The Sheer Idiocy of Cramer: Proof Irrefutable

[WhiteKnuckling]

For all of you Jim Cramer fanbois, I give to thee:

(From page 16 of 'The Intelligent Investor: Revised Edition, with commentary by Jason Zweig)

'In February 2000, hedge-fund manager James J. Cramer proclaimed that Internet-related companies "are the only ones worth owning right now." These "winners of the new world," as he called them, "are the only ones that are going higher consistently in good days and bad." Cramer even took a potshot at Graham: "You have to throw out all of the matrices and formulas and texts that existed before the Web...If we used any of what Graham and Dodd teached us, we wouldn't have a dime under management."

Cramer's favorite stocks "did not go higher consistently in good times and bad." By year-end 2002, one of the 10 had already gone bankrupt, and a $10,000 investment spread equally across Cramer's picks would have lost 94%, leaving you with a grand total of $597.44.

[zyzzyva57]

Cramer constantly stresses do your homework and not be a lemming with him or anyone. I am not sure how he can stress this more than he does.

[aiki14]

The book was written in 1949, By Benjamin Graham. So the author who died in 1976 didn't write those words. And the book is a tour de force on long term value investing, not the fast trading super high risk hedge fund strategy. You may want to note, Jim held each position on average 21 days, some only minutes, 23 months later he was out of every position 20 months. My copy doesn't have the stuff you describe on page 16 or any other page. I'd like to see where that quote by Cramer is from, I find it a bit odd he would use the term "teached Us". Give us some more references I'd be interested in verifying or refuting this.
One more thing, Jim's a billionaire and I haven't heard from a single Cramer Berkowitz investor. With a minimum investment of $1million at first and then $5m later on if he had tanked anything like like you stated we'd still be hearing about it.

[TonyM]

For all of you Jim Cramer fanbois, I give to thee:

(From page 16 of 'The Intelligent Investor: Revised Edition, with commentary by Jason Zweig)

'In February 2000, hedge-fund manager James J. Cramer proclaimed that Internet-related companies "are the only ones worth owning right now." These "winners of the new world," as he called them, "are the only ones that are going higher consistently in good days and bad." Cramer even took a potshot at Graham: "You have to throw out all of the matrices and formulas and texts that existed before the Web...If we used any of what Graham and Dodd teached us, we wouldn't have a dime under management."

Cramer's favorite stocks "did not go higher consistently in good times and bad." By year-end 2002, one of the 10 had already gone bankrupt, and a $10,000 investment spread equally across Cramer's picks would have lost 94%, leaving you with a grand total of $597.44.

May I ask what your purpose on this forum is, if you do not like/agree/learn from Cramer?

I doubt many posters will be swayed by your denouncement of a guy that made millions trading stocks, unless of course you have a better trading record?

Cramer certainly is not infallible, he routinely states that he has made all the mistakes that can be made in trading and even that he lost $17 million by doing what he advises listeners/readers not to do on one position alone. However I'd be willing to bet I could learn more from him and his previous mistakes than I could from you, perhaps you could add a poll to your post and find out if the other members would rather listen to your advice?

[Thierry Martin]

... and a $10,000 investment spread equally across Cramer's picks would have lost 94%, leaving you with a grand total of $597.44.[/B]

What kind of idiot would buy every one of his picks and then hold all of them all the way down, while the whole market collapsed?

[wqcustom]

once again, another post conveniently leaving out all the facts. you failed to mention that cramer changed his mind later and bailed on those picks in march, right before the collapse. which in turn led the way for a highly successful 2000.

was it 'luck', 'flip flopping', 'being flexible', or did the trading goddess bail him out??? you make the call...

[WhiteKnuckling]

The book was written in 1949, By Benjamin Graham. So the author who died in 1976 didn't write those words. And the book is a tour de force on long term value investing, not the fast trading super high risk hedge fund strategy. You may want to note, Jim held each position on average 21 days, some only minutes, 23 months later he was out of every position 20 months. My copy doesn't have the stuff you describe on page 16 or any other page. I'd like to see where that quote by Cramer is from, I find it a bit odd he would use the term "teached Us". Give us some more references I'd be interested in verifying or refuting this.
One more thing, Jim's a billionaire and I haven't heard from a single Cramer Berkowitz investor. With a minimum investment of $1million at first and then $5m later on if he had tanked anything like like you stated we'd still be hearing about it.


1) Cramer is not a "billionaire." How can you so flagrantly mistate things? There are estimates he may have a net worth of as much as 50 million. That's not small change, but it's a far cry from a billion.

2) If you had read my post carefully, you'd had seen that the commentary in the latest iteration of 'The Intelligent Investor' is by Jason Zweig, as I clearly wote.

[WhiteKnuckling]

What kind of idiot would buy every one of his picks and then hold all of them all the way down, while the whole market collapsed?


That's really the wrong question.

The right question is "what kind of idiot, especially a 'professional', recommend that investors ignore fundamentals completely when picking stocks, and furthermore, suggest that "internet-related companies are the only ones worth owning" in 2000.

Apparently, Cramer is that kind of idiot.

[WhiteKnuckling]

And by the way, I truly have no personal dislike for Jim Cramer.

I think those who forget the massive mistakes he has made in the past, however, may be susceptible to some of his incredibly short-sighted and fundamentally flawed advice that he routinely dispenses now.

[aiki14]

1) Cramer is not a "billionaire." How can you so flagrantly mistate things? There are estimates he may have a net worth of as much as 50 million. That's not small change, but it's a far cry from a billion.

