Telco Hopes Have Been Abandoned, So Buy
OT
By James J. Cramer
08/29/2002 08:19 AM EDT
Throughout this horrid telecom downturn, managements, analysts and the press always have presumed that the big dogs, the Lucents (LU:NYSE - news - commentary - research - analysis)
and the Nortels (NT:NYSE - news - commentary - research - analysis)
and the Cornings (GLW:NYSE - news - commentary - research - analysis), would survive.
All through the downturn I have been saying that this industry's troubles were too great, and as long as there was hope, these stocks would go down.
This was the week where all hope was taken away. Nortel's slipping below $1. No one is even talking about Corning or JDS Uniphase (JDSU:Nasdaq - news - commentary - research - analysis) making it to the promised land in their current configurations.
This morning's Heard on the Street column in The Wall Street Journal reads like an obituary for the industry, openly acknowledging what I have been saying: that many of these companies are going out of business.
And that's exactly why I'm buying them.
You make a field bet like this only when you think that all hope is lost.
I used to make them all the time at Cramer Berkowitz, usually in options. But when the stocks were this low, I did it in common.
I'm confident that of the five I am buying, two will go out of business, one will be bought and one will go up slightly. But another one will prosper and even win, and I will have made a great investment. It is impossible to tell right now which one is which; that's why I am making it a field bet.
All hope is lost. It's time to buy.
AI
