovering world (e.g. Asia, Latin America, Russia)?

We know that Japan is still in a funk, and Argentina seems to be heading into trouble, not recovering. Why won't higher interest rates in the U.S. start a new wave of currency problems in these weak areas? Add to these general problems the China spy situation, and the resultant U.S. economic retaliation that may result (rejection of most-favored-nation status, no

WTO

entry), and China may weaken further, causing questions about devaluation of its currency.

Fed Chairman

Alan Greenspan

had to rescue the world last October with a flood of liquidity, so he is obviously well aware of these problems. Why won't these concerns keep the Fed from raising rates, and more important, if they do, are we going to face another round of devaluation concerns (for the third year in a row)?

-- Frank Healy

(received 5/26)

TheStreet Recommends

Fee Only Is the Only Objective

Vern Hayden

: In response to your column

Hayden's Declaration of Independence Draws Praise, Fire, thanks very much for trying to inform the uninformed and unbelieving masses! I'm a Certified Public Accountant and see so many cases of the planning or "selling" by the nonindependent "professionals," that it is disturbing. I feel that "fee only" is the only way anyone can keep the best interest of the client as the only objective. Besides, I always liked the idea of getting paid for my advice whether the client used it or not!

-- Paul Putman

(received 5/26)

Keeping the Market Open

James Cramer

: In response to

Times When Trading Takes a Back Seat, I have a modest proposal. Let's increase baseball to 12-inning games. This way people will still be able to catch the last three innings of an afternoon game after work. I am sure the same excitement could be held for a game that is 33% longer.

If the players fret about the longer games, let's just increase the rosters. How hard should it be to find additional talent? Don't you think the extra time for advertisements will cover the additional costs?

Or, we could just add a later session to the stock market.

-- Jeffrey Sarrett

(received 5/27)

James Cramer

: I am also against

extended trading. The only people who will benefit are the big brokerage houses that can afford to hire somebody to watch the screen.

The small investor will get hurt in this deal.

-- Scott Clark

(received 5/26)

James Cramer

: I read with very little sympathy your pleas against the movement for

extended trading hours. The currency market, for example, is a 24-hour market and functions quite well, quite efficiently. You don't see currency traders moaning about the markets never being closed. Using family values to justify your argument is a joke.

Just because you think you won't be able to pry yourself away from the ticker doesn't mean other people won't or do. Throw in a few stop losses on your positions and read your kid a book or go to the ballgame. Stop sweating every single point.

-- Adam Alexander

(received 5/25)

E-tail vs. Retail: Diverse Battlefields

Jim Seymour and

Steven Schuster: In response to your columns in the

Everything Must Go ... Online series, I read your excellent points of view and disagree with both.

Barnes & Noble

(BKS) - Get Barnes & Noble, Inc. Report

and

barnesandnoble.com

(BNBN)

will be eminently successful in that this company enjoys the best of both possible worlds. Regardless of who is selling books, customers will have to go to Barnes & Noble, which, after it completes its acquisition of

Ingram

, will become the largest book distributor in America. That was a brilliant move.

While

Wal-Mart

(WMT) - Get Walmart Inc. Report

still lacks an online presence, it has ample resources to spend to become an overnight presence on the Internet. As long as Wal-Mart executes properly, (and doesn't it always?), it will blow away the competition, here, there or anywhere!

Will some brick-and-mortar companies fail to establish a successful online presence? You bet. But don't look for the big guys to fail. They are too good at what they do, and after all, the Internet is only an additional means to sell merchandise.

-- Michael Gordon

(received 5/25)

Suzanne Galante

: In response to your story

Everything Must Go ... Online: Amazon's Big-Tent Philosophy, I shop both. I have shopped for clothing online from

Gap

(GPS) - Get Gap, Inc. (GPS) Report

, for groceries from

Whole Foods Market

(WFMI)

and, needless to say, for books and CDs from

Amazon

(AMZN) - Get Amazon.com, Inc. Report

.

I buy things online when I know what to expect and can wait for them, things like socks, T-shirts, books, rice, etc. And I will buy services -- financial services, insurance, banking and information -- every time.

I don't buy things online when they are things that I need to see. Shoes, suits and ties, I need to really see their colors. I need to drive the car before buying it. When buying a television, I care about how the colors show up on the screen.

The point about existing brand names is well made. Building a brand name takes time and money -- ironically, money spent to advertise in traditional media like print, radio, TV and billboards. No e-commerce start-up can short-circuit that.

-- Richard Koo

(received 5/25)

Suzanne Galante

: In response to your article

Everything Must Go ... Online: Some Sites Are Dying to Offer Low Prices, there are no barriers to entry for e-tailing on the Web. There will always be someone willing to sell for a little less. The 8% to 10% net margins in Amazon's business plan are a mirage.

I predict someone will come up with a search engine to find the lowest price for anything. They will probably call it lowestpriceforanything.com. It will work like a low-price airfare site. Just type in the item -- a computer, book or whatever -- and it will send you to the Web site offering the lowest price. This is why margins will always be razor-thin in e-tailing. People don't particularly care if they buy it from Amazon or

Borders

(BGP)

or whomever. It's not like going to

Nordstrom

(NOBE)

, walking on a marble floor and listening to the piano player while your spouse tries on clothes. It's sitting in your living room and clicking a mouse. Wall Street is dreaming on this one.

-- Robert Wallace

(received 5/26)

Been There, Seen That

Aaron Task

: In response to your piece

Wall Street Worries as Market Tumbles Through Technical Levels, didn't we go through the same pattern about five weeks ago, April 13 -19? Four or five days in a row down on the

SPX

and the

NDX

and then turn around and gain it all back?

What are the differences now? We are one month closer to Y2K. We are one inflation report closer to a rate hike. One month further away from tax refunds and IRA contributions.

I think there is less demand at this time of year every year because a lot of the current year's new money has been put to work by late May, and it's too early to make bets with confidence based on next year's numbers. But at the same time, no one is panicking about the market. That's why volume is light.

-- Mark J. Thompson

(received 5/25)

Extended Hours: The Choice Is Yours

James Cramer

: In response to your column

Times When Trading Takes a Back Seat, I'm all in favor of actively setting priorities in life. However, no one will force you to trade longer hours once extended hours come into being. If you do, it will be your own decision. Lots of people have jobs where the more they work, the more they make -- for themselves and their partners/shareholders. Some of those people make the "wrong" decisions and face the consequences. Many others draw the line and are happy.

As a side comment, I must say that as a businessman and a consumer I find myself increasingly annoyed at artificial time fences. The world is rapidly becoming 24/7, and I for one like it. This factor combined with the tendency toward openness seems to put strong impetus behind the extended-hours movement.

-- Ronald Guest

(received 5/24)

James Cramer

: Thank you for arguing that

extending trading hours shouldn't happen. But it sure looks like it is going to happen, and soon.

However, it takes participants to make a market. What if, as we used to say in the '60s, "they gave a market, but no one came?" How much nonparticipation by the key players would it take before the extended hours would be withdrawn?

-- Charles Ehm

(received 5/24)