Rebuilding at a Discount

We were due for yesterday's selloff, and Cramer's glad he had enough cash on hand to start some select buying.
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So we found ourselves on top of the quicksand that is the summer. That's the quicksand that keeps companies from allowing us to raise numbers because Europe is on holiday. It's the quicksand that comes from a drought in retail sales until the fall. It's the quicksand that suggests, "Why don't I just sell now and buy them back when we have more visibility for the back-to-school season?" And, oh my,

Jim Seymour

, it's the insidious quicksand that is Y2K!

Tuesday hurt. People wanted out. The good news is that most prices held stable for the last four hours of the trading session.

IBM

(IBM) - Get Report

,

Sun Microsystems

(SUNW) - Get Report

and

Cisco

(CSCO) - Get Report

all reached their lows around midday and did not violate them. The bad news is that today is another day!

All I can do is tell you that we used the price breaks to buy companies that had spectacular quarters and sold off anyway. We bought some

Texas Instruments

(TXN) - Get Report

because the quarter was clean. We bought some more

Novellus

(NVLS)

because it is an order story and the orders were good. We snared some

Tellabs

(TLAB)

because we know how conservative that company can be. Those are just examples, and none of our buys were big. But we didn't sell the weakness.

Having been endowed with substantial cash, as I have said a dozen times in the last few weeks, Tuesday gave us a chance to begin to rebuild quality positions at a discount. One of the advantages of our trading style is that we tend to be not that long at the top. That allows us the room to be able to buy on down days and not sell. Often that provides the difference between performance and outperformance.

I don't want to be too philosophical about what caused this selloff. It was not an uptick in inflation, or bad earnings, or a realization that things can't get better, as I heard some noxious talking head on

CNBC

say. We were due. We had had a big run into earnings, and now we are viewing next quarter with a tad more skepticism because of questions raised by managements about the future. That's what happens after a big run. Those who would think otherwise no doubt would have chastised

Joe DiMaggio

for his crummy performance in that 57th game.

Random musings:

Now Dan Akst in

The Wall Street Journal

joins the ranks of journalists who begrudge our work. I gotta tell you, if journalists were our audience, I know I would never have started this darn thing.

They seem to hate everything involving money, including making it. Oh yeah, please excuse me for cutting some journalists in on the pie when we set this up. I guess we should have just set

TheStreet.com

up like the

Journal

or

Knight Ridder

(KRI)

or

Hearst

, when I worked for those institutions, so misery could love a little company. Here's how those places work: Here's your salary, go starve with it. You don't deserve a cut in the enterprise because it is owned by some rich family somewhere that doesn't want unwashed reporters and editors as shareholders. And if any money or stock is going to get doled out, it will go to the hacks on the business side because advertisers are the clients, not readers.

Instead

Marty Peretz

and I insisted that all of the journalists who started with us get big gobs of stock so that it would not be like all of the other media sweatshops I ever worked at. I made a point at every meeting we had that I didn't want journalists to be walking around with 100 shares of their company after five years of service, which seemed to be the pay at all of the places. I wanted stakeholders, not wage slaves. The readers are the customers, and the people who help them must be paid accordingly.

Now all of the wage-slave writers are uniting in a series of articles that must have the bosses cackling about how much the lower-paid no-stock-in-the-enterprise people love their chains. Who assigns these exercises in self-loathing and jealousy? Clearly, there is a power that is even greater than ignorance: envy.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Cisco, IBM, Novellus, Sun Microsystems, Tellabs and Texas Instruments. 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

jjcletters@thestreet.com.