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HEROES

American Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %> surged $3 1/4 to $107 1/16 on news that the Department of Justice may bring antitrust charges against Visa U.S.A. and MasterCard International for keeping banks that issue their cards from offering competing cards, such as Amex cards. Several state attorneys have also opened an investigation of the credit card industry. Wrapping up an 18-month probe, Justice Department staff has recommended charging Visa and MasterCard with violating antitrust laws, but antitrust chief Joel Klein hasn't come to a decision yet. In addition, Amex was also boosted by speculation that it would be a logical merger target following the merger announcement between Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> and Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %>.

Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> gave Internet investors something to yahoo about today after the online search engine topped analysts' Q1 earnings mean estimate of $0.04 a share by reporting EPS of $0.08. The stock shot up $16 to finish at $113 1/4. Yahoo!'s revenues vaulted to $30.2 million, 200% above year-ago levels and 20% better than Q4 results. Revenues rose much faster than expenses, resulting in 87% gross margins and 12.1% operating margins, a sign of the leverage to come. Other Internet-related companies benefited from the news. Search engine Excite Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> leapt $9 5/8 to $63 1/8, while competitor Infoseek Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> rose $1 5/16 to $22. Lycos Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> jumped $5 15/16 to $64 5/8; America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> gained $1 5/8 to $73 1/2; and online bookseller Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> booked a $6 5/8 gain to $95 1/4.

Ford Motor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> sped ahead $2 1/4 to $46 3/4 after Chrysler <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: C)") else Response.Write("(NYSE: C)") end if %> reported higher-than-expected Q1 earnings of $1.60 per share, up from $1.45 per share in the year-earlier quarter. Analysts had expected the No. 3 U.S. automaker to earn $1.49 a share, and some said the strong results in spite of a 75% increase in discounts and rebates suggest that Ford and General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> will also deliver higher-than-anticipated Q1 EPS when they report earnings in the latter half of next week. Ford was also spurred by news yesterday that it will begin offering side airbags in all its North American cars and its Windstar minivan, and that its Lincoln division has pulled ahead of GM's Cadillac in the luxury car market for the first time in Lincoln's 78-year history. Earlier this week, Jacques Nasser, president of Ford's automotive operations, told the Bloomberg Forum that analysts' Q1 EPS estimates are generally on target. The company has seen lower sales -- 4.1% lower so far this year -- due to supply shortage of some models and discontinuation of low-volume models, but this will be countered somewhat by cost savings as part of the company's plan to cut $1 billion in costs.

QUICK TAKES: In the continuing aftermath of the Travelers-Citicorp merger announcement, financial services companies rose amid speculation of further consolidation. Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %> gained $2 15/16 to $94 15/16; Lehman Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> jumped $3 13/16 to $83; J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %> added $3 3/16 to $140 9/16. Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> picked up $4 1/16 to $128 1/2; Bear Stearns <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSC)") else Response.Write("(NYSE: BSC)") end if %> rose $2 1/4 to $56 1/2; NationsBank Corp. (NYSE NB) moved up $2 3/16 to $76 7/16; and First Union Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FTU)") else Response.Write("(NYSE: FTU)") end if %> was bumped up $1 11/16 to $56 15/16.

Abercrombie & Fitch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANF)") else Response.Write("(NYSE: ANF)") end if %> jumped $4 to $45 7/16 after the casual apparel retailer saw a 39% increase in same-store sales for the nine-week period ending on April 5th. The company now expects Q1 EPS between $0.09 and $0.10. The First Call mean estimate was $0.02... Other retailers also gained after reporting increases in March same-store sales, largely resulting from high consumer confidence and early spring buying prompted by unseasonably warm weather. Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> rang up $1 9/16 to $46 5/16 on reporting a 10% increase in comparable sales. The casual apparel company reported a 32% rise in total March sales... Women's apparel retailer The Limited <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LTD)") else Response.Write("(NYSE: LTD)") end if %> added $1 1/16 to $30 15/16 after reporting a March comparable-store sales increase of 4%.

