Hardware horrors, they won't go away. I have often written that the market has a terrible short-term memory. But it does have some scar tissue now and then that can haunt decisions.
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Take the action in hardware yesterday. Did you notice that
bounced back while other tech stocks stayed sluggish? That was because Sun reassured investors again yesterday that it does not have a Y2K problem. If Sun hadn't reassured, I think it would have gone down with the rest of them.
Normally, right at this moment, I would be loading the boat up with hardware stocks. I would be building
and taking down
. I would have my max
position on. I would be carrying 100,000
. We don't own any of those right now.
Instead I have a little
and a little Sun and some
. Because I am scared. I am just not hearing the right things about the market out there. Oh, hold it, I am not on TV, I don't have to use euphemisms or worry that some CEO is going to call me and berate me.
The hardware business sucks right now. The resellers are saying nasty things. People are waiting. They are sidelined. Remember the way IBM concluded its quarter? That's how hardware companies are starting the fourth quarter. It is not reassuring.
I want a Y2K-proof portfolio and I want it now. I'll switch when we get closer to year-end and everybody wants that Y2K portfolio, but until then, you get to see the wares of most of my names at the supermarket, not in
Computer Reseller News
. (Shareholders of Best Buy, you would do well to read
article on BBY filed last night. Kapner has made a lot of people rich with her reporting, and I tend to follow her judgments more closely than I do those of analysts on Wall Street.)
So, why aren't I shorting these names? Because remember the
piece I did yesterday about short and cover, short and cover, the rhythm of the market? Hedge funds are short all of these names. I don't like being part of a gang-tackle short because if somebody blinks and tries to bring the short in, you get crushed.
In yesterday's weakness, I didn't reach for the Compaq or the I-Beam. I bid for the
. I didn't try to come up with a good reason to buy some
; instead I took down some
. There are just too many leaks in the ironclad boat for me to climb into it right now.
Understand, it is hardware that I am talking about. Communications infrastructure and Net plays seem to be OK, although the former keep getting raided by bears with nothing but time on their hands.
Sometimes I feel naked when I look at my portfolio, devoid as it is of hardware names. But rather than reaching for some Compaq, I think I'll just throw on a sweater.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Sun Microsystems, Gateway, Intel, Microsoft, General Mills and Pfizer. 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