If mutual fund managers would start picking better stocks, I would stop pounding them. But take a look at the most recent letter that Ryan Jacob, manager of the ( JAMFX) Jacob Internet fund, penned about his most recent buys. Jacob, who has had a huge recovery and is now down only 41% this year, has been snapping up the shares of EXFO Electro-Optical Engineering ( EXFO) and Newport ( NEWP), in order to complement his Digital Lightwave ( DIGL) position.

Talk about being doomed to repeat history. I mean, hello??! Some of you knock me for liking Qwest ( Q). What are you saying to Jacob? I mean the companies that buy the equipment made by Jacob's companies are dropping like flies. Any orders that these companies might have are dropping, not picking up. These businesses are doing lousy by their own admission. The remaining companies, like Qwest, will eat these companies' margins for lunch.

I don't think any of these companies can "make the numbers." Yet, Jacob just blithely keeps on buying. I think that the "recovery" Jacobs had from being down much more to being down 41% is simply another great selling opportunity for his fund, just like a bad stock that has bounced. You sell the bounce and move on.

Pretty simple when you think about it.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. At the time of publication, Cramer was long Qwest. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@thestreet.com.

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