McDonald's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %> gained $1 3/16 to $62 3/16 after announcing plans to invest $1.5 billion in the Asia-Pacific region in the next three years despite Asia's economic problems. The fast-food giant intends to build more than 2,000 restaurants in that region in that time... Powerwave Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PWAV)") else Response.Write("(Nasdaq: PWAV)") end if %>, which supplies RF power amplifiers for wireless communications networks, jumped $2 15/16 to $16 7/16 after reporting first quarter EPS of $0.13 per share compared with $0.17 for the year-earlier period and the First Call mean estimate of $0.12... Bike equipment maker Bell Sport Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BSPT)") else Response.Write("(Nasdaq: BSPT)") end if %> rang up $1 11/32 to $9 19/32 after agreeing to amend its merger agreement with HB Acquisition Corp. so that Bell Sport will be bought out at $10.25 a share in cash, down from $10.50, bringing the value of the deal to $250 million. In exchange, HB Acquisition has agreed not to let a recent uninsured $6.8 million product liability verdict against Bell Sport hinder the deal's close.

Computer services company Claremont Technology Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLMT)") else Response.Write("(Nasdaq: CLMT)") end if %> rose $1 7/8 to $24 1/8 after announcing it has agreed to be acquired by Complete Business Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBSL)") else Response.Write("(Nasdaq: CBSL)") end if %> for roughly $285 million in stock... Cognos Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COGNF)") else Response.Write("(Nasdaq: COGNF)") end if %> gained $2 1/4 to $28 3/8 after the business intelligence software supplier announced fourth quarter earnings of $0.38 a share versus $0.29 for the prior-year period. The First Call mean earnings estimate was $0.34... GTECH Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTK)") else Response.Write("(NYSE: GTK)") end if %> hit the jackpot today, gaining $1 1/4 to $37 after announcing that it has been deemed "fit and proper" to supply lottery products and services to Camelot, the operator of the U.K.'s National Lottery. There had been allegations of improprieties regarding GTECH's systems and services.

Dart Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DART)") else Response.Write("(Nasdaq: DART)") end if %> was lifted $23 1/2 to $163 1/2 after announcing it has agreed to be acquired by Richfood Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RFH)") else Response.Write("(NYSE: RFH)") end if %> for about $207 million in cash, or $160 a share. Richfood gained $7/8 to $28 11/16... Schein Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SHP)") else Response.Write("(NYSE: SHP)") end if %> shot up $7 1/2 to $24 1/2 from an initial public offering price of $17 per share on 3 million shares... Horizon Pharmacies <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: HZP)") else Response.Write("(AMEX: HZP)") end if %> jumped $1 1/4 to $12 1/4 after announcing that February sales increased 154% to $4.04 million from $1.59 million for the same year-ago period. Same-store sales at the retail pharmacy rose 7.7%... Cellular phone systems operator CommNet Cellular <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CELS)") else Response.Write("(Nasdaq: CELS)") end if %> connected for $18 3/4 to close at $68 after announcing a 5-for-1 stock split to shareholders of record on April 20 and payable May 7.

Triple S Plastics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TSSS)") else Response.Write("(Nasdaq: TSSS)") end if %> gained $1 5/8 to $8 after the custom injection molder announced that it expects higher-than-anticipated Q4 earnings in the range of $0.17 to $0.19 per share, compared with $0.14 for the year-earlier period. The single analyst EPS estimate listed in First Call is $0.15.

RATINGS MOVERS: C-Cube Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> added $1 1/4 to $19 5/8 after Lehman Brothers reinstated its "outperform" rating on the digital video compression products maker... Transaction processing and information services company Ceridian Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CEN)") else Response.Write("(NYSE: CEN)") end if %> gained $2 11/16 to $53 15/16 after Morgan Stanley Dean Witter raised its rating on the company to "outperform" from "neutral"... British antivirus software company Dr. Solomon's Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SOLLY)") else Response.Write("(Nasdaq: SOLLY)") end if %> soared $4 3/4 to $30 7/8 after Goldman Sachs raised the company to its "recommend list" from "market perform." The 12-month price target is $41 per share.