2) If you had read my post carefully, you'd had seen that the commentary in the latest iteration of 'The Intelligent Investor' is by Jason Zweig, as I clearly wote.

I'll accept your estimate of Jim's worth since it doesn't really matter, you can substitute 50 mil and it doesn't change my point which you fail to address, name a single individual who did not profit from their association with Cramer Berkowitz.
Secondly you quote from a book, the edition of which has commentary by Zweig, you do not identify the quote as by Zweig, again a small matter.

How about addressing the fact that the value of the stocks 2 years out has absolutely no bearing on the value of the fund, or each individual stock at the time Jim sold them.
You want to call him an idiot for his commentary (which you don't reference so we have to take your word that he indeed made those comments) but I'll go by track record, Cramer Berkowitz made it's investors money.

What's your agenda here? You want to make the point that Jim's methodology is flawed, OK your opinion is noted. You've twice now called him an idiot (odd for someone with "no personal dislike") without offering a competing strategy, let's hear yours, and we'll decide if you're any smarter than Jim or just another gal who casts aspersions but brings nothing real to the table of her own.

[aiki14]

An update to my earlier comment. I don't like being wrong, and less do I like actually admitting it , however after a couple hours of research I could only verify Jim Cramers net worth to $100 million at the time of his retirement from Cramer Berkowitz in November of 2000. I believe him to be worth more than that now but $1b is almost definitely an overstatement ( Being introduced as "billionaire investment maniac" on Imus is not adequate evidence).

[WhiteKnuckling]

What's your agenda here?

Do you or do you not think that Cramer gave financially sound investment advice in 2000 (per the quotations in the first post)?

[Blackark]

Cramer went to 100% cash in March of 2000. So obviously you are framing your comments dishonestly, as all the other Cramer haters do.

[WhiteKnuckling]

Cramer went to 100% cash in March of 2000. So obviously you are framing your comments dishonestly, as all the other Cramer haters do.

Wait, so you're saying that one month before he gave this advice, he went to all cash?

'In February 2000, hedge-fund manager James J. Cramer proclaimed that Internet-related companies "are the only ones worth owning right now." These "winners of the new world," as he called them, "are the only ones that are going higher consistently in good days and bad." Cramer even took a potshot at Graham: "You have to throw out all of the matrices and formulas and texts that existed before the Web...If we used any of what Graham and Dodd teached us, we wouldn't have a dime under management."




Wow, if true, that makes his February comment sheer lunacy, wouldn't you think?

I mean, he makes a sweeping statement in February about how internet stocks are the only ones to own, and how fundamentals are for the "old world," and then he goes to 100% cash within a month?

Also, do you have any proof or supporting links showing that Cramer went to 100% cash by March, or are you just making things up? :rolleyes:

[Blackark]

My source is Cramer himself, in his book, You got Screwed.

I would say a month after he gave this advice he went to all cash. If you know Cramer you know he will change his mind hour to hour, especially at his hedge fund where he was accountable only to his investors and not the public at large. So not a month before, a month after.

[zyzzyva57]

Simply check out Cramer here and be current:
http://madmoney.thestreet.com/

He lays it out

See the FULL tapestry before flamming one piece

Name one other big name in the stock game who hits 100%

If Cramer still sux, simply move on to the guru that works more times than not for you--but do not pick and choose your facts--i.e., keep the same basic metrics within the same time frame

Almost nightly, Cramer warns do not be a lemming with him...Not doing this is tantamount to smoking even though tobacco companies warn you of the dangers to smoking and you then blame the tobacco companies when something bad happens to your health from smoking

[aiki14]

Do you or do you not think that Cramer gave financially sound investment advice in 2000 (per the quotations in the first post)?

I don't know the context of the quote so I cannot say definitively, however I would be inclined to say yes and heres why.
1) prior to feb of 2000 the internet/tech stocks I believe him to be referencing did indeed outperform the Graham style value stock by a large margin
2) They continued to outperform through the timeframe Jim typically worked in (days to weeks) and anyone who followed him at the time knew he could change his mind on a dime
3) He got out of those positions prior to the tank, I don't see how you can judge him on the occurences after he publicly sold the positions. His on the record statements are that of a trader and if you take his advice it must be on that basis, buying and holding his positions would be like daytrading Graham style picks (where you'd never make up the commissions). If a person was foolish enough to do that he wasn't listening to what Jim was saying.

As to the statement he made regarding if he used Grahams methodology he wouldn't have a dime under management, that's absolutely, as you would say, irrefutable. Jim ran a hedge fund which I assume you know is designed to make money using alternative methodologies to the Graham method (which admittedly is the gold standard in value style investing). If you want that type of fund you go with managers like Chris Davis or Bob Doll and everyone who gave Jim the 1 to 5 mil knew that going in.

A lot of guys don't like Jim for many reasons, and he's PO'd a lot of insiders so just like you need to do DD on stock picks, a little on the possible motives behind the quotes is advisable.

[WhiteKnuckling]

My source is Cramer himself, in his book, You got Screwed.

I would say a month after he gave this advice he went to all cash. If you know Cramer you know he will change his mind hour to hour, especially at his hedge fund where he was accountable only to his investors and not the public at large. So not a month before, a month after.


Can you be a little more precise?

I'd honestly love to see proof of what you are claiming.

Let us both be clear:

You are saying that within one month of proclaiming that "internet stocks are the only ones to own" in February of 2000, Cramer went to 100% cash?

