James Cramer on AOL

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James Cramer chatted on AOL Feb. 24 at 5 p.m. EST.

PF Trader:

Welcome everyone to another edition of

TheStreet.com Live on AOL.

Tonight we'll talk stocks with Jim Cramer. Just one note:

TheStreet.com

did file for an IPO this week. This topic is off-limits due to SEC regulations. Welcome Jim.

TSCNYjjc:

Hey -- rough day -- or at least rough half a day! Lets get started.

PF Trader:

So what do you make of Greenspan's comments?

TSCNYjjc:

The point of Greenspan's talk was frankly that things are strong here and weak overseas. Because of that dichotomy it is unlikely that he will hike rates drastically, but that he would like to hike rates if the economy gets stronger. The bias is to tighten I think. that's not good news. But if the economy softens a bit or we see slower numbers out of this economy then he will do nothing . Warning lights; yellow lights; but not red lights I think he also understands that it is dangerous to call a top in the stock market because he did that once and he was wrong, the irrational exuberance comment.

Question:

Hi Jim, do we have the gas to get to Dow 10k from here? What does the Trading Goddess say ?

TSCNYjjc:

The Trading Goddess thinks that things are fine, not bad, not good. She wants to see a good advanced decline line and she does not like it that the market has been dominated by just a couple of tech stocks. But she thinks the market is benign. I agree. Buy dips in Tech and I am buying some banks and drugs.

Question:

Is this bond market induced sell-off a buying opportunity?

TSCNYjjc:

I think the bond back-up is to be expected given that Japan is reflating like mad and our economy is so strong, but inflation remains low and I am not that concerned. I do know, however, that there is always the point where we get to all-time highs and it brings out sellers, and this was one of those occasions.

Question:

Do you think LCOS's earnings report tomorrow will help the Net stocks?

TSCNYjjc:

I have been very vocal that I thought the Lycos trade -- the one where he swapped assets with Barry Diller -- was not beneficial to shareholders. I think that deal made the numbers from Lycos irrelevant to Lycos but they may be viewed as positive for the Net if they are as good as i expect. Lycos was doing very well before this deal.

PF Trader:

I saw one analyst report saying the MSFT trial will not cause any harm in operations.

Question:

Jim: How do you think Microsoft will come out of the trial?

TSCNYjjc:

I am neither long nor short Microsoft and have no position. But I think the trial is a negative and the remedy may be more negative. I do believe however that there will be appeals and that nothing will be done to wreck the stock. It is a blunder on Microsoft's part to have handled the case so poorly though.

Question:

What's your target price on AOL?

TSCNYjjc:

I tend not to use target prices as I think that they are really the province of these analysts looking to upgrade or downgrade a stock. My take is that AOL is a winner in the segment, that I am long it and as long as it continues to execute as well as it has I will remain long it.

Question:

Do you feel that CPQ is a good short term hold?

TSCNYjjc:

No, I don't like Compaq (full disclosure--I own puts on it) and I have cooled on the personal computer segment of tech until I can confirm that business has gotten stronger.

PF Trader:

Jim, what do you make of Intel and the Pentium III?

TSCNYjjc:

I think the transition will be difficult, like all transitions and I don't have a position in the stock right now. I sold my stock today as I am increasingly worried about this aspect of tech (personal computers) even as I like the Net and I like the networkers and I like companies involved in wireless.

Question:

What lies ahead for Dell computer?

TSCNYjjc:

Dell is another that I had now left until I can get a better handle on this sector. I don't think that the sector is as robust as it once was. I think that tech away from personal computers is strong, but I think Dell is wait and see.

PF Trader:

Jim, many people may not know about the new indexes that TheStreet.com has created and the options that now trade on them. Talk to us about these.

TSCNYjjc:

There are two of them. There is the commerce (ICX) and the DOT. I like the DOT and I am not as fond of the stocks in the ICX. I have to emphasize that these are wild traders --too wild for me -- the virtual American Scream Machines of trading. That said, I think that they are great benchmarks and I have my eyes glued to them all day, particularly the DOT which holds up well considering.

PF Trader:

(Symbols $ICX.X and $DOT.X for the AOL Quotes and Portfolio system.) One of my favorites ...

Question:

Will Cisco continue to dominate its marketplace?

TSCNYjjc:

I am glad you asked this question. Cisco is a long of mine and while I am moving out of the personal computer sector because of a possible short term slowdown and a love affair with the cheaper p.c.s, I am sticking with the networkers. I bought Cisco into the weakness today and think that it is a long and short term winner.

Question:

Jim - Are you going to be an aggressive buyer tomorrow if we have a weak open?

TSCNYjjc:

Actually, I am going to be on Squawk tomorrow so I doubt I will be doing much of anything. But when I get back, if the bonds firm a bit, I will be a buyer. I think the market is just fine and I don't mind a pullback after Monday's big gain.

Question:

What would be your top 3 stocks to buy tomorrow for long term?

