James J. Cramer Chats on AOL

The trader chats about Cisco, Microsoft, AOL, the Fed and more.
Author:
Publish date:

James Cramer chatted on AOL Tuesday, July 27 at 5 p.m. EDT. As with all chats, this transcript is unedited.

PF Trader:

Welcome to another

TheStreet.com

Live with Jim Cramer event!

PF Trader:

Let's go!!

PF Trader:

Welcome Jim!

TSCNYjjc:

Thanks AOL! We had an Intel related rally today and it felt great to shake the gloom for a session didn't it??

TSCNYjjc:

Hit me with your tough ones, let's rock.

PF Trader:

There was gloom where I was - ouch!

Question:

I guess in today's world, short term investing=day trading. In an intermediate time frame (6 -12 months), what do you see as the stocks to own?

TSCNYjjc:

I continue to think that the best segment of the market is the segment that makes the Net work faster. That's why my biggest position is cisco.

TSCNYjjc:

It is why I like stocks like Tellabs and Broadcom. It is where I want to be for the next year. I even think the RBOCS (Baby Bells) might be spending money which would really be bullish.

PF Trader:

Internet2 is going to need all new "pipes" and that's where CSCO shines!

Question:

Are CSCO and MSFT still your two favorite stocks to put away for the next 5 years?

TSCNYjjc:

Yes they are. I know that it can be boring to continue to talk about these stocks, but when I want excitement I go to Busch Gardens and I ride on the Loch Ness Monster or the Big Bad Wolf.

PF Trader:

MSFT? So you and Gary are locking horns then?

TSCNYjjc:

I have to tell you that the Trading Goddess, my wife, has a crush on the "work" of

Gary B Smith

, our fine technician who you see on our TV show. Notice work, not the man.

TSCNYjjc:

Gary shocked me with that negative MSFT call on the show last week, but so far he is right. Of course,

Adam Lashinsky

, his fundamental opponent liked @thome--and that was a home run.

TSCNYjjc:

Seriously, that duo is the best part of our TV show.

PF Trader:

Oh these chart guys (I'm partially one myself, for the record) - it's all about looking at the pictures!

PF Trader:

By the way, we're tallking about

TheStreet.com's

new TV show which has been out for 2 weeks on Fox News Channel - Saturday's at 10am ET and Sunday at 1pm ET -- well worth a look!! Great show Jim.

TSCNYjjc:

For the first time I am allowing camera crews and a wire on for tomorrow session. You will see it this weekend.

TSCNYjjc:

And you get to meet

Jeff Berkowitz

, my better and always hidden half as we strategize. We are wired!!!

PF Trader:

Folks this ain't for kids or people with heart conditions!! Cramer live and uncut!

Question:

I think Bank One, with its cash cow First Usa, is a great stock. Am I missing something?

TSCNYjjc:

I tried to "sell" Bank One to Jeff in one of our meetings today. Thats what we do. And it flopped because we are worried about buying bank stocks in front of Greenspan's speech. But One is the cheapest bank stock around. I mean it.

Question:

Is there a chance that AOL gives access away for free in the US? Is this why stock is declining or is it from insider selling?

TSCNYjjc:

I think AOL, which I am long, is going down for a host of reasons. the insider selling, the cable modem debate, the London free serve, and the T cut of access fees. These are all old stories, but they still impact the stock negatively.

TSCNYjjc:

We chose to do nothing with the stock. We think the second half will be stellar and we dont think they will go free.

TSCNYjjc:

Okay that's the good news. The bad news is that I thought it was wrong to cut off IM to outsiders even though I dont like Mister Softee (as a company-- as a stock I love it).

TSCNYjjc:

And I think it was kind of a public relations debacle. But PR is all. I still think the stock is a good one.

PF Trader:

I'd have to agree with that opinion on MSFT myself.

Question:

How do you get help starting a web business without some one stealing your plan?

TSCNYjjc:

Great great question. My experience is that there has to be a level of trust in all business. But that it helps if your idea has something proprietary that you bring to the table.

TSCNYjjc:

I knew I could write a daily dairy on my site so I wasnt worried about someone copying ours.

TSCNYjjc:

But I think you want to talk to entrepreneurs in gatherings and conferences and ask them which v.c.s they really trust as venture capital money is a must.

