Friday July 7, 9:47 am Eastern Time
TheStreet.com - Wrong!
Semiconductors Can't Hit This Curveball
An analyst makes the right call on semiconductors, and we players all should be thankful.
By James J. Cramer
Few downgrades engendered heat like that Salomon Smith Barney downgrade of the semiconductor group this morning. (TheStreet.com looked at Salomon's unpopular stand in an earlier piece.) The reaction from you was instantaneous.
"This is a horrible call," wrote a typical emailer on the topic. "They are stuck in the old thinking of three-year cycles on the semis. The standard discount-the-expansion-six-months-ahead-of-time is way too easy and lazy research."
Another wrote: "The call was not discriminate, and as a result, the selloff is wholesale. Micron Technology (NYSE: MU - news) is being knocked down as much as RF Micro Devices (Nasdaq: RFMD - news) , even though the former serves a very different market."
And still one more: "Listen to the companies, not the analysts. They are saying they will have upside for at least two quarters and maybe more."
To which I say, Ah, come on. This downgrade was a thing of beauty from an analyst point of view. And from a customer point of view. We want our analysts to get out in front, not to wait for the companies to tell him things have turned bad.
Often, the companies would be the last to see it. We need our analysts to take all of the inputs, supply and demand, macro and micro, and make a reasoned judgment not only of when we should get in, but when we should get out. Otherwise, we will be too late and we could get hurt. We want analysts to think, not just retell or spout bullish dogma. We want our analysts to make us money. John Joseph's call was designed to do that.
Yes, it was unexpected. Many smart people thought these stocks would rally into excellent quarters and then they could get out. Others have gotten so used to riding the bull that they forgot these stocks have lost a lot of money for people at times, too.
And no, I don't believe the big move is over. Our firm was hurt by the call. We were and are long stocks like Xilinx (Nasdaq: XLNX - news) , LSI Logic (NYSE: LSI - news) , Intel (Nasdaq: INTC - news) and Micron, all of which were hurt by the downgrade.
But to rail against Joseph, to call him stupid, or wrong, or way too early misses the whole point of the game. Joseph has to call them like he sees them. He has to get you in when the getting in is good, which he has done, and get you out before you give those gains back, which he did today.
To blast him is to play home team to its illogical degree. I remember when I was a little boy my dad would take me to see the Phillies play the Dodgers or the Cards and we would watch Bob Gibson and Sandy Koufax pitch and my father would actually want to see a no-hitter. Me, I couldn't stand it. We couldn't buy a hit. Those games drove me crazy.
Now I look back and I say, I saw a guy at the top of his game. Sure my team got beat, but sometimes that happens.
Joseph is at the top of his game. He no-hit the Sox team today. Give him his due. Accept it. And get out there tomorrow and hit the ball out of the park. |
