Jim:     Another absolutely miserable, horrible, crummy day... another day where the Dow is down big, off 508 points... not coincidentally the number points where it fell during the Crash of - obviously at a much higher level - in 1987... And, more important, your and my favorite... the Nasdaq... is really getting creamed, it's getting pummeled, it's getting annihilated, it's getting shot at... It's everything that we don't want!... Down 108 points, 5.8%... Now that shows we're in a rough tech territory.

Everyone wants to know, though, when this key group - loved by you - will bottom, even if it's this kind of bottom (sound of man jumping out window)...

But first we need to know what a bottom actually looks like... and we're going to take this lesson and apply it to this stock market...

What are the clues for a bottom? They're not what you think they are when you hear people come on TV, or write and say, hey, we're almost there, we're almost there...

So, let's look back... let's look back at the big tech bottom in late 2002, when the Nasdaq composite finally bottomed at 1108, after peaking in 2000 at 5132. This, my friends, is a 78% decline, okay... A 78% decline... Now, during that period, well, I've got to tell you... A lot of people loved it...

Let's find out what actually caused the Nasdaq to stop going down... and see if we have any of those things right now...

Now this exercise is real important, particularly for those who say, Jim, I can't believe you... it's much too late to sell anything... because, as you can see from these great companies in the Nasdaq composite...the not-too-late-to-sell philosophy was a money killer. And, even after the recovery, you didn't get back to anywhere near where you were at the peak for most of these stocks...

What we want to know is what happened between the top of tech and the bottom, that even allowed these stocks to rally at all...

And then we have to ask ourselves... has any of this happened yet? Are we in the bottoming process yet?...

So what did it?...

Okay, I've studied this and studied this... Here's the first thing...

1. We had repeated estimate cuts by Wall Street analysts... over and over again... "repeated" being the most important word in that sentence.

They cut their estimates to the point where estimates were finally low enough so that these companies could beat them. That's when the bottom could finally come... when the bar got so low, it could be beaten.

2. Second, going into the recession of that period, the tech companies had bulging inventories, as they thought the economic growth would continue for tech. And those goods took forever to work off. We are in a similar situation now for many tech companies, particularly hardware... not so much software. It wasn't safe to go back into these stocks until we worked off these inventories, even though everyone kept telling us it was fine. And, remember, we just now got the build in inventories... just now... I saw a report at my desk today about Western Digital... a great drive company. I once owned 4% of the company when I used to be able to own stocks. It said that inventories are out of hand, just now... today.

For some reason, these tech companies thought that, this time, Brazil, Russia, India and China were going to save them. They were wrong, and that means it's way too early. We will get no bottom until these inventories are worked off and there's no supply to sell... And we just hit the wall now. This isn't Nascar. You don't bounce off the wall and get back in the race. You idle and you sulk and you deflate and you start losing a lot of money.

And, for investors, all of these companies turned out to be more cyclical than we thought... That's one of the reasons why prices were so inflated at the top... why an Intel could fall 82%... Cisco, down 90%... Yahoo, down 96%... Microsoft, down 66%, and Oracle, down 84%... (in 1987)... They got killed the last time tech fell... because, before then, we thought these tech stocks were like drug stocks. Yeah... we thought people had to use them no matter what... I know it probably seems insane to you now, but we thought that they could grow forever, regardless of the economic conditions. That was the attitude then.

Now things are different...

3. We know tech is cyclical, and it can't be better until the economy is better, like it started to do in 2003...

The three big clues so far that the tech stocks needed... What did we need to get? We needed major repeated estimate cuts to get a bottom. We need to see inventories go lean, after swelling big to get a bottom, and we need to see the economy improve to get a bottom...

Do you know that we have none of those right now... That's what caused a bottom. We have none of those...

Keeping these three things in mind... repeated estimate cuts, big inventories to get worked off, and a better economy, where are we now when it comes to a bottom?...

I'd say we're nowhere close... We haven't yet had any estimate cuts, other than for Yahoo... You can't start picking at these stocks before the numbers have come down... you can't! That's strike one...

We are just now seeing inventories bulge... We need them to be worked off, if not non-existent, for a bottom... Strike two...

We need these companies to annualize... to lap their bad numbers... so that it can look like they're growing again, but that process hasn't even started.

How about the macroeconomic picture?...

Okay, in 2003, the economy was improving. Right now, we haven't even gone into the recession yet. We're still at the very beginning. And things are clearly going to get a lot worse before they get better again. There's strike three...

A tech bottom is out. Sure, Intel, Cisco and Microsoft are all sitting on a big hoard of cash, and they do seem cheap... they're not going out of business...

But we don't want to buy companies just because they aren't going out of business... We don't ATMs, we want growth. I think Cisco (CSCO*) and QualComm Inc. (QCOM*) have growth, otherwise I wouldn't be buying them for my trust... The others I'm worried about. And even CSCO and QCOM... they're just cheap... I need catalysts...

These companies have also frittered away billions on share buybacks since the first quarter of 2003, when we bottomed. And those buybacks have done next to nothing for them. Of course, if some company had a new killer application... something like what iTunes, or an iPhone was, or a Blackberry... that's how Apple (AAPL) and Research In Motion (RIMM) ran on it... they had new products... then maybe it can overcome the negative gravitational pull I just outlined, but I don't see anything on the horizon like that. If you do, be my guest...

I mean, I think Cisco's got good orders and Qualcomm's got 4G (i.e., fourth-generation wireless technology coming out soon). That's as close as I can find. That's the reason why I own them for my trust...

If you look at the charts, I regard this as a bit like no man's land... If you get a lift (in stock prices), I think you want to lighten up... despite what my critics say about buying and holding, even if it is all the way down...

These clowns are still waiting to get back to even... You can't think that stocks are like children lost at the mall, when you know that parents always come back. These are stocks. Nothing has to come back ever.

More important, for all of you trigger happy tech fans... If you look at the fundamentals, it's just not a great time to buy.

Here's the bottom line...