TSCNYjjc:

I have to tell you I have had nothing but positive experiences with my guys from Flatiron Partners, which is my v.c. based in New York. I love those guys.

PF Trader:

Depending on the idea, you should look into patent protection. Also, while talking to potential partners & vendors - look into using NDA's (non-disclosure agreements).

Question:

Just read your great 4 part series on internet brokerage.Sounds like thestreet.com may be heading in that direction?

TSCNYjjc:

Thanks for reading it, it was from a speech I gave yesterday.

TSCNYjjc:

What I said in a nutshell was that someone would combine news and brokerage someday because the commission stream from the news, but I didn't know who it would be.

TSCNYjjc:

The area is fraught with regulatory issues that are well beyond me, But will be broached somehow by somebody.

Question:

Thoughts on Lucent. Buy here?

TSCNYjjc:

I was confused and disappointed by the quarter of Lucent. that said I remain long it because, I guess you could say, it has gone down so much.

TSCNYjjc:

I sold some when the quarter came out but I kept the rest. Once again Lucent has become a show me stock. They were worried about Y2K spending and about smooth quarters.

TSCNYjjc:

It was one of those conference calls my firm would like to forget.

Question:

Hi Jim, Love TSC! I never hear you talk much about VOD. Is this a keeper or is it too overvalued?

TSCNYjjc:

You know, this is one of those situations that is so soundly misses, that I so screwed up that I always look at it and say "I missed it." Thats why I don't talk about it much. This company has mucho momentum.

Question:

For us folks who try and trade while we work any thoughts on whether the danger of a limit order (getting our order taken after big news which makes it obviously dumb) outweighs the convenience of having a bid or ask in while we're out earning our real $?

TSCNYjjc:

Another great question. I am a huge believer that if you are going to trade you have to give some limits.

TSCNYjjc:

What you might want to do is use wider limits, with some give to keep yourself from being picked off but still getting it done.

TSCNYjjc:

When I used to trade part-time I had great success with that method. It kept me in the game. Now, though, I have to tell you, if you are going to trade full-time you have to watch it full time.

PF Trader:

Using limit orders rather than "mental limits" also helps one avoid getting caught up in the emotions of a trade - it can help you stick to your original strategy for the trade by maintaining discipline.

Question:

JJC, does the Fed's 'neutral bias' mean something different than it used to? What kind of data will guarantee a tightening on the 24th?

TSCNYjjc:

I think the Fed is on hold until it has seen more numbers. I do believe that the end of the tightening bias was a positive, but maybe we all viewed it too positively and the Fed reined us in last week.

TSCNYjjc:

I think that if we were to see two or three weak numbers for the economy we would see an upside explosion in the market.

Question:

What is your opinion of CPQ's new CEO? Looking at long term holding,(1-2 yrs)?

TSCNYjjc:

I think this is too soon to tell. You know my partner Jeff and I argued all day about whether to buy some compaq ahead of the quarter tomorrow and we decided to wait and see.

TSCNYjjc:

We did not know this guy from Adam which is quite different say from what Hewlett (I am long HWP) did when it named Carly to the job.

Question:

Jim, was today's rally a one-two day event or is the correction over?

TSCNYjjc:

The market was strong today but i think it will remain choppy. Today;s rally was really triggered by a Cowen analyst going positive on Intel. He had been negative. It also had to do with an oversold bounce.

TSCNYjjc:

But I continue to believe the market will do nothing until we see weaker economic numbers. We must see some weaker numbers to get the fed off our backs.

Question:

What made the net aol amzn yahoo! come down in the last 30 min?

TSCNYjjc:

I think the DOT market was never that strong today. was the unpleasant E-Bay quarter, boy did that story unravel.

TSCNYjjc:

Part of it was the pain of the secondaries (Pcln and Inkt) which keep kicking around and causing cramps. But mostly it was the report that T is going to cut access charges, which hurt AOL and once AOL was down that was all she wrote.

Question:

Mr. Cramer, your view of EMC stock, long and short term?

TSCNYjjc:

EMC seems stuck here. Remember the big run and consolidation it had last month or two ago? Well I think that decline made people uneasy about the stock and how far it has come. As far as the quarter, it. was excellent, but some of these stocks are overpriced even for excellent fundamentals.

