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"Not All Stocks Become Buys in a Selloff"

By James J. Cramer
RealMoney Columnist
3/17/2004 8:34 AM EST

"We grow skeptical of the chorus, of those who tell us that the selloff is an opportunity. We long to hear people say, "Nope, real deal, nothing's going on here, I would sell any lift, or even sell right here."

We long for those people because of all of the charlatans who told us that everything was fine, particularly in Nazzland on the way from 5000 to 1200.


I think our nostalgia is misplaced. No, I don't think every dip is a buying opportunity, but I do like stocks with good fundamentals that have come down more than I did when they were higher. For that, I plead guilty.

There's a distinction here, and it's important and overlooked. We tend to look at and talk about stocks in a generic way, as if when we say, "Stocks should be bought," we mean that you should reach down and buy everything that's in the S&P and a dollop of the QQQs (QQQ:Amex - commentary - research) while you're at it.

But I would argue that some stocks are just plain sales here. I am not rushing to buy the slow-growing defensive stocks. I'm not betting that those are right. I don't want to make a huge bet on energy right here, although some of the stocks make sense. I can't pound the table on all the financials when I think that bond yields are absurdly and artificially low, courtesy of the terrorists.

Yet, the idea that I am supposed to like DuPont (DD:NYSE - commentary - research) at $45 and dislike it at $41 -- the anti-dip philosophy -- is simply stunning. It is stupidity to me. I believe that DuPont is a better value at $41 than at $45 given that the world hasn't slowed and the thesis is intact. For me to embrace the "Get out of DuPont now" crowd in order to satisfy the needs of those who think the market has changed for the worse is something that, intellectually, I just can't do.

This is not to say that I think the market is terrific and fantastic. Someone emailed me recently to ask how this period compares with what we saw last year. Apparently the reader made a lot of money off my exquisite moment call, which turned out to be, well, pretty exquisite.

I immediately shot back a response: "This moment is not exquisite at all." In fact, that's the real rub -- not the buy on dip, but the overall opportunity schematic and distribution has been changed radically by the overall appreciation of stocks. Or, to put it bluntly, there are some bargains now, but the market, even after the selloff, is no bargain. Last year at this time, all of the negatives were priced in but none of the positives were discounted.


Now, many negatives are not in the market, and boy have we factored in a lot of positives. The overall playing field, which was even and supercharged last year, is now muddier than a Russian steppe during the rainy season.

It doesn't mean we should give up. It doesn't mean we should go short. In fact, if last year was a run-and-shoot game, this moment is a game where you work the clock, try to get fouled and hope for a good shot. If last year you expected to score 100, this year you would be hard-pressed to get 60.

So, don't confuse the "It's an opportunity" crowd with the "It's the opportunity" crowd. We had the opportunity. Now we just have more of an opportunity than we had at Dow 10,800. "

(in www.realmoney.com)