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What I Dislike About Wall Street, Real March Madness Is in IPOs: Jim Cramer's Best Blogs

So, if Yelp and LinkedIn ultimately worked, what's the fly in the ointment? First, Amber Road is a relatively unseasoned company with fast revenue growth that's losing a lot of money. That's fairly typical of these deals. The public's appetite has been whetted, but not that many months down the road it is likely that there will be a secondary offering that comes well above the IPO price. That alleviates the tightness and tends to send a company's stock down almost instantly.

Take the trajectory of FireEye (FEYE - Get Report). Here was one of the hottest stocks in the universe. It's an acknowledged leader in security software for the enterprise. Its software actually flagged the security issue at Target (TGT).

It had been a huge winner trading all the way up to $96 not that long ago. Sure enough, just when the stock spikes to that level, the company files a 14-million-share secondary enabling insiders to cash in and the stock gets clocked instantly, with the deal ultimately being priced at $82.

[Read: Stock Tip Website Beats Wall Street Analysts]

Must Read: Cramer: These Moves Are Insane

Next thing you know the stock's below $70. That's right, $96 to $70 in a blink of an eye. And remember, this company, while losing money, is indeed the best of breed with this hideous decline occurring while it came out that Target turned off the FireEye program that would have detected the hacking that has hurt the retailer so badly.

I think the cautionary note here is that stocks like Yelp and LinkedIn are the exceptions and FireEye is the rule. Sure, you made a lot of money if you rode FireEye to the top. But you needed to get out when the insiders sold, something akin to what happened in 2000 when so many insiders sold.

All I am saying is be careful. There's froth everywhere in the IPO market right now. Don't confuse IPOs with IPAs, although both can indeed make you drunk if you have too many of them.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, held none of the stocks mentioned.

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