So, in other words, Cramer held -ZERO- internet stocks (actually, make that NO STOCKS PERIOD), as of March 2000?

So, just to be perectly clear, Cramer had no postions open in March 2000, but was 100% cash?

And your source for this statement was his own book?

Am I hearing you correctly?

[zyzzyva57]

I think this is where the quote came from:

http://www.thestreet.com/funds/smarter/891820.html

Note the date

[WhiteKnuckling]

I think this is where the quote came from:

http://www.thestreet.com/funds/smarter/891820.html

Note the date

Thank you for that!!!

Can you believe that load of crap??!!!

I can't actually believe some on here can read what Cramer said in 2000 (in that speech) and think he has ANY credibility.

WHat about that 100% cash, perfect market timing claims some of you made?


Here's the infamous Cramer sage wisdom:


The Winners of the New World
By James J. Cramer

2/29/00 9:42 AM ET


Editor's Note: James J. Cramer is the keynote speaker at the 6th Annual Internet and Electronic Commerce Conference and Exposition, held today at the Jacob Javits Center in New York City. We're running the full text of that speech here.

You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.

OK. Here goes. Write them down -- no handouts here!: 724 Solutions (SVNX:Nasdaq - news), Ariba (ARBA:Nasdaq - news), Digital Island (ISLD:Nasdaq - news), Exodus (EXDS:Nasdaq - news), InfoSpace.com (INSP:Nasdaq - news), Inktomi (INKT:Nasdaq - news), Mercury Interactive (MERQ:Nasdaq - news), Sonera (SNRA:Nasdaq - news), VeriSign (VRSN:Nasdaq - news) and Veritas Software (VRTS:Nasdaq - news).

We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over -- and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don't even have earnings per share, so we won't have to be constrained by that methodology for quarters to come.

There, now that that's done with, can we talk about the methodology that produced those top 10 so that you can understand how, in a universe of a gazillion stocks, we arrived at those, so you too can figure it out? I hope we can because I have another 10 and still another 10 and another. They all do the same thing: They make the Web faster, cheaper, better and easier to access anywhere, anytime. They allow you to get on the Web securely anywhere in the world. They make the Web economy the only economy that matters. That's all they do.

We try to own every one of them. Every single one. And if I had my druthers, I wouldn't own any other stocks in the year 2000. Because these are the only ones worth owning right now in this extremely difficult, extremely narrow stock market. They are the only ones that are going higher consistently in good days and bad. I love every one of them, just as I loathe the rest of the stock universe.

How did this stock market get like this, to where the only people who can make a dime in it are the people who are interested in the most arcane subject, the moving of data from one space to another, via strange new machines and software? How did it get to the point where nothing else matters, most particularly the 90% of the stock market I have studied for the last 20 years? How did all of that knowledge become totally irrelevant and the only stocks that work are the stocks of companies that didn't exist five years ago and came public in the last two or three years?

Let's start with the world in the early 21st century, a world where capital is abundant for a chosen few and nonexistent for just about everybody else. It is a world where the whole of Wall Street and Silicon Valley is at your fingertips if you are creating the infrastructure for the New Economy, and a world where neither Wall Street nor Silicon Valley could give a darn about you if you are using that infrastructure.

Or in other words, we don't care if General Motors (GM:NYSE - news) and Ford (F:NYSE - news) are going with Oracle (ORCL:Nasdaq - news) or with i2 (ITWO:Nasdaq - news) for their new parts procurement process. We don't want to own GM or Ford on any occasion. In fact, we would rather own the loser in that tech bake-off than the winner in nontech, because in this new world, there is so much business to be done for the i2s and the Oracles that the capital will remain plentiful for them, win or lose a particular piece of business.

Just yesterday I found myself wishing I had bought i2 when it lost out to Oracle for the giant business-to-business contract for the Big Three automakers. Others had the same idea because i2, the loser Friday, was up much more Monday than GM and Ford could be this year. i2 can own the world because the company with the access to cheap capital always wins. And the companies with no access have to lose.

Or, closer to home. We in the stock market don't care that The Street.com Inc. (TSCM:Nasdaq - news), a company I helped create, has built a compelling new brand, has more than 100,000 paid subscribers and has $100 million in the bank. We just want to know which companies TheStreet.com employs to publish each day. We want to know who the host is, which publishing tool works best, which wireless strategy TheStreet.com is adopting and how does it automate its email? (By the way, the answers are Exodus, Vignette (VIGN:Nasdaq - news), Motorola (MOT:NYSE - news) and Kana (KANA:Nasdaq - news) -- all at or near their 52-week highs as TheStreet.com languishes at its 52-week low, a triumph of the arms merchants over the combatants if there ever were one.)

How did this bizarro world where nine-tenths of the companies I have followed as a stock picker for the last 20 years are losers and one-tenth are winners? To answer that question, you have to throw out all of the matrices and formulas and texts that existed before the Web. You have to throw them away because they can't make money for you anymore, and that is all that matters. We don't use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management.

So how do we sort through which stocks get bought and which stocks get assigned to the waste bin?

We have a phrase on Wall Street. It's called raising the bar. If you can raise the bar, or brighten the outlook for your company, if you can see your growth accelerating, your stock will go higher and you will be given the currency to expand, acquire and do whatever you want. That's the secret of the quintessential New Economy stock: Cisco (CSCO:Nasdaq - news). This giant networker has the ability to control its own destiny. It can, as my colleague Adam Lashinsky says at TSC, buy any company it wants to. It can pay any price. Because it has a currency that it better than U.S. dollars: It has Cisco stock. It can do that because it raises the bar every quarter!

