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James Cramer: First, let me say that I am truly impressed by you. I believe you to be honest, entertaining and very intelligent. I think that you are doing a great service for investors by trying to educate them and help them to make better, informed decisions. You have said, don't try and copy me, do your own homework. I agree totally!
Tonight, you confused me. On
asked if he/she should buy
because their broker recommended it. Your response was, do it on
. Is that advice not a bit hypocritical?
Let me explain. You have said, and I agree, that it really burns you up when people take your articles and pass them around the office instead of the people coughing up the $10 a month for a subscription. I mention your articles and the other writers on your site often and even try to get clients and co-workers to subscribe to your site because I feel that it would be a great educational experience for them, as it has been for me. I feel that you deserve that $10 a month, and it is a very fair price.
If I make a recommendation to a client and they take that trade to an online broker, are they not doing the same thing to me as someone who takes your information and passes it around for free? I am not saying that online/discount brokers are bad and they don't have a place; they do. Just as index funds and no-load funds have their place, too. However, I work very hard, just as you do, to put out a quality product at a fair price. My top 20 clients, clients whose portfolios consist solely of individual stocks that I recommended, watched over, etc., averaged a return of over 70% last year and for this, I received a commission of around 1%. Pretty reasonable in my opinion, and well deserved. If I was fortunate enough to run a hedge fund like yourself, I would have made a lot more money. Yes, I am in it for the money just as you are, but like you, I get a great deal of satisfaction out of teaching people about investing.
My wealthy clients are too busy making money at their jobs/businesses to watch over their portfolios and to do the research to pick their own investments. I think that you have even said that these people will always need brokers. I am not sure that I agree with you that the little guy can trade online and do better. A lot of my time is spent hand-holding and trying to take the emotion out of investing for my clients. This cannot be done at home online. I agree that if you are buying
for a long-term hold, you probably don't need a broker. However, I can make up the difference between my commission and that $14.95 a trade by getting the client in or out at a better time. Hey, 50-cents a share in trade price makes a big difference.
I believe that the little guy needs a more level playing field. I think that online trading has and will change my business. I believe that brokerage firms including mine are being slow to adapt. The people in the command posts don't necessarily know what's going on at the front line. But I don't think that people are better off trading online; they may save a few bucks on their execution costs, but they may not make as much money on their investments. And let's face it, the name of the game is to make the most money, not to save the most in transaction costs. We will probably disagree on some of these points and that is fine. But I hope that you understand my point.
Confession time, the first time I saw you on "Squawk Box," I thought that you were an arrogant, egotistical jerk. Boy, was I WRONG! Keep up the great work.
PS. A client who took his account online in the summer of '97 called the other day and told me that he realized that I knew very little, but he found out that he knew even less. We both laughed, and now he's a client again.
James Cramer replies: I am asking the editor to publish this exchange because I may have confused people. My "use E*Trade" comment was intended to suggest that I thought your broker was WRONG about Ciena, not that trades should be done away from the suggested broker. I think Ciena is a bad stock to own and that is what I meant.
Mamby Pamby or Sound and Sensible?
In response to
Asset Allocation: Your Portfolio's Insurance Policy, it's too basic and mamby pamby. It's not very practical. Not up to your usual quality. Sorry, dude.
asset allocation and funds of funds, my thought is that funds of funds' biggest drawback, even for the laziest of investors, is that as circumstances change and the need for a change in asset-allocation strategy arises, investors need to sell out of the entire fund of funds and buy into a separate fund of funds to rebalance. The end result (hopefully) is a relatively large capital gains tax bill vs. a more traditional rebalancing whereby only a portion of an asset class is sold.
Fund of Funds investors should be wary.
J.C. Penney for Your Thoughts
, regarding your
J.C. Penney's Questionable Strategy, I shake my head every time I walk into one of their stores. The stink of long, slow death is palpable. Lousy layout, tired merchandise and mediocre pricing are a recipe for disaster. Why is it that these former catalog greats,
, etc. are so slow to translate their remote-sales expertise to the Internet age?
you're not. Yet
your hoax on J.C. Penney nearly had the same result on me as Welles' Mars invasion broadcast! Know that you nearly caused me a heart attack upon reading your hoax of J.C. Penney's plan to go into the bookstore biz.
