Putting the Spurs to Investors

<I>TSC</I> readers respond to recent articles.
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TheStreet.com

publishes selected email received by the publication and its staff members. To send an email intended for publication in this section, write to letters@thestreet.com, and include your full name and city. Letters may be edited for length, style, clarity and accuracy.

Some Good Advice

Brenda Buttner

: Excellent

advice

Brenda

! Most investors are so broker-ingrained with the D.E.A.D. (Don't Ever Average Down) principle that instead of buying on the dips (regardless of the popular notion that all retail investors are conditioned to do this) they end up passing on the best of companies like

MSFT

(MSFT) - Get Report

. The smarter concept is, of course, paying up sometimes for a long term/short term winner. Now the smart money investor has to retrain their offline brokers to the new concept of A.L.I.V.E. -- Always Let Investment Velocity Enrich! I've used this a couple of times with a broker that I have a great respect for, but who still won't acknowledge the Internet as a viable investment.

-- Penny Sieffert

(received 10/21)

Getting Over the Rumors

Elizabeth Roy

: About

Treasury Yields Reach New Highs Amid Nasty Rumors, aside from the issue of what "collapsing"

stock prices means (a true collapse could result in a rate cut), the failure to hike would only have unclear consequences that probably nobody would be happy with.

If the data by the next

Federal Open Market Committee

meeting supports a hike, then we'd all be better off getting it over with. And if it doesn't support a hike, we'd still probably be better off getting it over with.

I think everyone is weary of the game.

--

J. Cameron

(received 10/19)

Smoothing Out the Ride

Cory Johnson

: About

Internet Stocks With Little Institutional Ownership Could Be in for a Tough Ride. For the sake of argument, I'll accept your figures. But not your conclusion. Check out this equation: 3 million people * 300 shares/day = 900,000,000. shares/day. 900M is a goodly fraction of the billion or two shares that trade on busy days. And that assumes just 300 shares/day/person.

Obviously most of these 3 million people don't average that yet, but I bet they will. I know I trade about 100 times more shares than I did a couple of years ago. And even if "we" average just 100 shares/day/person that is still a force, not "peanuts."

--

Wat Hughes

(received 10/18)

Cory Johnson

: I enjoyed your article

Internet Stocks With Little Institutional Ownership Could Be in for a Tough Ride. Great insights. The question is, where would an individual investor easily find institutional ownership data? I have witnessed the same effects you wrote about in my own trading and now I understand the reasons behind it. Investigating institutional ownership may help improve my returns. Many thanks for the "heads up"!

--

Gary Lamb

(received 10/18)

Your Frog is Cooked

David Ricardo

: Your first article,

Cooked-Frog Economy, felt like a punch in the gut. I'll be watching for his next "cooking lesson," possibly to be called, "I told you all to Duck!"

-- Matt Kohn

(received 10/14)

Falling Short on Tyco

Joe Bousquin

: Regarding your piece,

Despite His Faltering Fund, Tice's Tyco Call Resonates, in

TheStreet.com

, you failed to explain the fund's objective. The fund's prospectus very plainly and specifically states that under the market conditions of the past three years, it will be Net short. Any time the dividend yield of the

S&P 500

is under 3%, it will generally be Net short. In a bull market such as the past few years, it would be apparent to any person that has read the prospectus that the fund's NAV would fall. Now, what you neglected to point out is its relative outperformance during market declines. During the rising markets, it has sustained a less than inverse 1:1 decline. You say nothing in your article about the investment conditions specified in its prospectus, and that is an unacceptable omission. Your article was not balanced in its view, and almost defamatory to

Mr. Tice

and Co. It appears that you have chosen the path of least journalistic integrity.

-- Pete Hitesman

(received 10/15)

Joe Bousquin

: Thanks for a great, balanced report on

Tice. I now understand why he has credibility at all, due to his analyses in

Behind the Numbers

. His one-note Samba always drives me nuts. Now I also understand this as all, thanks to your report: He's a "salesman" for his Prudent Bear Fiasco, er, I mean, Fund. Guess it's a heck of a lot easier to call 'em than to trade 'em.

-- Ron Martin

(received 10/15)

Cost of Annuities

Matthew Lubanko:

I'm writing in response to

Competition Brings Down Cost of Annuities -- but Slowly, as a guy who has sold everything out there for 20 years, insurance, annuities, securities, etc. for brokers, banks, and myself, I have one sales tool I use to sell variable annuities. I show potential clients the quarterly statements on my existing clients. I then show them statements from stock portfolio customers, and mutual fund statistics from various articles. My variable annuity customers' returns leave most of the rest of the folks in the dust.

