If the Nasdaq rallies today, please ignore it. If you recall our now totally ridiculous run up in the Nasdaq two weeks ago, a run spurred by numerous upgrades of semiconductor and semiconductor equipment companies by analysts who are always bullish no matter what the fundamentals are, you know that it was dead wrong.
Dead wrong. I said it at the time, but in this market the bulls don't give a darn because all of their work is based on "cheapness" and that you buy stocks at this stage of a recession because you know we are almost out of it.
These are lies.
Today Intel's (NASDAQ: INTC) (Cramer's Take) really cheap. Using a Warren Buffett analogy -- although he doesn't like tech, just GE (NYSE: GE) (Cramer's Take) and Goldman (NYSE: GS) (Cramer's Take), two "much easier to figure out companies" -- Intel's now genuinely cheap. But then again, I forgot that Buffett's always right -- see Doug Kass' column -- and those who say he is wrong are simply short-term trader types.
Cheapness when it comes to tech has never mattered. Intel does have a good dividend and a case can be made for a patient investor to get his butt kicked while waiting for a turn, but the simple fact is we have had a turn, a turn for the much worse and the idea somehow that it wouldn't affect Intel or the semiconductor equipment stocks -- the real darlings, amazingly, of the analysts -- is just historically inaccurate.
Given that we know that the downturn is severe -- and we know that because consider when Intel made this call: in the middle of the quarter before it even had its end-of-November look where it has traditionally issued statements about how business is better than expected because this is traditionally a boom quarter -- I can only expect that the Nazz will trade down.
And here is the irony and the rub: That's never how it works. When Intel preannounces to the downside, that's usually a sign to the analyst -- hopefully not to you -- that the worst is finally over and you have to buy tech.
If you agree with this completely fatuous reason, why not wait, as the others are going to take action today in what will seem like a prop-up but is actually the rabid nature of conditioned mutual fund managers to buy on bad news, because alas, things can't get worse.
My take: Sell the bogus rally, if we get one, in the Nazz. We know from 2002-2003 that the declines in even the good Nazz stocks were breathtaking ... and things were much better then.
Random musings: China's no longer rolling over with alacrity. Worth watching as Europe frets and deals with nascent inflation that I know I couldn't even find with a high-powered microscope.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long GE and Goldman Sachs.
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Reader Comments (Page 1 of 1)
11-13-2008 @ 10:04AM
beachpaul said...
I remember buying GLW back then for $8. The tech stocks seem to be heading back to those numbers in 2002. That's what it looks like, but. AAPL was $18 back then, before they stumbled into the digital detritus of the Music Industry with the ipod. I would use that stock as a lighthouse in this stormy sea. This could be a massive do over for all whom missed out on this past six years run.
11-13-2008 @ 10:52AM
Beltway Greg said...
For god's sake, if I wanted my analysis sprinkled with words like "fatuous" and "detritus" I'd call Dennis Miller. And what say you Beachpaul? Last week you were an Apple hater and now you proclaimith that "This could be a massive do over" Or, it could just be a massive?
Beltway Greg
11-13-2008 @ 11:29AM
Williams said...
Transportation Division, GE Aircraft Engines: GEAE in negotiations with United Technologies for
spin-off on GEAE major segments to Pratt & Whitney.
11-13-2008 @ 12:41PM
John Darr said...
Hey. Is it just me or are the markets down 14% (and falling) since Election Day because smart investors like yourselves are betting on tax increases promised by Obama? "No Market Bounce For Obama" headline stories blame this decline on "recession worries" and "uncertainty in the market". Isn't it really a matter of people with wealth moving it and hiding it before Obama and the Dems can get their hands on it? Just like to get an answer on this. I move all my retirement into the TSP G fund.
11-13-2008 @ 2:10PM
beachpaul said...
AAPL computers have been used in recording studios for 25 years. I'm on one now. That doesn't make their stock at 25/30 times earnings worth $90, None of the companies listed deserved to be rewarded for such p/e ratios. But they were. Because a bunch of idiots rewarded them. Look at the market ,take a picture, it's going to be a long, long time before you ever see 12,000 DOW again. AAPL, $25-30, where you bought it, 2nd 1/4, '09. Sell BeltBoy. Oil was going to $150 also, remember.
11-13-2008 @ 6:42PM
joe said...
at 56 dollars a barrel Mr. JC.. tell us how many hundreds of billions of dollars are NOT going out of the country?! Not to countries that hate us but into American consumers and American companies? Tell us Jim....
Should we sell the rally so your hedgie cronies can back the truck up? scare the little guy and once again screw mainstreet? You waffle too much dude to be credible.