The fax hit my desk like so many other unimportant items: "Klamath First Bancorp Inc. Announces New Branches." Yawn, zzzzzzz.

I put it on


ILX machine as a joke. My partner,

Jeff Berkowitz

, and I remember the pain of



. We owned close to 10% of the bank two years ago. We blew it out at a big, big loss. Right into Klamath's self-tender. We got close to 19 for our stock, down 3 from our average.

Berko looked incredulously at the release and laughed. "Where the heck is that stock now?" he asked. "Eleven?"

I hit up KFBI. It came up at 10. With a 4.82 yield. And I said, "That stock could have put us out of business."

Yep, let's deal with real life in the stock market in the year 2000 for the professionals. Not the world where money managers blithely talk about great value and how you have to own stocks that are trading at rock-bottom prices, but the real world, where money managers are competing for investors' dollars in a business where people compete on performance --


on niceness or gentility. You aren't going to take down big assets with the Mr. Congeniality award in tow.

I live in a competitive business. Really competitive. For years, I swore by owning the value plays that so many would extol in the search for "grounding" in the market. We were the biggest shareholders of a half-dozen savings-and-loans, all of which had insider buying and traded at cheap price-to-book ratios.

Our investors had come to expect our fund to generate low volatility and high returns, but beginning in 1997, these savings-and-loans became a drag. We grew increasingly jealous of compadres who played in the world of the



and the



. Our savings-and-loans did nothing but go down, despite their great values.

In 1998, we changed styles -- always supposed to be a sin -- and blew out the Klamaths and



. To get out of them cost us in performance; it was one of the reasons why 1998 was less than stellar for us. (Haven't heard of that? It was written up in


twice and

The New York Times

as well as repeatedly by me on this site.) When you move illiquid stocks, you knock them down getting out.

In retrospect, though, that style shift saved our firm. We would have been history if we had stuck with the old formulas. History. You wouldn't be reading me; others wouldn't be investing with me. That's the reality of the money-management business.

When we made our shift, a lot of investors pulled out. They don't like style shifts. But had we stayed with our style, they all would have pulled out. It was a difficult, gut-wrenching and right decision. Our assets are now well above where they were at the time.

Did the style shift have anything to do with core valuation techniques? Did it have anything to do with a statement about the way the U.S. economy functions? Did we do it to thumb our noses at those who toil in the vineyards where the price-to-earnings multiples are stored?

Nah. There was no "Battle Hymn of the Republic" playing when we did it. More like the Bee Gees' "Stayin' Alive."

We switched to survive.

That, in the end, is what this game is all about.

Random musings:

Gratz to the folks long


(RMBS) - Get Report

for the 4-for-1 split. ... Boos to


(DL) - Get Report

for blowing it. ...


(DELL) - Get Report

going higher after


upgrade. We are there.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Inktomi, JDS Uniphase and Dell. 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