As a dividend buyer, please allow me to rebut your opinion. I do not think the dividend is in jeopardy. Of course I was wrong on
when it was going through throes. But at the same levels for Kmart that J.C. Penney is at now, I was able to enjoy Kmart's hefty dividend for several quarters before it was cut and still sold at a gain.
The main reason I'm in the stock? It's the drugs, stupid. Yes, the company is doing the right thing buying small chains it can sweep up. Penney's Laguna Hills store is a modern, up-to-date, first-class merchandiser. I don't know where you're located, but I invite you to beautiful sunny Southern California to see for yourself where the future of J.C. Penney lies. Say, maybe you can get some J.C. Penney execs out of their woebegone offices in Plano to have a look, too.
Natural Born Lawyers Take Aim at Time Warner: Movies are such an important part of life that the American people will go to any extreme to let the producers know what they think. Film is a form of folk art, and folk art belongs to everyone. You might argue that people pay to see these movies, and that justifies their moral content. No. People go to see the movies the way they always have and will continue to do so.
I actually hope the litigants win and the victims, whose lives were fodder for the fantasies of a disgustingly wealthy corporate oligarch masquerading as a egalitarian film producer, get some justice. Sounds like the plot of one of
films, doesn't it?
What If . . .
Time to Reflect About the Possible Risks of Internet Stocks just makes me laugh. His worries and concerns about everything are just ridiculously silly. We can easily follow his way of thinking and make the whole world fall apart: What if you lost your job tomorrow and you don't have money to feed your kid anymore? What if you were hit by a car when you walked out of your house? What if
had a heart attack?
What if the earth stops turning? What if the sun burns out and we have to live in the dark? What if all of a sudden people just stop purchasing computers and all the box manufacturers were out of business?
We can simply go on and on. Conclusion: The only way to stop worrying and turn Mr. Greenberg bullish will be to eliminate all competition and have only one player in each sector. Mr. Greenberg must have been brainwashed by Communists that competition will turn everything sour.
I usually find Herb Greenberg's columns interesting and insightful, but
today's Chicken-Little-the-sky-is-falling is absurd at best.
"What ifs" do nothing to help your readers make sound investment decisions and really portray you as someone who is a wannabe
instead of a reliable source of investment information.
What if people stop drinking soft drinks? Will that impact
? What if everyone starts taking the train instead of flying? Will the airlines have concerns? What if people start utilizing herbal medicine in greater numbers? Should
be worried? I believe everyone understands that every business carries risks.
I would hope in the future you would concentrate on providing information that has a positive impact instead of helping create self-fulfilling prophecies.
Regarding your article
Time to Reflect About the Possible Risks of Internet Stocks, thanks for the yellow flag regarding Net stocks. Playing the devil's advocate helps stabilize some irrational and excessive bets people make on high flyers. I appreciate the heads up and food for thought no matter what happens with the sector.
Broker Defends Destiny
I'm writing in response to
Twin Fidelity Destiny Funds Experience Diverging Destinies. When a young person with no money wants to sit down with a broker/adviser to discuss investment goals and objectives, create an investment plan and get help with its execution,
Fidelity Destiny is a great option, although expensive.
For 20 years, I have resorted to this recommendation and to this date have never regretted it. Lots of people starting out wanting to accumulate money in the stock market can do a heck of a lot worse and more expensive things than start a monthly contractual plan with Destiny. Look at it through the eyes of those who need a plan and through the eyes of a retail broker, and it isn't so hard to understand.
Y2K Survey Says . . .
has been on
this for a while and has been wielding the big stick. My bank has seen them four times in last 12 months. I'd trust their analysis more, since I've never heard of
, and I should have received one of their surveys. Y2K has certainly become a nice cottage industry for the doom-and-gloom set, but unless the phone companies and electric utilities have severe problems, it is unlikely that banks will.
Colin Blair, Peoples Savings Bank
article is a good, timely article. The major concern should be: Is the government refusing to allow banks to release their federal year 2000 examination report cards because they are trying to prevent customers from switching from banks that are behind to banks that are compliant or on schedule? Why the cover-up?
Although Weiss' reports have to be questionable because of so few returns, the fact that this kind of important data is being withheld by the government supports the fact that major problems will surface. Obviously, if the large majority of banks were on time and schedule with their testing, the FDIC would be bragging.
In my case, my bank responded to my Y2K questions with flowery phrases, and when I pointed out that I wanted specific information about schedules, they said they wouldn't answer because the information was proprietary. I opened up another checking account with an organization that was compliant at the end of '98 and am in the process of transferring my pension and Social Security deposits to the new organization.