GOATS

PC graphics accelerator technology and add-in board king Diamond Multimedia Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIMD)") else Response.Write("(Nasdaq: DIMD)") end if %> fell $2 1/8 to $12 1/2 after reporting fiscal Q1 EPS of $0.22, which beat the First Call mean estimate by $0.03. However, the company warned that it expects "some pricing pressure" in fiscal Q2 ahead of the launch of next-generation products in fiscal Q3. The price squeeze cited by the company is partly due to the increasingly competitive PC sales environment. The advent of the sub-$1000 PC has original equipment manufacturers (OEMs) jockeying for lower rates from graphic board suppliers like Diamond. The company will generate some additional revenues in the short-term from its newest OEM client, Dell Computer Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>, which has largely remained above the sub-$1000 fray, but the road ahead is still full of potholes.

Watch maker Fossil Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FOSL)") else Response.Write("(Nasdaq: FOSL)") end if %> was crushed $3 1/4 to $19 /8 after an analyst at Ladenburg Thalmann & Co. downgraded the company to "buy" from "long-term buy." While the downgrade was about as slight as they come, the analyst stated that the company's share price had climbed "well above what its growth prospects can match." After today's haircut, the company trades at 17 times 1998 estimates with a 20% compound average growth rate expected over the next five years. The stock has been on the move over the past year, rising 160% from $12 1/2 last April 11. Yesterday before the plunge, ammunition for the bearish case came in the form of a filing with the SEC. As part of an offering of 2.15 million shares, the company said chairman and CEO Tom Kartsotis would sell 1.11 million of his shares, effectively cutting his stake in the firm to 33.2% from 38.9%.

QUICK CUTS: Public transportation services and physicians' services management firm Laidlaw Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LDW)") else Response.Write("(NYSE: LDW)") end if %> fell $7/8 to $15 despite reporting fiscal Q2 EPS after the close yesterday of $0.21, beating the Street estimate of $0.19... Kmart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> dipped $3/8 to $17 9/16 after reporting a 1.2% drop in March comparable-store sales... Children's apparel company Gymboree Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GYMB)") else Response.Write("(Nasdaq: GYMB)") end if %> slid $2 1/4 to $21 5/8 after reporting a 6% rise but being downgraded by Bear Stearns to "neutral" from "attractive"... Pier 1 Imports <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PIR)") else Response.Write("(NYSE: PIR)") end if %> sank $1 7/16 to $25 1/2 after the home furnishings retailer posted a 10.8% rise in same-store sales in March. However, the Fort Worth, Texas-based firm is only forecasting a single digit sales gain in April due to a shift in the date of the Easter holiday.

Consumer services giant Cendant Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CD)") else Response.Write("(NYSE: CD)") end if %> slumped $2 1/16 to $37 after Dow Jones reported that three of the firm's executives are resigning. However, Cendant said chairman Walter Forbes and CEO Henry Silverman are staying, putting to rest rumors of their departures... Pasta marketer American Italian Pasta <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PLB)") else Response.Write("(NYSE: PLB)") end if %> was canned $15/16 to $34 15/16 after registering with the Securities and Exchange Commission to sell up to 5.4 million shares in a public offering... Fiber optic lighting manufacturer Fiberstars <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FBST)") else Response.Write("(Nasdaq: FBST)") end if %> was burned for $3/8 to $5 7/8 after announcing yesterday that it would report a fiscal Q1 loss of about $0.07 per share. The Street had been expecting earnings of $0.05 per share.

Conversion/correction software services provider ConSyGen Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSGI)") else Response.Write("(Nasdaq: CSGI)") end if %> slipped $7/16 to $8 3/16 on its first day of trading on the Nasdaq SmallCap market. The firm's shares were previously traded over-the-counter on the Nasdaq's bulletin board system... The M/A/R/C Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MARC)") else Response.Write("(Nasdaq: MARC)") end if %> lost $13/16 to $13 1/2 after the marketing intelligence firm said yesterday that it expects a fiscal Q1 loss of about $0.06 per share due to a $1.1 million charge to write down losses at its Targetbase Marketing unit... Lawson Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LAWS)") else Response.Write("(Nasdaq: LAWS)") end if %>, which makes nuts, screws, rivets, and other replacement parts, was nailed for $7/8 to $26 3/8 after saying it expects fiscal Q1 EPS to come in as much as $0.15 below the $0.42 per share earned a year ago.