TSCNYjjc:

EMC needs to mark some time, as it often has to after one of these big runs and consolidations. I am not long the stock.

Question:

Compuware

CPWR, buy/sell/hold?

TSCNYjjc:

I think this stock is not one to own. It reported a crummy quarter. What I really disliked about it, though, was that if you read the release it looked like all was well. But that was hardly the case. I don't want to be there.

TSCNYjjc:

I thought that Soft should benefit too. I was surprised that Soft did not keep pace more and I wrote a piece about that for the site.

TSCNYjjc:

It seemed wrong that MSFT lagged but as Gary B, SMith says, the chart stinks!

TSCNYjjc:

I think that FDX has already been penalized enough by the Big Brown truck. They are probably both buys.

Question:

What time is the Fox show on this saturday? Will it be like the PBS show?

TSCNYjjc:

It is on Saturday at 10 a.m, and Sunday at 1 p.m. Except in a couple of cities like Philly, where I am from.

TSCNYjjc:

Shameless cable operators insist on running a lot of other slop instead of this. I am getting a dish for my Dad and for me. I cant stand these operators.

PF Trader:

It's on

Fox News Channel

, by the way.

Question:

Is DIS a buy?

PF Trader:

Yah, is the Mouse sick?

TSCNYjjc:

I think you would buy DIS Is you knew that Eisner wanted to become emeritus. This story needs new blood.

TSCNYjjc:

I read a half dozen research reports about how great management was here in the last few weeks and I was scratching my head. Lotta guys must want to go to work for Mickey Mouse in the next life I guess.

Question:

It seems like the fundamentals are against micron i mean dram prices are down they miss estimates are supposed to lose more money but yet it goes up why?

TSCNYjjc:

Not really. DRAM prices change day to day. (I am long MU) and I have to tell you that they have gotten very tight in the last few day s(hence the strength in MU)> I think it is for real and i am staying long

Question:

What are you looking for to determine whether todays's tech rally was a dead cat bounce or the end of a correction?

TSCNYjjc:

I think you will know soon enough. You have to see how the market likes Northern Tel's numbers (I am long)l as that will be the topic for tomorrow like INTC was the topic for today. I am optimistic that tech is trying to put in a bottom, but i must tell you that I maintain plenty of cash here

Question:

What is the outlook for ATHM?

TSCNYjjc:

I am very long @Home. I sold some at the bell when I couldnt figure out what was going on and thought it has moved too much. There were many rumors that T and soft are going to increase their stakes in ATHM.

TSCNYjjc:

I did not know if they were true. But I still own a ton and think it is a great stock.

Question:

Whats the point of really studying charts when news comes suddenly ie cendant etc?

TSCNYjjc:

Oh, aint it the truth. Yep. this is without a doubt the most harrowing company I have ever owned. I dont think you can game fraud ; it just blindsides you.

Question:

Liked the show. But 1/2 hour doesn't cut it. How about the hour. And how about a guest apperance from the Trading Goddess?

TSCNYjjc:

You know, my wife might be tempted to do this. I am betting she will. She is very very shy except on the dance floor. I am going to ask her to come on when I get home tongiht.

Question:

Jim, any truth to the rumor AT&T is cutting Internet access to 9.95 per month and cable access to 19.95?

TSCNYjjc:

This is precisely the rumor that rocked AOL at the end of the day. I heard it so many times that it must have some foundation but in either case, I am not going to junk my AOL. The stock has come down too far.

PF Trader:

That's just about all the time we have to talk stocks with Jim tonight. Do check out

TheStreet.com's

TV show on Saturday 10am ET, the

Fox News Channel

.

PF Trader:

Thanks for chatting Jim.

TSCNYjjc:

I am thrilled to have this chance to come on AOL, and I have to tell you that I am more convinced than ever that the Net is the place to be in this market, but that you have to continue to be selective. Remember to watch "The Street.com" or check out www.thestreetcom which I write for everyday many times a day. Thanks PF Trader (David!!)

PF Trader:

Thanks again Jim - see you next time in August.

Copyright 1999 America Online, Inc. All : Rights Reserved.