Keep the information flowing. Any updates on the progress of brokerages and funds? Have any brokerages, major banks or fund families declared themselves to be Y2K-compliant and had it verified by independent testing?
Career Change for JJC?
Looks like someone at
reads your columns. Only one day after you
write that Mr. Softee should follow
lead by making a deal,
news comes out that Microsoft is thinking of doing the same thing. Maybe they should hire you instead of all those lawyers. Just kidding of course, I know you love what you do and Microsoft couldn't pay you enough to persuade you to advise them. Congratulations on a great call, though.
Sports Isn't So Special
In his report on business journalism,
Giving Volume Its Due,
writes: "But sports is the province of truth, and business is the province of puff and ignorance." Upon further reflection, I think you might see a plethora of fluff and puff in the sports arena, too. Don't even talk about mainstream media!
No Relief in Sight
: I know that you chart the
bond yield. I have always stuck with the futures charts, but in any event, the huge old resistance level of 122-10 in the futures was taken out last year. That level, when tested for support in the last few weeks, failed miserably in an attempt to hold.
Our rally on Friday didn't even come close to turning this around. In my work we are in an intermediate-term bear market in bonds, with the possibility of moving into long-term bear mode. Do you concur? I hate talking like this, but could we be getting into a decoupling period between bonds and stocks,
early '87? Just a thought. Also, good
spot by you on the financials holding quite well in the down market of two weeks ago.
Friday's report, you stated that the advance/decline line was doing very well. Sorry, but one day doesn't establish a trend. Plus 400 on the
and plus 200 on the
doesn't wipe out what is an ugly advance/decline line. One other point: The new high/new low indicator is still very negative and the volume barely broke 800 million shares both Thursday and Friday.
Read the tea leaves. Couldn't this just be a head fake by fools with nothing better to do with other people's money?
Jim Cramer, about your column,
Avon Need Not Come Knocking: I don't know where you got this information, but I have to disagree. As an independent Avon representative, I know that the "processing" charge from a "Sales Associate" is only 25 cents. Avon charges
to order from the Internet.
I, for one, am not worried about Avon on the Internet. All of my 200-plus customers buy from me to get the personal service that only an independent sales rep can offer.
I enjoyed reading your commentary; I just wanted to straighten that out.
KC Wallace Ports,
Avon independent sales representative, recruiter/trainer (received 2/22)
Editor's Note: The information was quoted from a research report by Goldman Sachs.
Blame It on the Competition
I was most interested in your article
Surging Shares. Your conclusion seems to bode ill for sustained long-term growth rates. However, I think there is a simple explanation for the lagging rate of wage increases, namely, greatly increased competition from overseas during the 1990s that was not there in the 1960s.
Just go into any store these days and try to buy something that isn't made in China. U.S. employers can't raise wage rates because U.S. wages are already too high on a global scale and will have to be equalized with the rest of the world eventually. Just compare the hourly rate of a
worker with one in a Korean auto factory. The growth rate in U.S. wages will have to be far lower than in Asia for a long time to even out these imbalances. Thanks for a thought-provoking piece.
Timothy H. Archer
It's a Deal for Dell
Jim Cramer's and
Eric Moskowitz's articles on
can find only one winner -- IBM. I believe the big winner may turn out to be Dell, for a reason no one seems to have recognized.
This deal is between IBM's OEM Division, the one that sells computer components to manufacturers, and Dell's Enterprise Server division, the one that sells expensive multi-CPU computers and high-end disk arrays to large organizations. While Dell is a leader in selling laptop and desktop computers, they are far from being the leader in high-end servers. In fact, the leader in that segment is IBM's Computer Division.
By gaining access to IBM's current and future high-end technology, Dell acquires immediate credibility in the high-margin server market where it is currently perceived to be low end. Its recent agreement to OEM Network Appliance's file servers falls into the same category. With today's deal, Dell will be able to use IBM-developed and IBM-branded components to compete with IBM's Computer Division in the high-end server market.
before it, Dell is trying to move upscale, to become a full-line computer company rather than just a PC retailer. Unlike Compaq, Dell is doing it through OEM agreements instead of acquisitions. That makes good sense, since Dell's strength is much more in sales than in research and development. Having just acquired the best available server technology, Dell, I would expect, will become a formidable competitor for IBM,