Editor's Note: Be sure to read the first three installments of this four-part series.
Ironically, the death knell for value investing may very well be sounding right now because of technological innovation. Let's again pick on Dreman (what the heck, you attack me, I believe in massive retaliation). Let's look at his pathetic picks, which would have had you down an average of 9% in the week they came out. First is
. Dreman thinks that Albertson's got punished for having a bad quarter and will come back. I think Albertson's is being hit by a fundamental paradigm shift, buying the high-end foodstuffs, where are the profit margins are, over the Web. It will only get worse as
Dreman likes three financials,
. Ouch! I think all three are being knocked about by the ease with which you can locate and take the cheapest mortgage online. These guys are not the low-cost providers. Meanwhile, as people become more comfortable banking on line, these franchises will be eroded.
may not have technological enemies, they're just bad fundamental businesses. But I wouldn't be surprised if the Web cuts into the latter eventually.
You see, tech became part of all business, and if you avoided it you got smoked in a host of ways beyond just tech itself.
Ultimately, the tech thrust cuts to the core of what the contrarians believe. They are pinning their comeback on the return to favor of their out-of-favor securities. But if tech outmodes their favorites, they aren't coming back and the value camp will be doomed to massive underperformance.
I think that, in the end, is exactly what's happening. And I have no sympathy for them. You shouldn't either.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Cisco, Goldman Sachs, Intel, Microsoft and Sun Microsystems. 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