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On This Day 15 Years Ago...
Exactly 15 years ago today, who said it?
"You want winners? [This] is 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..."
Fifteen months later, Money magazine reported that [his] list had cratered 82%... Accountability ruins the game.
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Presented with little additional comment, except to note, it is never different this time...
James J. Cramer is the keynote speaker at the 6th Annual Internet and Electronic Commerce Conference and Exposition, held at the Jacob Javits Center in New York City. From TheStreet.com
February 29, 2000
The Winners of the New World
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, Ariba, Digital Island, Exodus, InfoSpace.com, Inktomi, Mercury Interactive, Sonera, VeriSign and Veritas Software.
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_) and Ford (F_) are going with Oracle (ORCL_) or with i2 (ITWO_) 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., 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, Motorola and Kana -- 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_). 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 raise the bar? Can Pfizer? Can U.S. Steel? Or Phelps Dodge? Union Pacific? 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 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 or Dial or Hunt's or Ralston, 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 recreated Wal-Mart 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 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 and Intels 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 compete with Nokia as a way to bank? How can Goldman Sachs compete with Yahoo! 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.
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And then this...
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As we have previously opined, sometimes - it would appear - 0% is better than -82%...
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h/t @RudyHavenstein
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Fuck you Cramer.
The revelation is that the MSM believe this type of clown character appeals to the retail investor... The truly sad part is that they are correct...
Cramer is doing what people want him to do, be a clown.
The real fuck you is for the retail muppets who continued to follow him AFTER this massive crash. In any real financial position Cramer would be fired, but he is an entertainer, not a financial advisor.
I don't know why he's always fighting the current. The only guys making a killing hawking retail product in this environment are guys selling the "Crash Proof Retirement System" on the radio. Their sessions are always packed by scared-to-shit retirees and near retirees.
(They are selling index-linked annuities, by the way. Prodcuts that carry a commission of 5-8% for the person selling them, 10 years of surrender charges and often high internal running expenses that drag on the alreay meager returns. Great system, huh?)
Thank god stocks can Never go down again, Buy with both fkn hands.
Don't quit your day job, Cramer. Unless your day job is picking winners.
The only difference between Joe Granville and Cramer is Joe had a monkey on stage with him and added something to investment knowledge. (On balance volume)
Like these stocks?
There is only one reason for the average person to have a retirement plan. Currency Debasement.
CONgress likes the plans because they will be easy targets after the next crash. Sweep the account, and replace them with more debt.
I grew up in chicago during the 70's... John Wayne Gacy ruined the whole 'clown' thing for me. But attempting to stay on topic I offer. Using my southside childhood transitive property of equality...
Jim Cramer is J.W. Gacy in a tie instead of a big red nose.
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Is there any difference between Cramer and Obama? Essentially, they are nothing but hilarious "me"-showmasters. The Cramerites have overtaken foreign policy of the US as well. It is the same sociopaths, cynics, egomanicas, overeducated-underexperienced chilldren with their hypertrophied egos who have their smegma-smelling fingers on the N-button.
Pimping ain't easy
Simping is ever more burdensome.
Booooyaaaah.
Penis Head.
Penis Head with Ears yet !
he seems trustworthy and very knowledgeable...
im gonna sell ALL of my worthless Silver and go all in with this guy...
My all time favorite thing about the internet is that this manifesto willNever disappear. Delusional carnival barker that he is Tonight he sais " I got you out of nasdaw in march of 2000 when we shorted everything. " I shit you not
Cramer is proof just how dangerous the misallocation of funds is. The world is being run by drug addicts, pedophiles and banksters and it ain't going to last long unless somebody does something.
Who is "somebody"? I realized a long time ago that I am but a cog in the machine and any war cry from my little corner of reality would be squashed like a bug... So I removed myself from the madness and moved 12 time zones away from the USA... When you can't stop the train, the next best thing is to get the hell out of it's way...
Kamchatka?
But as you step out of the way of one train another that you never saw coming runs you down from behind. 12 time zones isn't enough.
I know, but short of volunteering for the one-way Mars mission, where is a person to go?
