TSC Summit Yahoo! Transcript, Part I - TheStreet

TSC Summit Yahoo! Transcript, Part I

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Thanks to all the

TSC

readers who attended Saturday's Summit via

Yahoo!

chat.

Jim Cramer

,

Herb Greenberg

and ten other money managers, Wall Street strategists and columnists gathered together in New York to talk shop. In a discussion moderated by

Dave Kansas

, they tackled topics like

Long Term Capital Management

, Internet stocks, and the outlook for the U.S. economy - all topics that

TSC

readers helped select in advance.

Some tips on reading the transcript:

The "Summit Host" is a typist who was transcribing the discussion. She didn't get everything, so if there are some gaps, or some typos, we apologize. Please do not rely on this transcript as complete.

We are preparing a complete transcript, based on tapes, that we plan to post early next week.

When a panelist began talking, the Host typed "Jim Cramer says," "Jim Cramer is speaking," "Jim Cramer thinks" or "Jim Cramer:". The panelist's comments follow, until the name changes.

The panelists took several questions from Yahoo! chatterers in the final portion of the session. You'll find those at the end of the transcript.

For more about the panelists or the events leading up to the Summit, please see our earlier

write up

.

Our thanks to all the panelists and the chatterers for coming. Please feel free to

let us know

what you thought of the Summit day.

Summit_Host

: Hello everybody and welcome to TheStreet.com's Summit event!

Summit_Host

: We'll be starting at 1:00 PM, and at this moment the participants are beginning to assemble in the Conference Room for the Summit.

Summit_Host

: Hey, it looks like we'll be starting early, so stay tuned, and get ready to send in your questions which we'll be taking starting at 2:30.

Summit_Host

: Jim Cramer is now talking.

Summit_Host

: Saying how proud he is of TheStreet.Com...

Summit_Host

: THe most readable financial publication in the world.

Summit_Host

: For me, he says, it has been a mixed blessing.

Summit_Host

: Because of the issues of doing this while running a hedge fund.

Summit_Host

: But I wanted to do it so badly.

Summit_Host

: Then they said, well you can't talk to THeStreet.Com about what you do for a living!

Summit_Host

: I'm here but I have no control whatsoever about what goes on here. I can't talk to Herb Greenberg.

Summit_Host

: I don't have an office here. My input is in my column, which I write everyday, and that's it. But I love it.

Summit_Host

: I'm really proud of it. I speak in terms of hyperbole constantly, but I think it's maybe the one thing I'm doing right in this world!

Summit_Host

: Michael Levy is now speaking.

Summit_Host

: I've been running international equities.

Summit_Host

: At Bankers Trust.

Summit_Host

: I work with a team, actively searching out interesting investment opportunities around the world.

Summit_Host

: I have been thru downturns in the market.

Summit_Host

: And it is interesting and challenging for sure right now.;

Summit_Host

: Herb Greenberg now speaking.

Summit_Host

: I have a column coming out in Fortune, why the Short sellers wear the white hats on Wall Street

Summit_Host

: My column tends to have tension on good days, and asks questions that maybe most people aren't asking.

Summit_Host

: I am the oldest person I think at TheStreet.Com! I think, older than everybody.

Summit_Host

: I also do CNBC every day and have a pretty full schedule.

Summit_Host

: I really believe in the internet tremendously.

Summit_Host

: There is still a lot I don't like about TheStreet.Com personally, but it's going to evolve as is the internet, and it will be successful.

Summit_Host

: There are no barriers to entry on the internet.

Summit_Host

: The NY TImes and The San Francisco Chronicle where I used to work, won't scoop themselves, So we are getting a jump start on all of them.

Summit_Host

: Sam Lieber is now speaking, the resident REIT expert.

Summit_Host

: I stick to much less rarified things mostly, real estate, is what I look at.

Summit_Host

: Back in the early 80's when I was a real estate broker and realized real estate was a dirty word, I managed to be a little early in getting into the securities side of things.

Summit_Host

: Our focus has been mostly as value guys, so sometimes we've been a little early.

Summit_Host

: David Schafer is now speaking manager of String/Schafer Value.

Summit_Host

: We've been doing this since the end of 74.

Summit_Host

: It is a very challenging time for value managers.

Summit_Host

: We do a lot of mid cap stuff.

Summit_Host

: We are based here in New York.