TSCNYjjc:

Again, this is not a tomorrow exercise. I can tell you that I like AOL, Cisco and Worldcom and I will buy them lower if they come in. I am not jumping up and down about anything because the bonds are so shaky , but when they firm the market will firm. I am inclined to want to buy weakness here.

Question:

What entertainment stocks are you currently buying

TSCNYjjc:

I am long Time Warner and Viacom. I think these are excellently run stocks and I think that when they are down or victimized by sloppy sellers I scoop them up. But when they run up I let some shares go.

Question:

Prodigy -- hold or sell?

PF Trader:

Short?

TSCNYjjc:

I am not that familiar with these guys, but man are they knocking AOL with that pop-up thing! All I can say is that I am long AOL and I don't have any Net hedges against AOL. Why do I need Prodigy if I can own AOL??

Question:

What is your opinion of PSIX long term? Thanks.

TSCNYjjc:

Looks like they are doing better, but I still prefer other players in the sector.

Question:

Short-term opinion of ATHM?

TSCNYjjc:

@home is one of those stocks that is very problematic in that short-term it is being held down by its buy of Excite, but longer time it should do fine. I do not own the stock but would buy it if it fell to the 80s.

Question:

What are your favorite names in the telecom group?

TSCNYjjc:

I like and am long both ATT and WCOM. this really is a favorite group of mine. What was the cause of today's sudden nose dive? You know this market has a kind of schizophrenic tone to it. I have been writing about how whoever speaks last controls. Today I felt that commentators on TV scared us into thinking that rates are going way up and the two-year auction, an important harbinger for the short-term direction of interest rates, went poorly. So the overall impression was that if rates are going up the market is going down. That's a common pattern and it happens all of the time.

Question:

James: Is there a vast institutional conspiracy against the Internet stocks? Do some of these pompous analysts have financial reason to slam these high-flying stocks or are they just sore because they missed out on all the fun?

PF Trader:

Hot one!

TSCNYjjc:

Wow -- I have to tell you that I think the analyst community is actually fairly supportive of the Net, but I know what you mean as they were slow to realize the Net's true strength. What I recommend is that you get a hold of the transcript of the Internet Summit we held last Friday as it is very instructive.

Question:

Is LU a good buy now??

TSCNYjjc:

I want to see how Lucent's quarter is. The last time Lucent reported it disappointed on the top line. That said, this is a great company and if it can show that things are back on track, I think it will go higher.

Question:

What do you think about Yahoo at these levels?

PF Trader:

(Do you Yahoo?)

TSCNYjjc:

I am long Yahoo. I feel that Yahoo is another big winner in the sector. And I like the sector. What I would urge you to think about is that tech, as a title, is very broad now and that there are various times when some sectors are better than others. Right now I like Net and telco and I don't like personal computers. But that could change, if i could get some comfort on how sales are.

Question:

Jim: Are drug stocks still in favor with you? If so, which two do you like the most? Thanks: A.J.

TSCNYjjc:

Yes, I like almost all of these stocks. PNU and SGP (the latter is a long of mine) make sense, but I wrote today that I wish these stocks were to come down with the bond market so I could buy more of them.

PF Trader:

What do you think about the NYSE perhaps extending its trading hours?

TSCNYjjc:

I would welcome it. I am an early bird and am always ready to roll. But I would feel badly for those who got to spend less time at home because of the change

PF Trader:

From one auction to another ¿

Question:

Do you think EBAY will be a long term winner?

TSCNYjjc:

I have a very small call position in E-Bay. I am trying to get comfortable with these guys. It is a terrible trader but I find so many people on EBAY that it is of interest to me. I particularly like the repeat business this company seems to be doing. Kind of like national classifieds.

Question:

I was wondering what the story is behind "Picking Winners," if you were interested in stocks how did you come to read this book? And, do you still read it every so often?

TSCNYjjc:

Actually, I learned to like horses when I was at college. After I got out I stayed with that interest. I re-read "Picking Winners" when I got involved with the market because it has excellent references to discipline and only taking a swing when it is right. Beyer speaks endlessly in the book about the need to do homework, and that is a valuable lesson for everybody who trades and invests.

Question:

Is SUNW attractive at these levels, or would you wait for it to come down some more?

TSCNYjjc:

I would like to come down some more. SUNW has gotten to the point where it goes up or down three every day. I wish it would get to a level where it would get a firmer footing because I know business is excellent.

Question:

What are the prospects for companies like CMGI which act like venture capitalists for Internet companies?

TSCNYjjc:

There was a fellow, Ryan Jacob, who was at the TSC Internet roundtable the other night and he spoke positively on CMGI. Based on his recommendation and subsequent work that we did, I bought a small position in the name. Again, I would urge you to read that roundtable transcript as it was excellent.

PF Trader:

Jim, that was another fun one! Thanks for taking the time out of a bust day to chat with us. We have you back for the next chat on Tuesday, March 30th at 5pm. Until then Happy trading!

TSCNYjjc:

David, as always it was a terrific pleasure. I look forward to these things as I learn as much from the questions as I hope you learn from the answers!