But what about the Old Economy stocks? Can Merck (MRK:NYSE - news) raise the bar? Can Pfizer (PFE:NYSE - news)? Can U.S. Steel (X:NYSE - news)? Or Phelps Dodge (PD:NYSE - news)? Union Pacific (UNP:NYSE - news)? No, no, no, no, no and no. So what happens to them? Despite the billions in buybacks and the plethora of strong buys that the Street has put out about these companies, their stocks have no traction. They just stumble along, rising and falling haphazardly with every whim and quizzical speech of the Federal Reserve chairman that still controls their destiny. If Greenspan indicates that there is more tightening ahead, these traditional companies, the ones that you measure with traditional matrices, get pole-axed as we worry about where the capital will ultimately come from if credit gets choked off, while the arms merchants in the Web war, with capital to burn, just go higher.

It is no secret that the Dow, made up principally of companies that can't raise the bar, is down 12% while the Nasdaq, which is made up of companies that can raise the bar, is up 12%. And in the self-fulfilling jungle that is Wall Street, only growth can maintain growth!

So how do we find what are the great growth companies, knowing that growth and not cheapness of stock to company is what matters? We have to look for the fastest-growing industries and then select the companies that can make the infrastructure happen the fastest and the cheapest in those industries. The growth must be positively organic, if not viral. There must be heavy technological barriers to entry. And there must be an ability to scale without any thought to human cost. These companies must be able to dominate their businesses or be willing to become part of a larger institution that dominates.

So, whom does that eliminate? First, any company that is a commodity producer simply can't be owned, no matter what. The New Economy makes those be simply a function of low-cost producer with no ability ever to raise price. This, of course, is the crying shame of the way the Fed is trying to break the economy because the only place that could stand for a little inflation is in the deflationary commodity industries. But their inflation revolves around the ability to build inventory to anticipate future price hikes and the Fed is taking short rates to a height that makes it uneconomic to stockpile.

Second, it eliminates any bricks-and-mortar company that doesn't embrace the Net. To not embrace the Net is to give a cost edge to a competitor who does. It does so because the Net removes the middleman that was a product of the regional economy. There is $4 trillion worth of wholesaling that gets instantly eliminated by the Net. Before only the largest orders could be processed by the biggest companies because it was too expensive otherwise. Now all orders can be processed by the biggest companies through the Web. There is no need for the jobber or the wholesaler. Obviously, if you are still using that old distribution network, you can't compete against those who do.

Third, it eliminates any industry that does not have a proprietary brand. This is one of those weird features of the Web that people haven't woken up to yet, but it will seem obvious a few months from now. In the New World's economy, the desire to "name your own price" is too great to squelch. An outfit like priceline (PCLN:Nasdaq - news) will change the very nature of brands in this country. It won't destroy the premium brand, but it will force everyone else out of the market. Why? Because the way priceline works is that we are trying to buy the premium brand for the price of the off-price brand. That means the off-price brands, whether they be Colgate (CL:NYSE - news) or Dial (DL:NYSE - news) or Hunt's or Ralston (RAL:NYSE - news), are simply doomed by the Web. Why would you ever buy the second- or third-best when you can get the best via priceline for the same price as the lower tier? Ahh, that's a real killer. It leaves only the top brands to vie for supermarket space. The others won't be worth carrying. They won't move! Oh yeah, same goes for the airlines and the hotels and just about everybody else.

Fourth, it just destroys retail as we know it. Why? Because the companies that embrace the Web more vigorously will eventually be pitted against other companies that embrace the Web more vigorously, creating a virtual constant price war, the kind of war that Marx, of all, actually predicted would happen to capitalism. It will happen to retail once everyone realizes that Amazon (AMZN:Nasdaq - news) recreated Wal-Mart (WMT:NYSE - news) online because it will forever have access to cheap capital. Why do I say forever? Because at a certain point, it will be done with its buildout and will effectively be able to cherry-pick whomever it wants to destroy while having it be subsidized by other areas. It will be Home Depot (HD:NYSE - news) vs. Wal-Mart vs. Amazon in the end. Nobody else. And that's only if Home Depot figures out it better get on the Web and fast.

Fifth, it wipes out everybody who straddles the Old and New Worlds. Let's take the brokerage industry. If you are trying to preserve a price point, because you need those margins, you can't and you become roadkill. Same with journalism. If you are free online and cost offline, you will eventually not be able to charge offline. Why not? Because the Hewlett-Packards (HWP:NYSE - news) and Intels (INTC:Nasdaq - news) and Ciscos are bent on making the online version far superior to the offline version. And they will do it. They, too, have the access to capital to make it happen.

I can tell you from TheStreet.com that we have substantial cost advantages over our printed cousins. We can come out around the clock. We don't require paper, ink, delivery people or trucks. In that sense, we are much more like television, personal television, which is why we were wrong initially to think we could charge for basic news, and right to think we can charge a huge amount for proprietary analysis that can make you money.

The struggle between the offliners and the onliners in banking will also pan out just like these other industries, with huge wins for those with a fresh online culture and hideous losses for those who don't see it coming or are slow to adjust. If you have to preserve your giant branch network and the costs that come with it while someone else perfects secure wireless Internet transactions, you can forget about it. You can't afford to compete. How can Bank of America (BAC:NYSE - news) compete with Nokia (NOK:NYSE ADR - news) as a way to bank? How can Goldman Sachs (GS:NYSE - news) compete with Yahoo! (YHOO:Nasdaq - news) as a way to invest? Isn't Nokia, with its wireless machine that goes everywhere a better bank than one that needs branches? Isn't Yahoo!, with its access to all of the information and quotes in the financial world a better place to buy stocks than Goldman?

