Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
Back in 1999, in the heat of the dot-com bubble, Cramer said nearly 300 companies came public, most of which were totally bogus and had no hopes of ever turning a profit. When the money dried up, these companies folded. That was a bubble.
However, many of today's high flyers can turn a profit if they wanted to, but are instead taking a page from the Amazon.com (AMZN) playbook -- Sacrifice profits to grow quickly and the market will reward you, which it did with high valuations.That strategy worked up until a few months ago, when the market changed its stripes and demanded both growth and earnings, sending these once-loved stocks plummeting. Cramer said there are indeed bubbles out there, particularly in the software as a service names, along with early-stage biotechs and certainly in the IPO market. But that doesn't mean that stocks like Twitter (TWTR) or Tesla Motors (TSLA), which have received "cult status," should be lumped into these groups. Many of the newly minted IPOs have huge lockup periods expiring soon, Tesla and Twitter no longer do.