All: Interesting piece - lotza talk about ICGXX:
Wrong! Dispatches from the Front: Cramer on His CLEC Mess
By James J. Cramer
3/31/98 8:44 PM ET
Tuesday was the day I should have started my CLEC position.
Remember a few weeks ago when I said I was learning all about an exciting new group of mini-MCIC's? I joked about how I might be late, but I had to be there because these local exchange companies were exploding. I even went on Squawk Box and made light of the fact that I was jamming a few of these names on my position sheets in order to get to know them better. Couldn't get enough of them.
And I got to know them. I went right from ignorant bliss to the Competitive Local Exchange fund, buying anything that began with the Letter I and a bunch of others as I became intoxicated with these companies' beautiful, spectacular top-line growth.
It was CLEC heaven, and I was strutting down the main street.
Yesterday I found myself in CLEC hell. My nightmare of nightmares, an analyst making a stand: The group is overvalued. Just when I had finished my buying.
Last day of the quarter, on the day when the incredibly high-profile ACNS deal gets priced, and the guy downgrades? Stick a knife in my chest, why don't you? Bayonet me in the eyes. Gut my quarter's outperformance, why don't you? Where was this guy's end-of-the-quarter etiquette? Couldn't he see my bloody entrails?
It gets worse. At first I thought I was sitting pretty at the opening of yesterday's trading. The CLEC I like the most, ICG Communications (ICGX), stood like Stonewall would in the face of the downgrade. I found myself thinking, "Stonewall Jackson ICGX at your service," as the stock hung in at 39 3/4, despite the vicious, withering downgrade.
"Can't cut this stock down," I yelled at Jeff. "Behold, there is a Stonewall and his name is Shelby Bryan," I muttered at Jeff, invoking the name of the youthful ICGX president.
"Yeah, sure," Jeff said.
I know it's early, but the stock does act great, I say to him.
"What the $&$&%^ are you talking about. Stop joking. We're getting killed!"
What? What do you mean?
And then it hit me. Mr. Bridge machine, my *%*&%&^% Bridge Machine, was down. It was frozen at last night's price. 39.75. 39.75. Unchanged. Lookin' good.
"Where in the $&%^%^ is this *$&^%#$^ ICGX?" I asked the trading room.
"Down 4," came the chorus.
I grabbed the frozen screen with both hands, intent on throwing it through the glass window behind me. But I did that once before when my Bridge was frozen and all that happened was that I was out a Bridge machine and was surrounded by broken pieces of a PC. Instead, I resorted to yelling at my ever-faithful, ever-patient assistant, Jeannie Cullen, to fix the &%^%$ Bridge or get it out of my ^#^%#%$ face." Since she had to put the pieces together the last time I threw the Bridge machine in a rage, she was no doubt relieved that the only damage I had done was to the portfolio.
Now I was steamed, though. For only the second time this year, I called a meeting off the desk to remonstrate, Cultural Revolution-like, about how stupid I was. Jeff, Mark Kantor, my trader, and I gathered around in Jeff's office, as mine is too small for these kinds of skull sessions. I had let it happen to me again, smitten by a new group, bought right at the top. Pulverized like some 90-day-wonder in the cold, snowy Ardennes.
"^$%%$#$," I screamed. "On the last ^#^%#$% day, to get picked off like a rookie. ... They should take the ^&$&^%$^ money away, I am a &%^$#&^%$ joker. We are all *^%&*^$% jokers."
I thought Jeff was going to try to mollify me for a moment, but I just glared at him. The last thing I wanted to hear at that moment was some half-^#*$ justification, some piece of %*&%&^ rationale about my screw up.
"Now what do we do?"
Jeff suggested that we write this whole incident down as a clear-cut example, a lesson to ourselves about what to do when we fall in love with a new hot group. Son of a constructive %$&^%$^%. Agreed, I said. But how about now.
Jeff shrugged. And I said, "We know what we have to do. We have to pretend that we own none of these stocks. And we have to buy. Because had we been patient, had we not felt to rushed, so insistent that we had discovered gold, we would have waited. Until this moment. This is the buy point. This is the stupid downgrade we should have been waiting for. This is the opportunity. Nothing has changed."
And then I asked the question that should have been asked at the top. "Jeff, do you believe in the downgrade?" Jeff said no, he didn't. "Me neither," I said. "He probably just wanted to get off the horse with a win." I instructed Mark to do the one thing I hate doing more than anything else at the office: average down. We now at last had our perfect entry point, with all the hot money out of the picture.
And that's what we did.
By the end to the day the buys looked good. But the bases looked awful. And we were ashamed. As we should be. We'd been had by the pressure to keep up with the Jones. We'd been had by the hot group. What a way to end the quarter. |