Year 2000 problem solver and information technology consultant Complete Business Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBSL)") else Response.Write("(Nasdaq: CBSL)") end if %> lost $3 1/16 to $36 1/4 after agreeing to acquire Claremont Technology Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLMT)") else Response.Write("(Nasdaq: CLMT)") end if %> in a stock swap valued at about $285 million, or about $27 per share... Real estate investment trust Vornado Realty Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VNO)") else Response.Write("(NYSE: VNO)") end if %> slumped $2 1/8 to $41 1/4. Yesterday, the company sold 10 million common shares in a public offering underwritten by Goldman Sachs.

Ratings Movers: Telecommunications network testing equipment maker Applied Digital Access <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADAX)") else Response.Write("(Nasdaq: ADAX)") end if %> fell $11/16 to $7 5/16 after being downgraded to "market perform" from "buy" at BT Alex. Brown... LaSalle Re Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSH)") else Response.Write("(NYSE: LSH)") end if %> shed $2 5/16 to $39 15/16 after Morgan Stanley Dean Witter downgraded the property catastrophe reinsurer to "neutral" from "outperform"... Gold mining firm Battle Mountain Gold Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMG)") else Response.Write("(NYSE: BMG)") end if %> lost $5/16 to $6 9/16 after being downgraded by CS First Boston to "hold" from "buy"... Computer networking products supplier Bay Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAY)") else Response.Write("(NYSE: BAY)") end if %> declined $1/8 to $24 3/16 after being downgraded by Fahnestock & Co. to "hold" from "buy."

FOOL ON THE HILL
An Investment Opinion
by Louis Corrigan

A Market-Timing Lesson

Along with the hoopla over Dow 9000, you've heard more about the market's supposedly off-the-charts valuation. You've seen the Dow flitter with its typical round number jitters. So it's perhaps natural to wonder if it's time to take some money off the table. But there's one old saw that still cuts wood: Market timing doesn't work.

Between 1925 and 1992, small company stocks produced an average annual return of 12.1%. A buy-and-hold investor would have done quite well -- despite the Crash of '29, the Great Depression, World War II, the Korean War, the Vietnam War, runaway inflation in the 1970s, baseball strikes, and myriad other troubles that might have made it seem prudent to get the heck out of stocks. Sure, if you had been unbelievably prescient, you could have avoided some major disasters. But so what?

Former Lehman Brothers analyst and one-time market guru Elaine Garzarelli, for example, made a bold call prior to the October 1987 crash, telling her clients in early September to get out of stocks. In mid-October, she told USA Today she was expecting a 500-point plunge in the Dow. What a call! Yet despite this great prediction, the mutual fund Garzarelli managed from August 1987 to mid-1994 badly underperformed the S&P 500 (38% return vs. 74%). One huge reason is that the market staged a robust recovery after the crash, registering two of its largest single-day gains ever. Garzarelli, though, remained on the sidelines. She has said she was just too hesitant to trust her own complex quantitative data, which were actually telling her to buy.

Human error perhaps. Yet we all suffer from it. Moreover, the overall numbers suggest that just a few such errors can debilitate a portfolio built on an otherwise solid buy-and-hold approach. For example, if you had missed just the best month between 1925 and 1992, your 12.1% buy-and-hold return would have dropped to 11.2%. Sitting out the best five months during this 67-year period would have sunk your annual return to a pathetic 6.3%. (For more, see "Market Timing Is Bunk" in Randy Befumo's Buy & Hold Apocalypse? series.)

