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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (49064)	7/11/2001 12:13:00 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Lets revisit this one year from now. Cramer is as good a contrary indicator as they come. With "insight" like this, no wonder The Street.com is floundering: The First Blip Up in Your Tech Fund Is the Time to Exit By James J. Cramer 7/11/01 8:04 AM ET Click here for the latest from James J. Cramer. Tech's woes should have been obvious. They also should have been "in" the stocks. But they weren't, because of these doggone tech mutual funds. I keep railing about these funds and will continue to rail about them because I think these guys just don't get it. At the end of the second quarter, there was concerted, monster buying of tech, particularly telecom tech, including router, switches and high-end semiconductor stocks. We also saw strong buying in all sorts of fiber-optic plays. In retrospect, that buying was just plain stupid. Smarter Money: Are You a Mark-Up Victim? And you know who did it? Mutual fund managers with your money trying to a) call a bottom where there is no bottom and b) keep their stocks up so you didn't get sticker shock from them for a second time. Sticker shock in this business means you get your 401(k) and you say, "I can't believe how much these people are down." To date, other than one firing by the Vanguard team, I have yet to see any managers replaced because of their love affair with the same overvalued stocks. They won't get replaced until there is a serious withdrawal by the public. At the end of last quarter, I told you these people would walk up their stocks and they would continue to do so for the first couple of days of the quarter in order to not get in trouble with regulators for marking up. It wasn't unusual for many of these funds to pick up 6% to 10% in the end of the quarter, and it was done, in retrospect, to fool you out of your dollars. That's why I was so adamant that people should sell these funds at the end of the quarter and at the beginning of the third quarter because these funds' actions are so transparent. The notion that there was a tradable bottom -- something I know the Invesco guys fell for because people gave their name to me as an aggressive buyer of tech at the end of the quarter -- makes me sick to my stomach. They should know better. Stop kidding yourselves if you are in these funds. The stocks they own are going to have the same multiple when this era is over as every other stock, a multiple on earnings. If that multiple is more than 40 times earnings and the company isn't doubling its earnings, the stocks will end up lower. I know that it is unpopular to write these words in the journalism/fund industry. It is in no one's interest to have them written, not the people who cover mutual funds, the magazines and newspapers that make all of that money from them, or the fund families themselves who can't believe tech isn't just going to come roaring back. I don't care. I would rather be a pariah in the mutual fund/journalism complex than be a liar to you. I know when I first started saying get out of these funds, when they were much higher, I received a huge amount of negative email from people saying, "Now you tell me." That was 30, 40 and even 50 percentage points ago for many of these funds. Remember, I don't think they are done going down. Soon people will want to get out of them before they starting hitting you with the capital gains they will take from the April rebound. You will once again be paying taxes on income and be losing money. Oh, but it is in a nontaxable account? Believe me, you could be in cash and be doing better for yourself. Don't use that nontaxable stuff as an excuse not to take action. These funds will kill your nest egg because they don't know the world has changed. Don't wait for them to figure it out. Exit on the first blip up, whenever it is. And tell these fund families to shape up. They are oblivious to the pain.