This is the second of a two-part column on the game of money management. Click here to read the first installment.
No more silly Fed watch. Things have cooled enough that we don’t have to sit on the sidelines waiting for the Fed to sound the all-clear signal, which it never does anyway.
Stop the Candidate Bashing
Like it or not, neither presidential candidate is bad for the stock market. The Republicans would cast Vice President Al Gore in a light that is negative for stocks, but I don’t think that will have much traction, given how unbelievably positive the Clinton years were for the market, and Clinton isn’t as “smart” about the economy as Gore. I personally don’t like what Bush wants to do with taxes, but I know better than to get into a political debate here, so I will save it for other venues.
A whole new generation of kick-butt CEOs is coming up, giving us a new group of stocks to buy. I read an unbelievable interview with Keith Krach from Ariba. Tell me you don’t want to bet with these guys. You want to bet against Greg Reyes at Brocade, who had a battle plan ready if anyone ever tried to pull an Emulex with his company? You may not believe in the Exodus story, but I do. If you can’t beat Ellen Hancock, at least you can own shares in her company. And while I’m at it, isn’t this John Roth from Nortel a serious heavy-hitter?
No Longer Disappointed With AT&T
A couple of sleeping giants seem to be awakening. Last year IBM got taken down by Y2K, as it should have. That’s now behind them, and I think this stock is rocking here. AT&T, another stock that I felt betrayed, beaten up and crushed by, seems to be turning the ship around. Yes, in the 50s and 40s I saw no case for AT&T. Even in the 30s. But when this thing trades back to the low 30s high 20s, it seems like the essence of cheap. It owns a fantastic wireless division, AT&T Wireless, growing at 60 percent. It has assembled a massive cable network, which could come on strong now that DSL seems to be faltering again, courtesy of labor problems in the East and who knows what in the West. Its business unit may not have done that well lately, but that can be turned around by management, as I don’t know anyone who is angry at AT&T or thinks it is a crummy company. Sure, consumer is a drag, but if it can be contained without spending a lot of money, what’s the problem?
Much has been made of John Malone being angry or upset with AT&T’s management; but I think that is hogwash, just a bunch of reporters trying to get a story going. I think Malone’s in there making some solid suggestions that will get traction with stockholders eventually. In the meantime, when the Germans are willing to pay $50 billion for some network nobody has ever heard of, what is AT&T worth? Go figure.
That brings us to the banks and the brokers. This group is hot, hot, hot. And it is never a false tell. One thing I do a lot of work on is group leadership. While there is always plenty of splash behind technology leadership, the bulk of securities out there trade off the financials, not off of Intel or Cisco. There are literally thousands of financially related stocks out there that really color the advance-decline line. When these stocks go up, they create a healthy hue that forces bears to capitulate. That’s what is happening now.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Ariba, AT&T, AT&T Wireless, Brocade, Exodus, IBM, Intel, Cisco and Nortel. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.