The Macro Picture Doesn't Fit Tech's Micro Decline
By James J. Cramer
03/12/2002 13:41
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The market's not discounting bad news properly. Take Nokia NOK . For days, some firms had been saying that things are shaky at the firm. Merrill just yesterday gave you a great heads-up. Nobody paid any attention. And now it is suddenly revelatory to people and they scatter to the exits.
Or take Lucent LU . It is shocking, shocking, shocking that it is guiding down, people. But when you consider that every major telecom company is scaling back capital expenditures, why should Lucent's earlier guidance have any credibility?
Or Microsoft MSFT . Here's a company that said things don't look so hot for the quarter when it announced its last quarter. Rick Sherlund from Goldman Sachs basically reiterates that six-week-old rap, and the stock gets pummeled.
Of course, the reason all of this comes as a surprise to professionals is that they keep believing the revision upward in gross domestic product growth must be benefiting these companies. That's wrong. It is benefiting Best Buy BBY and Maytag MPY and Whirlpool WHR . It is benefiting Stanley Works SWK and Lowe's LOW and Black & Decker BDK . It is not benefiting telecommunications.
No matter, the deluders (no doubt like the Bubbleonians in Bill Fleckenstein's unbelievably insightful columns, more on that below) keep trying to graft the macro on to the tech micro. And they keep failing. Which is why the discounting mechanism for the moment is deeply flawed.
Put another way, stocks in tech keep deviating upward from the declining fundamentals as market players simply fail to learn new tricks, plays like metal benders, furniture companies, appliance manufacturers, retailers and truck and car part companies.
They have only themselves to blame.
Random musings: All of those appliances get sold by someone. The consumer is still spending like mad. I still think it is not too late to own these retailers. I am itching to buy this Lowe's and I am thrilled that I bought some Best Buy two weeks ago. To find what I'm going to buy or sell next -- before I make the trade -- sign up for Action Alerts PLUS . ... Let's say you are bullish on technology. You read through Bill Fleckenstein's brilliant -- and incredibly funny -- dissections of the trading day and I am sure you are thinking, where is this guy coming from? He is way too negative. But hold on! Whether you are bullish or bearish, you need Fleck. To be a great investor you need conviction. The only way to get that conviction is to test your thesis. That's where Fleck comes in. If you read Fleck and it just steams you, then you aren't using Fleck the way you can use him. At my old hedge fund, whenever I read him or heard him talk negatively about one of my stocks, it forced me to redouble my efforts, make more calls, 'cause I didn't want to get blown up by my own optimism. Fleck performs an incredibly important function: He forces you to be sure of yourself. He's a very plugged-in guy who hears and sees things I can't get, and that makes him right enough to have to be reckoned with. Now a few words about Bill, the man. Often in the last decade I have been on the other side of the trade from Bill. Bill never showed contempt for me or held me up as someone who wasn't rigorous. He's not one of those "bears" who looks with anger at how the game is played and revels in the purity of his position. He's just an honest, good guy and I like him very much. ... Before Bill started writing for RealMoney , I would end my reading for the night with the always reliable Aaron Task . Now I have two must-reads before retiring, and they are both on our terrific site. |