Of course they are.

So, if you can't own the retailers, and you can't own transports, and you can't own banks and brokers and financials and you can't own commodity makers and you can't own the newspapers, and you can't own the machinery stocks, what can you own?

A-ha, that just leaves us with tech. That's why we keep coming back to it. That's why, despite the 80% increase in the Nasdaq last year, we are looking at another record year now. It is by that process of elimination that I have picked my top 10. And my next 10 and my next 10 after. Only those companies are worth owning. The rest?

You can have them.

Thank you.

[WhiteKnuckling]

I think this is where the quote came from:

http://www.thestreet.com/funds/smarter/891820.html

Note the date

Thank you for that!!!

Can you believe that load of crap??!!!

I can't actually believe some on here can read what Cramer said in 2000 (in that speech) and think he has ANY credibility.

WHat about that 100% cash, perfect market timing claims some of you made?


Here's the infamous Cramer sage wisdom:


The Winners of the New World
By James J. Cramer

2/29/00 9:42 AM ET


Editor's Note: James J. Cramer is the keynote speaker at the 6th Annual Internet and Electronic Commerce Conference and Exposition, held today at the Jacob Javits Center in New York City. We're running the full text of that speech here.

You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.

OK. Here goes. Write them down -- no handouts here!: 724 Solutions (SVNX:Nasdaq - news), Ariba (ARBA:Nasdaq - news), Digital Island (ISLD:Nasdaq - news), Exodus (EXDS:Nasdaq - news), InfoSpace.com (INSP:Nasdaq - news), Inktomi (INKT:Nasdaq - news), Mercury Interactive (MERQ:Nasdaq - news), Sonera (SNRA:Nasdaq - news), VeriSign (VRSN:Nasdaq - news) and Veritas Software (VRTS:Nasdaq - news).

We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over -- and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don't even have earnings per share, so we won't have to be constrained by that methodology for quarters to come.

There, now that that's done with, can we talk about the methodology that produced those top 10 so that you can understand how, in a universe of a gazillion stocks, we arrived at those, so you too can figure it out? I hope we can because I have another 10 and still another 10 and another. They all do the same thing: They make the Web faster, cheaper, better and easier to access anywhere, anytime. They allow you to get on the Web securely anywhere in the world. They make the Web economy the only economy that matters. That's all they do.

We try to own every one of them. Every single one. And if I had my druthers, I wouldn't own any other stocks in the year 2000. Because these are the only ones worth owning right now in this extremely difficult, extremely narrow stock market. They are the only ones that are going higher consistently in good days and bad. I love every one of them, just as I loathe the rest of the stock universe.

How did this stock market get like this, to where the only people who can make a dime in it are the people who are interested in the most arcane subject, the moving of data from one space to another, via strange new machines and software? How did it get to the point where nothing else matters, most particularly the 90% of the stock market I have studied for the last 20 years? How did all of that knowledge become totally irrelevant and the only stocks that work are the stocks of companies that didn't exist five years ago and came public in the last two or three years?

Let's start with the world in the early 21st century, a world where capital is abundant for a chosen few and nonexistent for just about everybody else. It is a world where the whole of Wall Street and Silicon Valley is at your fingertips if you are creating the infrastructure for the New Economy, and a world where neither Wall Street nor Silicon Valley could give a darn about you if you are using that infrastructure.

Or in other words, we don't care if General Motors (GM:NYSE - news) and Ford (F:NYSE - news) are going with Oracle (ORCL:Nasdaq - news) or with i2 (ITWO:Nasdaq - news) for their new parts procurement process. We don't want to own GM or Ford on any occasion. In fact, we would rather own the loser in that tech bake-off than the winner in nontech, because in this new world, there is so much business to be done for the i2s and the Oracles that the capital will remain plentiful for them, win or lose a particular piece of business.

Just yesterday I found myself wishing I had bought i2 when it lost out to Oracle for the giant business-to-business contract for the Big Three automakers. Others had the same idea because i2, the loser Friday, was up much more Monday than GM and Ford could be this year. i2 can own the world because the company with the access to cheap capital always wins. And the companies with no access have to lose.

Or, closer to home. We in the stock market don't care that The Street.com Inc. (TSCM:Nasdaq - news), a company I helped create, has built a compelling new brand, has more than 100,000 paid subscribers and has $100 million in the bank. We just want to know which companies TheStreet.com employs to publish each day. We want to know who the host is, which publishing tool works best, which wireless strategy TheStreet.com is adopting and how does it automate its email? (By the way, the answers are Exodus, Vignette (VIGN:Nasdaq - news), Motorola (MOT:NYSE - news) and Kana (KANA:Nasdaq - news) -- all at or near their 52-week highs as TheStreet.com languishes at its 52-week low, a triumph of the arms merchants over the combatants if there ever were one.)

How did this bizarro world where nine-tenths of the companies I have followed as a stock picker for the last 20 years are losers and one-tenth are winners? To answer that question, you have to throw out all of the matrices and formulas and texts that existed before the Web. You have to throw them away because they can't make money for you anymore, and that is all that matters. We don't use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management.

So how do we sort through which stocks get bought and which stocks get assigned to the waste bin?

