Tuesday March 13, 7:52 am Eastern Time

TheStreet.com

Bail Out of Tech Positions -- It's Not Too Late!

Don't sit there and watch your money burn, people!

By James J. Cramer

They always come back, they always come back, they always come back and get me.

Those lyrics are about:

A. Janus Twenty

B. Nasdaq 100 stocks.

C. QQQ (NYSE: QQQ - news) stocks.

D. Your parents.

If you guessed anything but D., you have been completely brainwashed by the talking heads and those in the media who have perpetuated the notion that, long term, everything works out. I thought about that song, from Kids Songs videos, because only parents always come back. Tech stocks don't. They haven't. They can go out of business. They can be in a massive redemption cycle. Consider the Stress Index of telcos I put together to measure the stress in the system. Last year, it was at 430; now it is at 59! Oh man. That doesn't always come back. That may never come back.

Ahh, but the long-termers have so many arrows in their quiver. Malcolm Fobes told me today you could have sold Berkshire Hathaway (BRK^ (NYSE: A - news) last year and been wrong at the bottom. Now he says I want to sell people out of Berkshire funds (which Fobes manages) down 50% and that could be the bottom. But there is a difference. The stocks that Buffett bought were big brand stocks with huge cash flows; they were, using traditional methods of valuation, cheap. The stuff that Berkshire, the mutual fund, owns is expensive and getting more expensive as the earnings decline.

But they say if you think long term you can't miss. Steve Frank, from the Journal, wrote about a couple of big tech stocks we're all familiar with this past weekend: If you hold on, you just might end up in the black eventually.

Why, I ask? Where is that written? And why not sell some anyway and redeploy? Remember, I think tech should be part of your portfolio, I just don't think it should be your portfolio. Yet, for millions upon millions of investors, that is just what it is.

Finally, optimistic folk will argue, "It is too late to sell." To which I say, "Come on, that's not fair or rigorous." I have been saying for months that it is not too late to sell. They have been saying for months that it was too late. I have tried my best to show you this, either in pieces about where stocks really are in relation to when they came public or where they are vs. their split-unadjusted prices. I have tried to show that there are still way too many $10 billion companies in tech. I have tried my best to say that PMC Sierra (Nasdaq: PMCS - news) and Intel (Nasdaq: INTC - news) and Applied Micro Circuits (">http://quote.thestreet.com/cgi-bin/texis/tools?tkr=AMCC&SearchBy=Ticker&DataChoice=StockQuotes'> (Nasdaq: AMCC - news) and Janus and Firsthand will hurt you.

And they come back over and over and say, "Don't listen. It is too late. They have to come back. Think out 15 years." I am so sick of their excuses and their glibness and their surety and their lack of panic and lack of worry. It smacks of the worst type of hubris and arrogance. That's why I keep writing the same thing. Sell something. Sell some tech. Pull some money out of those funds. It is still not too late. If you pull it all out and the market goes up 9% in two days, you will feel like an idiot. But if you pull out some, just some, and raise cash, you will get a better chance and a better opportunity elsewhere.

There are times when you must preserve capital and re-deploy capital. There are times when you can't sit and wait and hope, despite what these moronic glib talking heads are saying. I refuse to stop talking about this stuff because, I know if I do, these "long-term buy-and-holders" who tell you not to worry about the Copper Mountains (Nasdaq: CMTN - news) and the Vignettes (Nasdaq: VIGN - news) and the Yahoo!s (Nasdaq: YHOO - news) and the Dells (Nasdaq: DELL - news) and the E.piphanies (Nasdaq: EPNY - news) will keep your dollars. They don't deserve them. You worked too hard.

Bottom line: If I was still at Cramer Berkowitz , and I was slaughtering people like these tech funds are, I can tell you what people would do when my fund opened at the end of the quarter: They would pull out en masse. That's what smart rich people do. They don't sit there and take it. They get angry and they cut and run. At least on some stocks. When I would mention the long-term stuff they would say, "Will you give me a break? We didn't get rich so you could lose it for us. We didn't get rich by being stupid and listening to someone who is costing us a fortune." And you know something? They were right. Right as rain. Because it is their money and you need to protect your money from those who glibly tell you "not to worry."

Shortly before I penned this, I listened to some portfolio manager on TV who was saying it was time to buy tech. Load the boat up. But this clown has been loading the boat up for months. And before he was loading the boat up at this fund, he was blowing up peoples' assets in another fund.

I know, I know -- I run the risk of being considered a crank about this stuff. I am willing to run that risk, especially if I can save you some money before these folks burn it. I will have done well if I got you out of just a little bit of these funds. That's a win in my book.

-- (Paracelsus@Pb.Au), March 13, 2001

Answers

Looks as if you were right, just giving credit where it is due.

-- para friend (paras@a.friend), March 18, 2001.