Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: 5dave22 who wrote (121404)	8/1/2000 3:45:03 PM
From: tejek	Read Replies (1) \| Respond to of 1575119

One explanation for the current downtrend! ____________________________________________________________ The Beach Effect By James J. Cramer 8/1/00 11:40 AM ET There are real disparities in the performance of mutual funds. Some of the funds that caught the optical and wireless waves are up huge. Others that played plain old tech have seen their gains cut to nothing. Ironically, because of the way the calendar works, that could spell problems for the remaining highfliers. No, I am not referring to the underwriting calendar. I am referring to the vacation calendar. August is traditionally a difficult month because winning managers like to lock in their gains and head to the Cape or the Hamptons. It is a time-honored thesis that has saved me money for years. (I first talked about this in SmartMoney more than six years ago.) We saw vicious profit-taking in the favorites during the last few weeks and I am sure that much of it stemmed from this lock-in game. Here is how it is played. The kingpin portfolio managers see that they are riding high vs. their peers. They are pretty burned out, as we all are after a wild first half of the year. They begin to think, "Hey, maybe it's time to take a few weeks off." But they don't want to give up their gains. They are up too much. So, they look at their holdings and they decide to trim maybe 5%, 10% or as much as 20% of their winners so they can sleep at night at the beach house and not have to call in a gazillion times during the day. They can turn the cell phone off! However, the ramifications of their sell orders reverberate hugely throughout the Street. The salespeople, brokers and traders who handle their orders can't resist telling others that so and so is bailing from National Gift Wrap or whatever. "Get out now." This spirals until these stocks begin to get clubbed. Because the natural buyers are on vacation, the void hits. That's probably some of what you saw at the end of July. I expect more of it now that August has begun. Don't be fooled. It won't let up until September, when the profit-takers come back to their desks and begin stemming the very declines that they started with their trips to the ocean. -------------------------------------------------------------------------------- Hurry! Time is running out to see James J. Cramer live in New York City on August 7, 2000. Click here for details: bigfishinc.com -------------------------------------------------------------------------------- James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at jjcletters@thestreet.com. -------------------------------------------------------------------------------- Send letters to the editor to letters@realmoney.com. Read our conflicts and disclosure policy. Order reprints of RealMoney.com articles. Top RELATED STORIES