Steeling the Net Against Outages

When some investors hear about outages, they dump shares faster than you can say 'steel stocks.'
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When you hear eBay (EBAY) - Get Report outage or E*Trade (EGRP) outage or anything outage, immediately think Net Achilles heel. Amazing, but these Net stocks trade to the upside like great growth vehicles, but they trade to the downside like steel stocks.

I can't tell you how many times I would be taking a big position in

Bethlehem Steel

(BS)

, huge mega-sizers, and everything would be looking all systems go, and boom, they would have a relining outage or a problem in some cold-rolled steel plant that would cause them to miss, and BS would just roll over.

I would then be buried alive in BS!

That's how the Net is trading right now. Here's the mindset as I see it: "eBay outage? Heck, sell the darn thing. Sell all of 'em -- they could all have outages. Who can take the chance that my Net company has an outage? Get me out of the Net and into some company that benefits from Net outages."

Is it any wonder that

Sun Micro

(SUNW) - Get Report

is up while eBay is down?

I don't want to tell you what finally happened to stocks like BS. Nobody wanted them. That's why it is imperative that the money be spent to avoid the outages, even if it crimps short-term profitability. The whole sector gets pole-axed by this stuff.

Random musings:

Egomaniacal Department: I didn't know that my picture would be used in the

Investment Challenge

ad in

The New York Times

, but I thought it was pretty funny. Does remind me that you want to win that challenge. We will have a rocking good time.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. 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

jjcletters@thestreet.com.