Or as Burton Malkiel points out in A Random Walk Down Wall Street, his classic love song to efficient market theorists, missing just the ten best days of the 1980s (out of 2,528 total trading days) would have cut your total return on the S&P 500 index from 17.6% to 12.6%. In addition, historical data from 1970 to 1994 show that mutual fund managers who shift their assets between stocks, bonds, and cash were typically holding huge cash positions at market bottoms and little cash at market peaks -- exactly the wrong moves if you're trying to outguess the market. As Malkiel concludes, "Clearly the ability of mutual-fund managers to time the markets has been egregiously poor." Indeed, given the upward bias in stocks, a market timer needs to be right about 70% of the time to outperform an easily executed buy-and-hold approach, according to a study conducted by Richard Woodward and Jess Chua of the University of Calgary. A baseball slugger who was right that often would have the sport named after him.

This past week offered up another cruel example of what can happen when you're wrong, as Jim Cramer (Mr. "Wrong!" himself) found out. Cramer is a hyperactive hedge fund manager and co-owner of TheStreet.com, an online financial news site for which he's also a prolific, entertaining, and insightful daily contributor. TheStreet generally reads something like an edgier, hipper version of Barron's. It even features former San Francisco Chronicle columnist Herb Greenberg as its Alan Abelson-type gunslinger. Yet the boldest part of this well-executed and well-funded attempt to create a new breed of online financial journalism is Cramer's own columns. These seemingly real-time daily diaries from the front mix the gonzo adrenaline rush of the trader with often sharp market and financial analysis and a surprising helping of genuine human interest appeal. Part of the column's draw is that this guy who loves to be right readily shares with readers how badly he is sometimes... Wrong!

For months now, Cramer has rhapsodized about Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %>. His column in the March issue of GQ magazine, for example, talked up the international opportunities available to major U.S. banks and financial services firms in light of the strong dollar and the continuing financial crisis in Asia, particularly Japan. Cramer predicted that "in three years, when you look at the world's largest lending institutions, you will see Citicorp in the top five, if not at number one." Indeed, he said this "brainstorm" ranked right up there with his call to buy Intel at $2.

Guess what? This Citicorp �berbull missed Monday's stampede into the stock following the bank's announced merger with Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>. Although the Cramer Berkowitz hedge fund apparently has a significant percent of its money in long-term holdings, including Citicorp, Cramer is not one to pass up the chance to scalp a few points on a quick trade. So sensing Citicorp was in a holding pattern, and enticed by high premiums on the April call options (which allow someone to buy shares for a set price prior to the options' expiration on April 17), the goateed one wrote calls against his stock position.

That is, he essentially grabbed a few extra bucks per share last week in exchange for sacrificing any additional upside over the following two weeks. As chance would have it, Citicorp took another major step toward fulfilling Cramer's vision just as he had temporarily sidelined himself. With a Citicorp position of perhaps 50,000 shares (based on some hints from his columns) going into the Friday before expiration, this trade may have cost his hedge fund between $0.8 million and $1.8 million, depending on the difference between the price at which he could have sold the shares on Monday and the price at which they were called away from him by the buyer of the option.

Writing covered call options, of course, is one of investment gooroo Wade Cook's great "risk-free" schemes for making a killing on stocks. Yet it's a strategy that basically caps your upside at the option's exercise price plus the premium while offering just a smidgeon of downside insurance (on a decline, you lose the stock price minus the options premium you received). But more than a lesson about the downside of options writing, Cramer's debacle reminds us that even a nimble trader, a savvy guy who spends every day feeling out the market for opportunity, can end up a loser when he goes for the market-timing approach -- even on a stock he knows cold.

Sure, the trade was just part of Cramer's investment approach, which has apparently served him well over the years. In this case, he gambled and he lost. No doubt he took it like a man. (I imagine he cursed until at least Tuesday, when Citicorp gave back some of its gains.) But to be right on the investment but wrong on the trade is no doubt especially frustrating.

Of course, I'm not suggesting you throw your lot in with the efficient market theorists and opt for an index fund -- though you can do worse. And there are surely times when the market so completely discounts a company's future prospects that the stock is ripe to be sold, but before you turn market-timer, think of the cautionary tale of Cramer and Citicorp. Consider not just the risks of your investments but the risks of dumping them today on hopes of buying them back more cheaply tomorrow. Historically, that's been a losing game.

CONFERENCE CALLS

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