28. Too hot to think?

As a heat wave is baking the North East, it appears that it's also melting some people's brains. For example, one of the chief clowns of the investment advice world is saying that you should stay away from technology in the summer. His reasoning? Companies have already spent their budgets in Q1 and Q2, and are not going to buy as much IT in Q3. This is true to some extent. Technology companies performance is cyclical: consumer electronics sells more towards the holidays, and the last few days of Q4 are always the busiest days for hi-tech companies such as the company I work for, EMC. But all that information is already well known, which means that it's already part of the price of the stock. There's absolutely no reason why the value of a stock shall rise or fall based on information that is already well known and is priced into the stock.

Suggesting to sell hi-tech at the beginning of summer and buying back when the weather cools down is one of the silliest ideas I've recently read. And I'm not the only one who thinks Cramer "Bear Stearns is totally fine!" is a total bozo. With this weather, I wouldn't be surprised if more silliness ensues. Drink a lot of water and stay cool!