How many of us have customers who have earned better than 20% for six to eight years? With no current taxes paid? And a guaranteed return of principal upon death all the while? My analysis tells me very few people have actually pocketed that kind of return for that long. So, regardless of the negative press about high fees, and other bogeyman stories, all my variable annuity customers love me. None of them will ever break into my office at the other end of a semi-automatic.

--

Bob DeWitt

(received 10/11)

Y2K Quick Fixes

Eric Moskowitz:

About

The Real Deal on Y2K: Fears Dim as 2000 Approaches. The world may not end, or even be seriously challenged, but a lot of the Y2K fixes are just temporary patches.

I work on Y2K compliance software for textile companies and discovered this when my debit card, which expires in 2002, failed to work in numerous machines. It's because the credit verification companies, in at least one case a national one, really aren't Y2K compliant. They are just 2000, and sometimes also 2001, compliant.

Turns out much of the Y2K fixing is just a patch that allows the company software to read 2000 correctly, but not 2001 or higher. In some cases, the fixers just write a simple program that says, in effect, "If you get two zeros, assume it's 2000."

It looks like this is going to be an ongoing problem for awhile, although I still assume really critical systems have been permanently fixed. I hope.

--

Robert Loest

(received 10/7)

Old Ideas

James Cramer

In the case of your article entitled

Micro Devices, Micro Importance, I must strongly disagree with your sentiment and here is why. Imagine for a moment what you might pay for a new Chevrolet if

Chevy

was the only auto maker in the world. If for no other reason than competition in the market place,

AMD

(AMD) - Get Report

is important to at least the consumer of PCs. I think

Intel

(INTC) - Get Report

is a great company, but I do not believe for a moment that any of Intel's price cuts would have occurred had it not been for the pricing pressure put on them by AMD's K6 processor sales. Most of Intel's competition has fallen by the wayside. If AMD dies I can assure you that within five years we will all be paying astronomical prices for PCs.

--

Joe Bailey

(received 10/7)

James Cramer

I'm writing in response to

Micro Devices, Micro Importance. I think there is more to the ink that AMD is getting than just old-media fixation with an old -- and, I agree, broken -- company. As a general rule, Americans like to root for the underdog and AMD is commonly seen as the foil to big, bad Intel. That's why I think anytime anyone comes along with anything that could possibly be construed as negative for Intel the "bearish" stories begin to appear.

Just a thought.

--

Oscar Hall III

(received 10/7)

Options Experts

Erin Arvedlund:

I noticed in your article

Options Traders Feel Market's Ill Wind that

Ron George

said his favorite position is to go long the stock and short the calls and puts. He went on to say that "you have to be a believer in the stock." Do you think he's aware that he essentially has two covered call positions and that that is not even as risky as owning the stock? He is long the stock and short the call -- that is one covered call. He is also short one put -- that is another covered call. Anyway, that just makes me wonder about these options "experts."

--

Ryan Orlando

(received 10/5)

Long Term

James Cramer:

I disagree entirely with your article

The Quaint Notion of Buy-and-Hold Investing. I hold a very diversified portfolio of blue-chip stocks, including

Phillip Morris

(MO) - Get Report

, and have been successful over the years. Buy and hold refers to the long term, not the nine-month time slice used to downplay the proposed Philip Morris investment.

I've learned over the years to ignore the noise in the market. Look at

IBM

(IBM) - Get Report

. A few years ago, the company's shares sank. All the pundits were screaming sell! I held during those down times and saw the stock continually rise through two stock splits and now my original investment has grown more than 500%.

The bottom line for me and for other smart investors is to continually buy and hold blue-chips for the long term and reinvest dividends along the way. I pay less capital gains taxes and can sleep at night.

--

Dave Greenberg

(received 10/4)

James Cramer:

I read your piece

The Quaint Notion of Buy-and-Hold Investing and I totally agree with you. The buy-and-hold people have been taught the wisdom of that strategy by the bull market of the last several years. But underlying this strategy is the philosophy that the U.S. stock market will always work higher and higher. Maybe it will, but I doubt it. Maybe they will all recover, but I doubt it. We'll see how many buy-and-hold investors are left when the

Dow

is 9200.

What really scares me about the buy-and-hold crowd is the attitude that you can't lose in the stock market if you just hang on long enough. I saw the results of that type of thinking in the oil market of the early 1980s and the real estate market of the late 1980s. Also, I've wondered how many buy-and-hold people were left in Japan when the

Nikkei

dropped.

--

Don Crutchfield

(received 10/4)