We have a phrase on Wall Street. It's called raising the bar. If you can raise the bar, or brighten the outlook for your company, if you can see your growth accelerating, your stock will go higher and you will be given the currency to expand, acquire and do whatever you want. That's the secret of the quintessential New Economy stock: Cisco (CSCO:Nasdaq - news). This giant networker has the ability to control its own destiny. It can, as my colleague Adam Lashinsky says at TSC, buy any company it wants to. It can pay any price. Because it has a currency that it better than U.S. dollars: It has Cisco stock. It can do that because it raises the bar every quarter!

But what about the Old Economy stocks? Can Merck (MRK:NYSE - news) raise the bar? Can Pfizer (PFE:NYSE - news)? Can U.S. Steel (X:NYSE - news)? Or Phelps Dodge (PD:NYSE - news)? Union Pacific (UNP:NYSE - news)? No, no, no, no, no and no. So what happens to them? Despite the billions in buybacks and the plethora of strong buys that the Street has put out about these companies, their stocks have no traction. They just stumble along, rising and falling haphazardly with every whim and quizzical speech of the Federal Reserve chairman that still controls their destiny. If Greenspan indicates that there is more tightening ahead, these traditional companies, the ones that you measure with traditional matrices, get pole-axed as we worry about where the capital will ultimately come from if credit gets choked off, while the arms merchants in the Web war, with capital to burn, just go higher.

It is no secret that the Dow, made up principally of companies that can't raise the bar, is down 12% while the Nasdaq, which is made up of companies that can raise the bar, is up 12%. And in the self-fulfilling jungle that is Wall Street, only growth can maintain growth!

So how do we find what are the great growth companies, knowing that growth and not cheapness of stock to company is what matters? We have to look for the fastest-growing industries and then select the companies that can make the infrastructure happen the fastest and the cheapest in those industries. The growth must be positively organic, if not viral. There must be heavy technological barriers to entry. And there must be an ability to scale without any thought to human cost. These companies must be able to dominate their businesses or be willing to become part of a larger institution that dominates.

So, whom does that eliminate? First, any company that is a commodity producer simply can't be owned, no matter what. The New Economy makes those be simply a function of low-cost producer with no ability ever to raise price. This, of course, is the crying shame of the way the Fed is trying to break the economy because the only place that could stand for a little inflation is in the deflationary commodity industries. But their inflation revolves around the ability to build inventory to anticipate future price hikes and the Fed is taking short rates to a height that makes it uneconomic to stockpile.

Second, it eliminates any bricks-and-mortar company that doesn't embrace the Net. To not embrace the Net is to give a cost edge to a competitor who does. It does so because the Net removes the middleman that was a product of the regional economy. There is $4 trillion worth of wholesaling that gets instantly eliminated by the Net. Before only the largest orders could be processed by the biggest companies because it was too expensive otherwise. Now all orders can be processed by the biggest companies through the Web. There is no need for the jobber or the wholesaler. Obviously, if you are still using that old distribution network, you can't compete against those who do.

Third, it eliminates any industry that does not have a proprietary brand. This is one of those weird features of the Web that people haven't woken up to yet, but it will seem obvious a few months from now. In the New World's economy, the desire to "name your own price" is too great to squelch. An outfit like priceline (PCLN:Nasdaq - news) will change the very nature of brands in this country. It won't destroy the premium brand, but it will force everyone else out of the market. Why? Because the way priceline works is that we are trying to buy the premium brand for the price of the off-price brand. That means the off-price brands, whether they be Colgate (CL:NYSE - news) or Dial (DL:NYSE - news) or Hunt's or Ralston (RAL:NYSE - news), are simply doomed by the Web. Why would you ever buy the second- or third-best when you can get the best via priceline for the same price as the lower tier? Ahh, that's a real killer. It leaves only the top brands to vie for supermarket space. The others won't be worth carrying. They won't move! Oh yeah, same goes for the airlines and the hotels and just about everybody else.

Fourth, it just destroys retail as we know it. Why? Because the companies that embrace the Web more vigorously will eventually be pitted against other companies that embrace the Web more vigorously, creating a virtual constant price war, the kind of war that Marx, of all, actually predicted would happen to capitalism. It will happen to retail once everyone realizes that Amazon (AMZN:Nasdaq - news) recreated Wal-Mart (WMT:NYSE - news) online because it will forever have access to cheap capital. Why do I say forever? Because at a certain point, it will be done with its buildout and will effectively be able to cherry-pick whomever it wants to destroy while having it be subsidized by other areas. It will be Home Depot (HD:NYSE - news) vs. Wal-Mart vs. Amazon in the end. Nobody else. And that's only if Home Depot figures out it better get on the Web and fast.

Fifth, it wipes out everybody who straddles the Old and New Worlds. Let's take the brokerage industry. If you are trying to preserve a price point, because you need those margins, you can't and you become roadkill. Same with journalism. If you are free online and cost offline, you will eventually not be able to charge offline. Why not? Because the Hewlett-Packards (HWP:NYSE - news) and Intels (INTC:Nasdaq - news) and Ciscos are bent on making the online version far superior to the offline version. And they will do it. They, too, have the access to capital to make it happen.

I can tell you from TheStreet.com that we have substantial cost advantages over our printed cousins. We can come out around the clock. We don't require paper, ink, delivery people or trucks. In that sense, we are much more like television, personal television, which is why we were wrong initially to think we could charge for basic news, and right to think we can charge a huge amount for proprietary analysis that can make you money.