With all its faults, the USA is still the best place to be. Every country in the world has its own set of problems. If you are really worried, there are hundreds of small towns in the south and west where a family can practically live off the grid. Places where land and housing are cheap, good water supply and land that will produce everything you need. It would be a rough life, I know because I grew up in that environment. I prefer a more comfortable lifestyle, but I still like small towns. We will not have a complete meltdown, but a lot of people will suffer. They will be the paycheck to paycheck crowd, I have seen that before too.
Well said sir. Very well said.
VAST tracts in the midwest as well.
I wouldn't underestimate the government's willingness to steal what you have in a time of utter desperation (ie, when we finally default on our debt).
I would much, much rather be in a solvent country and take my chances there...
It's not so much where one goes physically, but one where one goes jurisdictionally. Most people don't know what jurisdiction they're in, or subject to. Nor do they realize that in America, thay can stand in one place and yet lawfully change jurisdiction.
Http://www.pacaliance.us
You won't have to worry about the dangers of missalocating funds much longer.
Under the auspices of our beloved leader, the Department of Labor will soon be issuing a set of updated rules/regulations to financial advisors...
p.t. barnum was right, as was charles ponzi, and this guy gets it.
there is no shame, he has none, few of us do, including the people at the network that employ him.
i prefer to live reasonably well, with modesty and my integrity. if i open my mouth, i may be mistaken, but before uttering bullshit, i attempt to say things that make sense and might be helpful to others.
some guy told me the other day, 'tom brady (i do not respect him either, but he is a great q.b.) which i guess means that the commentator, who had no respect for my dislike of bradys' ethics and behavior will spend the rest of his life hoping to be somebody he isn't, and not getting the things that he wants.
but - follow my point here, if you will - cramer - CRAMER - will help all you little dick losers make lots of money, at which point, you will be able to buy anything you want. and happy, of course.
in the end, the evidence is, since this guy is still getting air time, well there are a lot of people following him. that is the saddest part.
Some guy said "Tom Brady" to you and that set you off? Then you ask your readers to "follow my point here"..?
Do some editing man.. and stop taking up space with this bs.
My landlord is a Millionaire on paper. He has THREE TerrorVision Sets on continuously, 24/7, recording when he is not there to watch.
This guy sleeps two hours per night, and maybe three. But he watches all that damned crap he recorded and then some.
He swears by Jim Cramer's Mad Money picks...
And he actually plays the Stawks and wins???
Good luck convincing him....
He is so locked into the Matrix that I cannot tell him anything. And then I am just a "pessimist". He is a good man, do not misunderstand...
But perhaps there is some magic that happens to you while being engulfed by the Matrix.
but he'll be the first one knocking at your door when the SHTF
If you are so much smarter how come you are renting from him not the other way around?
DOW 30,000
Remember it well.
why so conservative?
The doom of men is that they forget.
can't help myself - or that they do not remember.
" 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"
I spit a nacho half way across the room when i read that.
Halfway???
You must be a constrained loser like Cramer talks about.
Try harder next time - you can get it easily embedded into the adjacent wall...
I stopped watching CNBC about 2 years ago. Is Cramer still there?
Is CNBC still there?
Even the idea of watching television now I find disturbing. "Uncle Samsung wants you."
<<Channeling Yakov Smirnov>> In Amerika, television watch you.
He just inspired me to donate 1 million shares of Enron to my charitable trust fund. In addition I'm going to donate 2 millions shares of Worldcom...Because I care!
Apparently it still works cuz he's still on. Albeit a shrinking audience lol.
I don't blame Cramer....he is what he is, but it surely reflects poorly upon those running the network.
Hell, even before I read the damned article I knew it was Cramer. This should make our ZH pal NotJimCramer really happy! +1000 for NotJimCramer!
