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Can your mutual fund own cash? Right now, as we look at the averages, we can make a harsh judgment: Cash was king. Those funds with a higher percentage of it (that are not biotech or health care) have done better so far than those who played full-out.

But most mutual fund managers would rather be wrong and long than be in cash. They would because they regard themselves as your repository of equities. They have convinced themselves that you have chosen them as an equity class and therefore they have no choice. I thought of this weird failsafe twice this week. First was when I read Roger Lowenstein's terrific book

When Genius Fails

and second when I read the news about Jeff Vinik

shrinking his hedge fund.

In Lowenstein's book, he talks about the incentive system at

Salomon Brothers

during its heyday when it represented more of a giant hedge fund than a brokerage house. He mentioned that the participants in the hedge fund portion of the fund got to take a huge percentage of the gains, but none of the losses when they were compensated each year. In a subtle way, that's sort of how mutual fund managers work. Often, they don't have as much at stake as you. They may not even be investors in your fund. Often they are paid more if they take in more assets, and sometimes they get a performance bonus. That means they are rewarded more for playing than for not playing.

Which brings us to Jeff Vinik. I have a lot of money in the


Magellan fund at


. Have for years. When Vinik was running it, there was a period where he liked cash and bonds more than stocks. Stocks went up. His assets didn't. And he underperformed. And then he left. He had made a decision that violated the rules of mutual-fund management. He had thought, for a few moments, that cash was king.

Ever since then, mutual fund managers have pretty much given up being remotely negative on the stock market. Vinik vanished from his job not for losses, but for prudence. Could there be a case in the not-too-distant future where managers come back to the way Vinik ran money? Could there soon be managers who don't play full-out that you can chose from? Guys who sidestep the horrid declines we have had this year?

I sure hope so. It would be nice for a change if there were a manager who was proud about not liking the market. It would be a refreshing change to have someone who willing to own some cash and then come back in when things are better. I am sure they are out there. But since Vinik left Magellan, I haven't seen or heard anyone talk about not liking the market and choosing to avoid it as one of his options as a manager.

That's too bad. The ones who did would seem pretty heroic right now. And pretty right.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, Cramer had assets invested in Fidelity's Magellan fund. His hegde 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