Summit_Host

: Brenda Buttner now speaking, contributing editor to TheStreet.Com.

Summit_Host

: I really am nine months pregnant!

Summit_Host

: I get to do exactly what I wanted to do here, which is to allow people to peek under the covers of mutual funds.

Summit_Host

: The degree of interactivity here keeps me on my toes.

Summit_Host

: You don't just get fan mail here, readers really get me on what I write about.

Summit_Host

: Jim Griffin now speaking.

Summit_Host

: Works at Aeltus Investment Management, chief strategist.

Summit_Host

: We are the investment arm of Aetna Inc.

Summit_Host

: We have basically added some mutual funds now, we have about$50 billion under management.

Summit_Host

: My background is as an economist.

Summit_Host

: I have had a rather stuffy jobs at insurance companies, but now I'm having fun.

Summit_Host

: A disproportionate amount of my time now relates to TheStreet.Com.

Summit_Host

: I think the importance of it in the future, I agree with you Jim and Herb.

Summit_Host

: At times you have a sense of disorientation about whether you are caught up with the newspapers, because in fact you are ahead.

Summit_Host

: Robert Friedman now speaking.

Summit_Host

: Chief Investment Officer of Franklin Mutual Advisers.

Summit_Host

: Value in this market the stuff that is supposed to support us in this market has collapsed in the last few months.

Summit_Host

: We are looking for stocks, we have no macro projections.

Summit_Host

: Looking at the questions, I can maybe answer two or three but I have to abstain from the others.

Summit_Host

: Gary B. Smith, Contributing Editor of TheStreet.Com.

Summit_Host

: Writes three times a week for us.

Summit_Host

: I have three jobs. I am Mr. Mom, first of all.

Summit_Host

: I worked for IBM for about 16 years. I left mostly to write, be at home and to trade.

Summit_Host

: I run a hedge fund.

Summit_Host

: The Gary B. Smith Hedge Fund.

Summit_Host

: I love trading.

Summit_Host

: I use technical analysis.

Summit_Host

: people read me because I am kind of like the every man, they read about me when I do great and when I don't.

Summit_Host

: There are a lot of people who say I want to be like you, I want to leave my corporate job... So I have a lot of fun writing my column, and I am thrilled to be here.

Summit_Host

: Dave Kansas: It's great to have you here Gary. Because ten years ago, it wouldn't have been nearly as common to have an "individual" here to discuss the market.

Summit_Host

: Craig Ellis now speaking.

Summit_Host

: I worked for CJ Lawrence for a long time.

Summit_Host

: I am a technical analyst.

Summit_Host

: The Infotech Fund was an idea that I had to go out a build a mutual fund.

Summit_Host

: I am running about $60 million now.

Summit_Host

: It's a tech fund.

Summit_Host

: I wanted to do a mutual fund because I thought what I did best was market my mutual fund. I am not a day trader and I don't feel I can sit around in my office and watch the screen all day.

Summit_Host

: I don't watch the news, I don't read the newspapers.

Summit_Host

: Now it's a day and age of so much information, and I think the real trick is deciding what it is that's important to you.

Summit_Host

: For me it's a lot of visiting a company, looking at people in the eye and deciding whether this is a good guy or a bad guy.

Summit_Host

: Seth Tobias, General Partner Circle T Partners now speaking.

Summit_Host

: Seth worked with Jim Cramer for a while.

Summit_Host

: I am probably the youngest person at this table, I'm 35. But this is the third bear market I've seen in my career.

Summit_Host

: I was out of a job two days before Christmas in 87.

Summit_Host

: Luckily I met Jim and he gave me the opportunity to get into the Hedge fund business.

Summit_Host

: I run Circle T now, a classic US equities hedge fund, with about $100 million.

Summit_Host

: I have had the pleasure of working with Jim Cramer and Mark Howard, two great managers.

Summit_Host

: This is great to set up a new forum in cyberspace.

Summit_Host

: It is truly an honor to be here.

Summit_Host

: Host, we are now going to start with the five Right! Wrong! questions.

Summit_Host

: Starting with the first question -- is Wall Street is own worst enemy?

Summit_Host

: We're starting with Jim Griffin from Aeltus.

Summit_Host

: Jim said Right!

Summit_Host

: The world evolves, businesses grow and shrink.

