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Pastimes : James Cramer Skeptic Thread
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To: Utopian who wrote (924)10/30/1998 1:56:00 PM
From: Greg Jung  Read Replies (1) of 1254
 
Cramer must've missed the 50% moves from Oct 8 but bygod he'll get his points to earn the rent on the Bloomberg terminal. Vintage Cramer:

Oct 30, 1998

Wrong! Tactics and Strategies: Beware of
Foot-in-Mouth Disease

By James J. Cramer

Beware of the rogue quote.

A couple of weeks ago, Lew Platt, the Hewlett-Packard (NYSE:HWP -
news) exec who can't seem to keep his foot out of his mouth, was quoted
on a wire service as saying that Y2K will cause a slowdown that will hurt his
business.

When it came over, Jeff Berkowitz and I pondered it for about 20 seconds and then ran in to buy
puts on HWP. Before we knew it, we had made a dollar and skeedaddled. The stock quickly dropped
another three points before it was at last corrected by a well-meaning corporate spokesman, no
doubt horribly embarrassed that the comment had been made to begin with.

Wednesday night another wire service wrote up a story involving Cisco (Nasdaq:CSCO - news) that
gave guidance to growth that was below the traditional guidance from the networker. We quickly
sold some Cisco to buy it back when the service was corrected.

Like Hewlett-Packard, Cisco traded down another dollar from our purchase before the denial was
fully circulated by the analyst community.

What do these have in common? In a world where guidance is everything, comments that are made
off the cuff or are misinterpreted by a reporter take on incredible significance.

These two incidents will look like blips on the chart that will barely be be noticeable several months
from now. But for a couple of scary moments, both stocks looked like goners.

My advice is that when you see off-the-cuff remarks by an exec of a firm on the wires that is directly
contrary to the party line of the company, you must presume error on the part of the wires. Both of
these instances were phenomenal buying opportunities once they were refuted.

blah blah blah ...
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