Skip to main content

Cramer's Rewrite of His 'The Real Problem of This Market' Piece

The trader revisits a Thursday column about Intel and Pfizer.
  • Author:
  • Publish date:

(Here's a piece written on the fly that I am glad I have a chance to amend and improve. It's like that for me a lot. I am banging out pieces and trading and thinking, and often I don't have time to flesh things out. This piece was not that well written, and when it was selected to be rewritten I was kind of embarrassed. But, while there are no second chances in trading, there surely are in a rewrite!)

All right, let's get off the desk for a second. Step away from the machines. Huddle on the couch with us. What are we really talking about?

(I don't know what happened in the editing here. This was supposed to say "huddle on the couch with Jeff and me," an allusion to the fact that we had just had one of our 10 strategy meetings for the day and the only things we focused on were


(INTC) - Get Intel Corporation Report and


(PFE) - Get Pfizer Inc. Report. We talked about them because they are two "overowned" stocks, meaning stocks that have become generic proxies for the market for many people. I used to appear on David Faber's aborted "Bull Session" once a week a few year's back, and he would kid me by asking me "Jim, what's the key to this market?" I would always answer "Pfizer." When people think of tech, they think first of Intel. That's why having these stocks ailing is so painful.)

The real problem of this market: Intel and Pfizer.

(Here was an inartful sentence. It should have been the twin problems are, and I can't stand this agreement problem that my seven year old would spot.)

Both of these stocks act like the circus bug warriors in

A Bug's Life


(Speaking of my seven year old, when we went down to Williamsburg for CNBC, we drove down in a van with a VCR and the kids watched A Bugs Life three times as Mark Haines's backroads method took us through more than 100 red lights! In A Bugs Life, some bugs that look like warriors are just actors, which is kind of how I feel about INTC and PFE.)

They look like they are fierce combatants ready to lay down their lives for you. But they are mere actors, and, unlike the movie, they aren't stepping up.

There is only one problem. We believe in these stocks. We have gone to them before, and they have worked for us. We know people who own these stocks. In fact, we don't know anybody who


Scroll to Continue

TheStreet Recommends

own them.

(What I am trying to get across here is that some stocks have become heroes to us. But stocks are pieces of paper. They aren't fiction like warrior bugs, but they don't possess heroic qualities. They can go down for no reason or because of fate, or, in some cases, because the companies themselves are not performing well. In this case, the latter is true RIGHT NOW. I could not believe how much angry mail I got telling me that I was wrong to badmouth Intel. I am not badmouthing Intel. In fact, if you search through my writings, I think you will find that in 1988, when writing a column for the Manhattan Law Journal, I said that you could own Intel for the next decade and that it was the best company around. That was only about a gazillion percent ago. I then wrote the same thing many times for SmartMoney , and my last column for them was about how it was time to double down on Intel, which was shortly before another quadruple in the stock. My Intel credentials are as about as stellar as they come, so I brook no one saying I am trying to knock Intel. I am just pointing out that when its stock isn't moving, it creates an overall impression in the market of negativity. Same with Pfizer. Heck, I have said as many times as possible that Bill Steere is about the best nontech CEO in the business. The transformation of this company from also-ran pharmaceutical to St. Pfizer is pretty amazing. Or, I guess, was amazing, because this stock has just dropped 40 straight points.)

Yet, the stocks can't possibly live up to our expectations anymore. Suddenly Pfizer, the drug company that could do no wrong in the 1990s, feels like Pfizer, the laughingstock of the '80s.

(When I got in the business,


(MRK) - Get Merck & Company Inc. Report was just inheriting the mantle as the greatest U.S. company, and




weren't far behind.


(LLY) - Get Eli Lilly and Company Report was loved, too. As was

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report. But Pfizer was considered an awful one- product company. Everything got turned around when its pipeline started spewing blockbuster after blockbuster. )

Trovan? Give it the hook over that liver stuff. Viagra? Better as a Leno laugh line than as a drug.

(No joke, sales are not what the Street thought they would be.)

Zithromax? Heck, they won't give it to me anymore at my HMO. They say it's because they are worried I will get immune to it. But I think it's because it is too expensive.

(Got lots of critical email from people saying what am I doing using an HMO. Well excuse me, but I like my clinic, which happens to be across the street from my house. Zithromax is this antibiotic that once stopped bronchitis in a day for Me, but the doctors all seem very reluctant to prescribe it. Pfizer's stock has come down because its earning estimates, which were as high as $2.80 recently, are now down to about $2.50, which still makes it expensive on 1999 earnings.)

And then there is Intel, which is a proxy for everything that ails the




(DELL) - Get Dell Technologies Inc. Class C Report


Applied Materials

(AMAT) - Get Applied Materials Inc. Report


(As Intel is in 80% of the personal computers, and the company is a brilliant marketer of its own product, you can't have Intel going down without sowing doubt about how everyone else is doing in the sector.)

I remember six years ago when I gave a talk at the 92nd Street Y, I asked how many people own Intel. Show of hands. Not one went up. (All shot up for

Philip "Killer" Morris

(MO) - Get Altria Group Inc. Report

, though.)

(This was one of those bizarre seminars that SmartMoney gave where I was on a panel with my friends

Jim Stewart


Steve Swartz

. I was shocked when no one owned Intel. That' s what made me so confident that I was still looking at a multiyear run. If we had that seminar now, I wouldn't be invited because we are now rivals, so this was a little unrealistic.)

Now if I were ever to be asked back there instead of the staid guys they let in now, and I polled that audience about who owns Intel, I am sure every hand would go up. Heck, whom can you sell Intel to if everybody owns it? Intel has infected every portfolio, and Pfizer doesn't have anything to cure it!

(Here again is the concept of being overowned. I will often bring this into discussion because it is the type of psychological knock that the Street never talks about but is most certainly true.)

Until we discover new leadership, these two circus bug pretenders will continue to let us down. They just don't have the juice right now. And we are asking them to do too much for us.

(I waited to post this piece until these stocks had firm footing. Indeed PFE moved several points. But that does not invalidate the thesis. It is as true as ever.)

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. 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