Jim Cramer warns about 'Long - term' scam -
Don't Fall For the 'Long-Term' Trap
By James J. Cramer
10/01/2001 12:54 PM EDT
Long term, if you own stocks, you will do fine. That's
what everyone says. That's what every graybeard,
on-the-take promoter, mutual fund person and
brokerage house sage says.
But let's change that sentence, that first sentence, that bedrock principle of
intelligence. I want you to sub "Excite@Home" for "stocks." Or "Exodus." Or
"Federal Mogul." Or "Razorfish." Or "Barnes & Noble.com." Too cruel? Okay,
substitute "First Hand Funds E-Commerce," or "Berkshire Focus," or "Van
Wagoner Tech."
There is what, at college, I would call a "textual
analysis" problem with that starting statement.
"Long term" might be right, depending upon what it
modifies. The rubric of "stocks" doesn't work in an
environment where 50% of the Nasdaq 100 might
go out of business in the next few years. Shudder?
That came from John Chambers, CEO of Cisco,
not me.
The notion of "long term" somehow curing bad stock
picking and bad mutual fund picking has assumed a
life of its own. The combination of "short-term
volatility" and "long-term outperformance" can be a
combustible excuse for buying stocks that, in the
long term, don't exist.
After that beautiful bounce last week, where many stocks were up double digits,
and with a Fed meeting on the horizon, we are getting, once again, a chance to
get out of stuff that, long-term, will be dead.
If you don't take it, the first sentence of this story will have no relevance to you. Will
you pass up one more opportunity? I sure hope not. Don't be fooled by those who
have a vested interest in your staying put. Either they don't want to admit that they
are wrong or they are afraid of losing your assets. I have nothing to gain. I don't
want your assets. I don't want a commission. I just want you to be prudent in a
dicey time, and I am willing to incur the wrath of a mutual fund-brokerage-media
complex that wishes that pieces like this one were never written or seen. |
