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The agony of defeat at Nike (NKE) - Get NIKE, Inc. Class B Report has to be painful to those who were looking for this lone horseman of the apparel business to pull the group out of the morass.

No such luck. They can't even get the darn thing open as I write. Too much supply. No demand.

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Message Boards. Every day, I look at Nike and its cohort (







Fruit of the Loom



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VF Corp.

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), and I choke on what look like cheap value stocks but are actually bears in book-value clothing.

On our

show last weekend, I talked about the notion of buying expensive stocks. I had my tongue somewhat buried in my cheek, as I tend to do when arguing a position that on the face of it can't be rigorous.

But understand that the "value" trap is what would put me out of business as a hedge fund manager. And I like my job. My job is to be disciplined and avoid goods that could depreciate. My goal is not to find "cheap merchandise that could get cheaper."

About a month ago, Faye Landes from

Thomas Weisel

came on our

show and talked positively about Nike. I didn't even want to hear it, lest someone fall into this value trap. The siren song of cheap has lured so many managers into oblivion that I don't want it to infect individuals, too! Nike is plenty cheap, but it is getting cheaper by the minute!

Understand this principle if you are going to understand anything I write: The "fundamentals" are the most important part of the puzzle.

All of the really good fundamental stories are, for the most part, discovered. I have two goals: Buy the stocks with good fundamentals at the moments when they become relatively cheap because of a downgrade, a macro problem or some short-term glitch -- and avoid the Nikes.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. 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