IBM's No Bellwether

One of my favorite bits of market wisdom comes from Peter Lynch's rambling, self-deprecating explanations of the inner workings of fund-dom.

He loves to point out that just about every year, he looked at his Magellan portfolio and wondered in disappointment why in the heck he held IBM (NYSE: IBM  ) . Of course, he answers the question elsewhere in his writings, when he explains that fund managers pick stocks like this precisely because they can't get into too much trouble when they screw up -- a much different situation than if, say, he'd stuffed the portfolio with something small and risky, like Rule Breakers pick Taser International (Nasdaq: TASR  ) .

To steal his explanation: If Taser tanks, it'll be, "Jayson! What's wrong with you?" If IBM tanks, it'll be "Jayson! What's wrong with IBM?"

Well, IBM screwed up, and today, I had to get my giggle on as a report in The New York Times confirmed that reality is indeed as silly as Lynch portrayed it. Remarks attributed to one Richard Petersen, an IBM analyst whose firm has an "outperform" rating on the stock, go even further, sticking the blame on the entire tech industry. The Times wrote this: "He noted that the breadth of IBM's struggles suggests the problem is not specific to the company. 'For them to miss by that amount suggests it's more than just IBM.'"

It's not my fault! Tech is bad! Reuters will be telling the same story today. In the U.K., The Times online made a similar, typical, bobbleheaded warning, backed up by IBM's failings, along with subpar results from Sun Microsystems (Nasdaq: SUNW  ) , Samsung, and the joint Sony (NYSE: SNE  ) and Ericsson (Nasdaq: ERICY  ) phone project, creatively named Sony-Ericsson, which saw a 4% revenue slide.

Get real, people. This is like evaluating a baseball team by judging the performance of four players on injured reserve. Sun has been stinking it up for a long, long time -- management's snotty attitude toward investors and analysts convinced me long ago that there was plenty of pain ahead. Ericsson? It put up some decent numbers last year, but at least one clever Fool foresaw the current malaise.

As for IBM, the writing was on the wall back in December, when I ventured to guess that a company that couldn't make money on its popular personal computers could probably find a lot more ways to mess up. Meanwhile, companies like Apple (Nasdaq: AAPL  ) get hammered, even though they put up very strong earnings. DittoDell (Nasdaq: DELL  ) , which has been doing just fine.

The moral of the story is this: There's no such thing as "tech" if you don't want there to be. There are winners and losers in every industry nook. Seek out the winners, and stick with those. And for crying out loud, when the winners get beaten down with the club meant for the losers, that's the time to go shopping, not run screaming with all the other lemmings. Keep your eyes open, because in the public loony-bin that is the markets, the freak-outs mean opportunity.

For related Foolishness:

Seth Jayson likes to keep a pile of cash on hand for times like these. At the time of publication, he had no position in any firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.


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