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Cramer Still a Believer


Ugly enough for you?

Sometimes, when the day is done, you can't believe they pay you to do this job. Other times you wonder: Who can take this kind of pain? Yesterday was the latter.

Can't say I didn't see it coming. You can't downgrade Intel, as Prudential did yesterday, without expecting to see some fall out. And a non-blow-out number from Cisco didn't help matters.

But the larger issue-- is it over, at least for tech?-- always lingers after a day like today.

This is a moment when my bullish credentials always fail me. You can't help sounding like a cock-eyed optimist (meaning moronic) when you say, "they are okay." Yet I think they are.

Here's what I am not going to do. I am not going to go into the litany of why American technology is always going to prevail and therefore you can buy tech stocks with your eyes closed. I am not going to tell you how much I like Andy Grove or John Chambers.

Let's save that for the revival tent.

Anyone who is not shaken by the severe sell-off in 3COM and Cascade and a whole bunch of other networkers and hardware companies should have his or her head examined. This type of vicious selling would jar all but the most lobotomized of traders.

But I can report that during this three day span nothing big in tech-land has really changed except Japan has gotten a tad weaker and Europe is still teetering along, maybe getting better, maybe getting worse.

Oh yeah, one thing has changed. These stocks are up huge, almost non-stop since the July bottom of last year. They are due for a correction. I never can tell when the correction is going to end. But in our shop, after a brutal day like today, I like to use the one-third rule that I pioneered a few years back.

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Statistically I have discovered that vehement sell-offs beget ragged bottoms. I tell my staff that one-third of the atomized stocks out there have probably already bottomed and are now poised to go up. Another third are trying to put in a bottom. And the final third has a way's to go.

How do you know which is which? Again, another rule of thumb. If the fundamentals are good, and you have recent data points so that your information could not have changed that much, you should start nibbling today on those quality companies that are down 10 to 15 percent from their highs. Wait to commit more so you don't obliterate your capital at all one level.

The press and the bears have teamed up to make constant fun of those of us who buy on dips. While I am by no means a faith healer in markets, I buy dips because I buy "weakness." I sell "strength." In other words, when a stock is up three or four points, it is my discipline to sell it. The converse is true too. That's why some of the more cratered tech names found me on the buyside at the bell yesterday.

This method is intuitive. After all, if your goal is to outperform the averages--my mantra--than how I can I win if I am only buying strength, stocks that are up and recognized as safe? I have to buy when no one else wants to in order to beat everybody else.

I don't want to go recommending what I bought. I might even flip out of some of them for a quick trade if the market resumes its swoon. But let's just say that I rounded up the usual suspects and bought a bit of all of them. I'll be doing the same thing today.

As usual, I own Intel and Cisco of the stocks mentioned in this article. *****************************

Pick: Morgan Stanley-Dean Witter. Not the stocks, heavens, they've moved enough already. But the concept. I see a handful of players, Citicorp, Chase, Morgan, Goldman, Merrill as heirs to the Big Four securities firms of Japan now that the financial structure of that former powerhouse nation has been rendered impotent. Congratulations to all involved in this merger. Good hunting.

James Cramer is manager of a hedge fund and co-chairman of The Street. While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to

James Cramer is manager of a hedge fund and co-chairman of The Street. While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to