Cramer on the Trouble with Technology

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Something bothered me about Friday's chat on

ABCNews.com

. It's part of a common problem that invades all chats. I call it the "techno-brilliant; stock market stupid" analysis and it causes people to lose millions of dollars a year in bad equity selection.

OROM technology, DVD technology, Zip Drive technology; these are all part of the same affliction. It is a fundamental, misguided belief that if you discover some technology that you think is revolutionary, you can make money on it.

I never, ever invest this way. I know that new technologies don't produce enough wins in the stock market to justify the dollars spent betting on them. Sure, somebody might make some money, particularly the earliest guys, but when we look back a year from now we won't find any winners worth investing in. If the technology is fabulous, then it will be copied by other, bigger companies. If the technology isn't fabulous, you will get blown up as surely as if you stepped on a live land mine.

One of the reasons why I wanted

Herb Greenberg

to write for us so badly is that Herb was wise to this phenomenon earlier than anybody else. He may not agree with my typecasting of these kinds of investments, but over the years, Herb's

Chron

column has set me straight many, many times about the wonders of betting on new technology.

I read Herb because I need to be more skeptical than I am. I love new stories. I love breakthrough technology. I love when I hear about something no one knows about. But Herb's column often tells me that not only have others heard about it, they know more about it, and in many cases are already short it! Talk about the life cycle of investments. It is no shock to me that

Jeff Berkowitz

, my technocentric partner, and Herb often seem to share the same views. They are out there everyday talking to people who know this stuff better than I do and they see all of the false prophets firsthand.

Jesse Eisinger's

stuff does the same thing for me. When everyone else is telling me about some breakthrough drug, Jesse is laying it out in a way I can relate it to the stock market without being fleeced.

Why are these interpretations so important? Because whenever there is a technology or a device or a drug that is difficult to understand, the fraudsters are out in full force explaining to us how big the market is or how wonderful the technology, or the device or the drug is. The promoters are so quick to seize on our inability to tell fact from fiction about science and technology that they can make hay while our ignorance shines.

That's why I want

TSC

jammed with skeptics demanding accountability. That's why I urge Dave Kansas,

TSC's

editor, to continue to recruit people who can see through the bull^%#%$, something that the conventional press does very little of.

Frankly, I don't need it anymore. I steer so clear of these hyped techs that the promoters can't lay a glove on me. But from my chats I know that the promoters are hammering the investing public with a vicious set of jabs and hooks.

That's why our job is so important. That's what makes

TSC

required reading for all of those who want to believe, even when the belief is misplaced.

**********

Random musings:

Could you get any worse than these

Bloomberg

ads? Boring, listless and a real buzz kill. Please

CNBC

, for everybody's sake, stop letting them have that 9:28 slot. Makes me want to have more coffee...

Thought

Barron's

might have had something for me, when I saw the piece on

Kohl's

. But it turned out to be Germany's Kohl. I knew there couldn't be anything positive in there about what I own.

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At time of publication, his fund is long Kohl's, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. 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 welcomes your feedback, emailed to

Jjc@thestreet.com.