Summit_Host

: The market can get depressed.

Sat Oct 3 10:03:25 1998

Summit_Host

: the volatility of markets is greater than of businesses and society

Summit_Host

: so, i think it's self evident that the market is its own worst enemy

Summit_Host

: arguably because it was manic and took thing to excess on teh upside

Summit_Host

: david schafer on long term capital:

Summit_Host

: all we do is bottoms up

Summit_Host

: but if the numbers are correct, that they had $1.25 trillion worth of exposure, it's a scary thought

Summit_Host

: i don't know what percent their 2-3 billion in equity is in the overall scheme of things of hedge funds

Summit_Host

: scary numbers about their exposure, their leverage

Summit_Host

: just the fact that the folks who gave them the money were willing is mind boggling

Summit_Host

: the fund just said "trust us";

Summit_Host

: i suspect that isn't going to go to far too long

Summit_Host

: the banks manage to get bagged on every scheme that comes along!

Summit_Host

: whether its latin american real estate

Summit_Host

: dave kansas says its reminiscent of the real estate situation of the late 80s

Summit_Host

: brenda buttner chimes in: there was a certain amount of hubris on wall street

Summit_Host

: we got very comfortable

Summit_Host

: we celebrated gurus and self-proclaimed geniuses

Summit_Host

: these guys in greenwich were not using normal rules of investing

Summit_Host

: many of us have come to ignore risk

Summit_Host

: the current market whose only certainty is volatility may change that

Summit_Host

: jim cramer differs

Summit_Host

: what those guys did at long-term capital was egregious, unlawful, horrible

Summit_Host

: and it's been compounded by the miserable bungling of the federal reserve

Summit_Host

: they sent the message that meriwether is alive and well, doing better than ever

Summit_Host

: the returns were not outsized; they stunk versus the leverage

Summit_Host

: there's the press saying "they met all their margin calls"

Summit_Host

: you're not supposed to have them; you're supposed to pay up1

Summit_Host

: this is one of the worst inside jobs i have ever seen

Summit_Host

: the gloss that meriwether has put on, the way wsj and the nyt has fell for it

Summit_Host

: if i had no other job in life, it would be to expose these guys in greenwich

Summit_Host

: Michael Levy says the bailout has everything to do with who the parties were

Summit_Host

: the trades had gone against them

Summit_Host

: they were trying to mask the fact that they were in a very stupid trade

Summit_Host

: they wanted to give themselves an opportunity to hopefullly win

Summit_Host

: the goldman/buffett bailout was the better choice

Summit_Host

: so it makes you question everybody at the table, maybe even the fed, in terms of the motives that they had

Summit_Host

: it's bizarre indeed to see how out on a limb so many parties are

Summit_Host

: Rob Friedman is now talking about how plain vanilla their style of arbitrage was

Summit_Host

: it was the same thing that other funds would do

Summit_Host

: eg. it was a simple trash deal from Cendant

Summit_Host

: also, the best and the brightest were suckered by meriwether's cache

Summit_Host

: they bought the publicity

Summit_Host

: their insight into what he was doing was no greater than blue jean america's

Summit_Host

: Seth Tobias says he thinks it will go down as the blemish on greenspan's career

Summit_Host

: i agree with jim i think it's criminal

Summit_Host

: it stinks of cronyism; it's almost japanese like

Summit_Host

: ubs's guy lost his job, i don't see anybody stepping down here in the U.S.

Summit_Host

: what might come out of this that's bad is undue regulation in the hedge fund industry

Summit_Host

: i know a lot of pople in my business closing their shops now

Summit_Host

: i didn' t see anyone stepping in to save their jobs

Summit_Host

: michael levy: a clean bailout would have been orderly

Summit_Host

: jim cramer: the goldman deal was a good deal

Summit_Host

: sam lieber: ultimately this question is all about confidence, maintaining confidence in the financial markets

Summit_Host

: so will we be able to maintain confidence going forward

Summit_Host

: i deal in presumably hard assets, real estate

Summit_Host

: tho' even that's veering off into a financial asest

Summit_Host

: the beauty of the market is that it creates opprty

Summit_Host

: but the question now is do we have stability in the market and will we have it going forward

Summit_Host

: dave kansas: has the rescue raised your level of confidence?