The struggle between the offliners and the onliners in banking will also pan out just like these other industries, with huge wins for those with a fresh online culture and hideous losses for those who don't see it coming or are slow to adjust. If you have to preserve your giant branch network and the costs that come with it while someone else perfects secure wireless Internet transactions, you can forget about it. You can't afford to compete. How can Bank of America (BAC:NYSE - news) compete with Nokia (NOK:NYSE ADR - news) as a way to bank? How can Goldman Sachs (GS:NYSE - news) compete with Yahoo! (YHOO:Nasdaq - news) as a way to invest? Isn't Nokia, with its wireless machine that goes everywhere a better bank than one that needs branches? Isn't Yahoo!, with its access to all of the information and quotes in the financial world a better place to buy stocks than Goldman?

Of course they are.

So, if you can't own the retailers, and you can't own transports, and you can't own banks and brokers and financials and you can't own commodity makers and you can't own the newspapers, and you can't own the machinery stocks, what can you own?

A-ha, that just leaves us with tech. That's why we keep coming back to it. That's why, despite the 80% increase in the Nasdaq last year, we are looking at another record year now. It is by that process of elimination that I have picked my top 10. And my next 10 and my next 10 after. Only those companies are worth owning. The rest?

You can have them.

Thank you.

[zyzzyva57]

Enough of this!

Help us Great Unwashed and provide a Guru you trusts

Blow us away with your hero!

[WhiteKnuckling]

Enough of this!

Help us Great Unwashed and provide a Guru you trusts

Blow us away with your hero!


But honestly, that's not the issue, is it?

That's a red herring.

If someone demonstrates Cramer's folly, you first deny it, and when presented with supporting evidence, change the subject?

Are you at least willing to concede that the 2000 remarks by Cramer were absolute, unmitigated horse manure?

[aiki14]

But honestly, that's not the issue, is it?

That's a red herring.

If someone demonstrates Cramer's folly, you first deny it, and when presented with supporting evidence, change the subject?

Are you at least willing to concede that the 2000 remarks by Cramer were absolute, unmitigated horse manure?

Your mind is closed, what he said made perfect sense when he said it and his fund made money until and after he left it. You haven't made any point, or answered the basic question of what your motivation is. You think Cramer is an idiot, message received. You want people to agree with you you're gonna have to bring a more cogent argument. Answering my previous post point by point in your own words as I did yours would be nice. You game for a debate or do you just want to throw down a bunch of invective?

[WhiteKnuckling]

Your mind is closed, what he said made perfect sense when he said it and his fund made money until and after he left it.

Do you know when he closed his positions in those stocks, and what his p/l was when he did so?

If so, please cite the source.

And more to the point, do you know when/if he went from proclaiming that "these are the only stocks to own," and that fundamentals don't matter, because it's a "new world" to something different?

[zyzzyva57]

I concede nata as overwhelming as is your premise

Let's work through something current we fans of Cramer for at least a year can remember:

In 2005, Cramer was hot on "jdsu" stock (and tech stocks in general)

In 2006, Cramer turned on "jdsu," because the company bloated stocks and hurt investors

Is it fair then to argue Cramer will lead you wrong? If Cramer had known this beforehand, then he would be guilty of insider trading

Once this nasty (albeit it legal) shenagin was known Cramer told us--Yes, we could have lost money, but was Cramer wrong when he pushed tech stocks?

Is Cramer guilty, therefore, of his 2005 deed of being very pro "jdsu" (and tech stocks in general)?

Is everything Cramer says stupid solely based on his 2005 love of tech stocks?

If I used your argument, I could go back into his 2005 shows and find one comment on tech stocks to argue Cramer is consistently wrong based on today

[zyzzyva57]

Look, all I can say after watching about every show of Cramer's, he has never-ever said Fundamentals do not matter! He preaches this and doing your homework constantly. This is his main point pushing Best of Breed...Even Buffett could not disagree with his Best of Breed! You can see them for FREE:

http://madmoney.thestreet.com/index.cfm?page=bestbreed

Do you see trash here?!

Go to his web site and read for FREE what he preaches--Scroll down once there

http://www.thestreet.com/_tscnav/tsc/cramerbook

[aiki14]

Do you know when he closed his positions in those stocks, and what his p/l was when he did so?

If so, please cite the source.

And more to the point, do you know when/if he went from proclaiming that "these are the only stocks to own," and that fundamentals don't matter, because it's a "new world" to something different?

You ask much and offer little, but since I'm interested I will see what I can find out. C-B being a hedge fund didn't report trades generally so it may be impossible to get the trade dates. I have been able to get historical prices on svnx, arba, insd, merq, vrsn and vrts (I'll get the rest as soon as possible). I used the dates 2/29/00, 3/29/00, and 11/29/00 as data points (day of speech, one month, and time of his retirement) and ran highs for the time in between and adjusted for splits. So far Arba is the only one up real big on 11/29 (+40%), svnx, vrsn are flat (+less than 2%), vrts and merq were down (20% each) and insd was down big (- 40%). Had you equal positions in each and held for the whole time you lost 16%. If you had sold at the highs for the individual stocks you were up over 60%. I used bigcharts and yahoo finance and they do not have data for the other symbols and it's a lot of work so I'm gonna stop for now, tomorrow I have access to a Bloomberg terminal and can get the rest, and I'll post them.

The fact you made your statements without the information you ask for is interesting, and I don't remember any place where he said fundamentals don't matter, he does indicate the old fundamental matrix is obsolete, and I would make the assumption he alters the matrix to suit his parameters which is still a fundamental analysis, just one that differs from previous paradigm.
Again to really back up your initial statement an example of one single individual who lost money with Cramer would be helpful. It seems all the folks who paid him to make predictions came out ahead and others who didn't got what they paid for.
And still I ask what your motivation is? At this point you're coming off like a case of sour grapes IMO.