Cramer the gamer. What a shill and I'm being nice. Last time I listened to cnbs was; Oh that's right I never listened just watched for the jokes. Completely out of the shit house casino as of Fryday the 13th June of 2009. Bought physical metals with profits. Poor wife didn't believe me when I told her then she'd better get her 401K out as the window was closing for any cash to be withdrawn penalty or otherwise. Think the crooks still have a destitution clause? Best she can do now is call her provider and take it completely out of the market and park it in cash. So she is doing. Sitting on cash for a year out of this run away freight train, with not a rail to roll on over the bottomless pit of fiat debt, will not hurt one bit.
This next crash will have the wall street banksters, who haven't hit the pavement from the top of the one world trade center, swingin from lamp posts. My hope is the bodies are not left to hang rotting and stink up wall street. LOL
I wouldn't buy a two-dicked donkey from this guy even if he threw in the third ball for free...
Wouldn't trust him to tell me the time in a room full of clocks!
I was there playing the dotcom bubble with everybody else. Ugh.
I remember working for an infamous Canada-based telecom around 1999, and the young guy in the cube next to me kept talking about toys.com... He took out an equity loan on his house (with two small children and a young wife) to invest it all in that ipo. Everyone had to hear how he'd triple his money and then own his house out-right! Poor bastard.
Only droolers in diapers and depends watching?
Mad Money delivered its 2nd lowest rated year ever with total viewers (lowest rated year is 2013) and its lowest rated year ever with the 25-54 demo
The saddest thing? He's managed to survive all this time, even after his buffoonery has been demonstrated time and again. Roaches have nothing on Jimbo.
9/11.
Everyone knew that bubble was bursting. "Might as well take out the Twin Towers.". Greenspan's Fed was bursting that bubble too btw....
All that guy ever saw was bubbles...
When he wasn't creating them of course.
I knew it was Cramer right away. People forget his hedge fund was one of the first to get a margin call.
gallows humor?
Somebody should squeak the clown horn for this fool.
Cramer prolly still gets paid by Goldman . . . for feeding the muppets his 'tips', which Goldman's prop desks fade . . . to stock the annual bonus pool.
This could be replicated for every stock picking idiot who shows up in the media.
Do you know I make money from selling you my stupid newsletter, not picking stocks?
Cramer was badly wrong. So what? Zero Hedge has been painting the wrong tone and been wrong on market interpretation for 6 years. There are muppets everywhere. big deal
zerohedge has not been wrong on shit.
everything they have said over the years that is wrong with the economy is true. we r in a fucking depression, and they r exposing it. u can say that the ''markets'' are at all time highs, but the ''markets'' have nothing to do with economic reality anymore.
if zerohedge was wrong, rates would have gone up a long time ago. obviously the fed agrees with zerohedge in that this economy is in a depression and that is why they can not raise rates even .25 basis pts.
Cramer for stocks. Trump for casinos. You don't have to disclose the charlatans behind the fog.
CNBC in a nutshell
Cramer was always a self promoting stock monkey who was full of hot air and probably shouted a lot at work to make up for his lack of moral ethics and smarts. Definite insider trader. Fact.
Kudlow is a coke sniffing low life whose extreme right political views would be better served at Fox News.
Maria Baritoromo is a private jet flying cock sucker. Fact.
Mark, the fat dead guy, was a american flag tie wearing ignorant douche bag
Michelle Cabruso Cabrera is a racist drunk
Rick Santelli is a futures bookie. Why anyone cares what this dimwit thinks is beyond me but he seems nice enough.
Joe Kernan This guy should be forecasting the weather in Northen Alaska. He has no place on a financial TV show. No one is more surprised than him by his job. total empty suit.
Andrew Ross Sorkin. Wrote a book and they treat him as the new Jesus Christ. Actually well thought out but still somethings odd about him. Possible inside trader and potential uphill gardener.
Tyler Matheson This guy is just plain high and/or stupid. Its hard to tell which but im sure he doesnt dress himself.
Steve Liesman Good intellect but ultimately corrupt spokesman for the Fed. No integrity whatsoever. If he was any good/trustworthy, would have made more money on Wall St.
Becky Quick Possibly along with Bill Griffith and Karl Qunintillina, the only real journos on the show. To be kept after the rest are tossed out.
It would be awesome to see a Cramer speech from after the dot-com bust.