Summit_Host

: sam lieber: it was a cork in the dam

Summit_Host

: the buffett goldy deal would have cleaned house more and sent a few more messages

Summit_Host

: Michael Levy thinks he's never seen such a "set up" as a bear trap

Summit_Host

: of greenspan's comments

Summit_Host

: to find out that all that his comments were about was an LTCM bailout

Summit_Host

: that was really quite stunning

Summit_Host

: that was an amazing swing in terms of playing with investor perceptions

Summit_Host

: it was a classic bear trap

Summit_Host

: greenspan will be held for that

Summit_Host

: it shook confidence, which is why we've been in this situation

Summit_Host

: Jim Griffin: the issue of bailing out the system rather than buying out the partners

Summit_Host

: the first deal may have been better for everyone else, but it wasn't for them and they acted in their own interest

Summit_Host

: it seems like tops and bottoms often have proper names, and there's a good chance we've got the proper name for this one

Summit_Host

: Host: Okay, we're on to the second question, about the business cycle

Summit_Host

: Readers said 2-1 wrong!

Summit_Host

: TSC readers aren't worried about a recession

Summit_Host

: Seth Tobias: it's a flawed question, b/c we are in a bear market!

Summit_Host

: the majority of stocks are down 30-50%, what are you smoking here!

Summit_Host

: i don't think the US economy has to go into a recession

Summit_Host

: we can orchestrate one of the great "soft landings" here

Summit_Host

: what's interesting is that there's some indications that economic activity

Summit_Host

: is picking up in asia

Summit_Host

: again

Summit_Host

: physical oil is trading heavily

Summit_Host

: it's always darkest right before dawn

Summit_Host

: this economy continues to be very strong

Summit_Host

: out in the real world people are still working

Summit_Host

: they're still making good money

Summit_Host

: going out to expensive restaurants

Summit_Host

: we just opened one in phili, it's packed!

Summit_Host

: it's possible we may be in the last stages of this move

Summit_Host

: Craig Ellis, our tech guy

Summit_Host

: Dave'

Summit_Host

: is asking him about Asia

Summit_Host

: Craig says he remembers a year ago, when MOT was going to miss its numbers, again

Summit_Host

: blamed China

Summit_Host

: yes, for many tech firms there's asia exposure

Summit_Host

: but it's also used as an excuse

Summit_Host

: take seminconductors and pcs

Summit_Host

: was that asia? or simply were they trying to sell the consumer something they didn't need

Summit_Host

: as far as the world goes

Summit_Host

: yes, consumer demand in asia and latin america is lacking

Summit_Host

: that's an issue

Summit_Host

: yes, companies, generic, commodity-based kinds of businesses with exposure

Summit_Host

: but at the same time there's a world of communications technology

Summit_Host

: building sysetms around the world

Summit_Host

: china is building a wireless commynications network

Summit_Host

: i'm certain the demand will be extraordinary

Summit_Host

: russia the same

Summit_Host

: they might be delayed but they won't go away

Summit_Host

: Michael Levy says spending will continue

Summit_Host

: but the serious issues is margins

Summit_Host

: china is clearly driving a hard bargain

Summit_Host

: there will be carnage on the battlefield, nortel, ericsson, lucent

Summit_Host

: when these networks get built out,

Summit_Host

: there is a question of who will win and lose

Summit_Host

: michael says he used to focus on technology at Oppenheimer

Summit_Host

: recalls a tech bull market followed by a bear market

Summit_Host

: b/c of over investment

Summit_Host

: it's not that the concept is bad, but capital allocation is a problem

Summit_Host

: too many people allocate capital to a good thing

Summit_Host

: Craig Ellis says pricing, that's what tech is all about

Summit_Host

: Tech drops the cost of delivering services, that's the cycle you're in

Summit_Host

: technology, like any group, needs a driver

Summit_Host

: dell computer is retail investing, not technology

Summit_Host

: internet, it's consumer demand driven

Summit_Host

: if technology is going to bring something new to the table, then there' s a reason to invest

Summit_Host

: new trends, that's where you make money

Summit_Host

: Herb Greenberg: you're talking long term, very long term

Summit_Host

: folks who once said compaq is rebounding, just three weeks ago, have changed their tune

Summit_Host

: talking about stuffing the channel again

Summit_Host

: Dave Kansas: does anyone think we're in a bull market?

Summit_Host

: Host: silence!