[aiki14]

Digital Island up 100% by 3/29/00 and then down 90% by 11/29/00
We should assume Jim was buying this as it rose through the 2/29 price, and we can't really be sure what his avg price was.
I got this info off the Wall St Journal online (you have to be a subscriber to get the historical prices but I'll post them if anyone wants them)
I'm still running into a wall on the remaining 3. WSJ says symbol not found, even though I have found archived articles with the Symbols mentioned but I can't get specific prices for specific days.
This skews both the data points, if you add this as an equal then your up a little more on the sell at high, and down a little more if you held through Nov. Since by all accounts I can find C-B returned 24% compounded per year from inception through Nov '00 the numbers appear to reconcile for selling the positions 10-15% below the high for the time period were referencing.

[aiki14]

EXDS or Exodus Communications corp.
What fun this was, had to go into Edgar and get into their 10k and 10q and 8k's. Luckily for me they filed a 10k on 3/31/00 and I could get prices from their options disclosures. Anyway, you could have bought the shares that day for 23.37 and the price had risen over the previous year from 4 or so. So we can assume Jim got any shares he got during the time before the speech at around or less than 23. They were at 93 split adjusted at the end of 3q '00 so jim would have had to have sold them around or below 90 so he would have approx a 400% gain there.
The company filed for bankruptcy 27 feb '01 and subsequently were liquidated later that year which for any holders would have resulted in a total loss.
Again this skews things like the others, you did a little better if you sold at some time during Jims tenure and got clobbered if you held.
A facinating aside was these guys (the company exds) were selling corp convertible bonds (unknown ratings) throughout the 99-00 time frame which of course would also be worthless subsequent to the chap 11.

[aiki14]

Lets review this thread,
The OP makes Statement based on her interpretation of an old news piece.
OP gets challenged by members, offers no additional info and does not answer repeatedly asking her motivation. Then posts as evidence of her position an article from Cramers own site (which even if you interpret it in a way favorable to OP at least speaks in favor of Jims integrity for having it there) and makes more statements of invective.
OP did catch me in a misstatement ( Jims net worth) and berated me for it.
OP did not address in any substancial way the positions I put forth that Jim was correct at the time he made those statements, and that the Zweig commentary really is moot since it addresses a methodology Jim didn't employ or advocate (that of holding the positions long term).
OP did not address any of zyzzyva57's points and then berates him for denying evidence. Evidence zyzzyva57 provided himself and which can be interpreted (as I do) to support the opposite point to the one the OP made.

So here you have my opinion:
OP has a problem with Jim of unknown etiology
OP has anger issues as evidenced by her repeated personal attacks and vitriol.
OP has delusions of grandeur as evidenced by her accusations of members ignoring evidence, even though she offered none. She appears to think she has put forth some cogent, erudite position when only offering a few shots and little else.

[Thierry Martin]

I need a drink.

[Blackark]

Critics of mine dwell on my bullishness in December 1999 and January and February of 2000, the peak of the last bull market, or the bubble, as some insist on calling it. But the leaps stocks were making in that contained time span have not been and may never be replicated again. In that market the goal was to make those trading gains and go home, as I did with my March 15, 2000, RealMoney.com piece saying to take things off the table, four days after the exact top in the NASDAQ. Rather than feeling guilty about some who stayed in too long, I prided myself in recognizing that the market had changed for the worse in the spring of 2000, after the greatest run of all time, and you had to switch direction, no matter what your previous pronouncements and beliefs had been. You had to stay flexible to be conservative, to be prudent, to be commonsensical and keep your gains. Wall Street gibberish about being "in for the long term" or "only interested in stocks that trade for less than their growth rate or their book value" is just plain recklessness. You have to be willing to change your mind and your direction. Nowhere in the commandments of investing is it written "One shall not change one's mind even if it may be wrong." Businesses change, they become good, they go bad. Markets change, they become good, they go bad. You can't be blind to those changes without losing money or risking being blown out of the game. But you must swear to stay in no matter what. It's not flip-flopping if you like WorldCom when the business is good and hate it when the business goes bad, even though I was accused mightily of flip-flopping, for example, when I tossed aside WorldCom in the $80s after owning it for more than five years. Had I not "flip-flopped" and booted the stock to kingdom come, I might have lost everything I had made in that stock and then some. You must roll with the punches of investing, bobbing and weaving when the underlying businesses falter or fade.

Source (http://www.powells.com/biblio?show=HARDCOVER:NEW:0743224892:26.00&page=excerpt)

[watchtvgetpoor]

What kind of idiot would buy every one of his picks and then hold all of them all the way down, while the whole market collapsed?

If the "idiot" bought the stocks because Cramer said to buy, the "idiot" waited for guidance from Cramer on when to sell.

Y'all amuse me. You give Cramer all this credit when stocks go up but when they go down, it's the "idiot" investor's fault.

Classic.

[TonyM]

If the "idiot" bought the stocks because Cramer said to buy, the "idiot" waited for guidance from Cramer on when to sell.

Y'all amuse me. You give Cramer all this credit when stocks go up but when they go down, it's the "idiot" investor's fault.

Classic.

Going all the way back to September to look for allies, he doesn't have time to update his site and provide all of the 'proof' against Cramer, but he does have time to go grave digging.:roll: