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Jim Cramer: In Fact, There Is No Bubble -- Part 1

Note: This is part one of a four-part piece. Parts two through four will appear later Monday on Real Money.

NEW YORK (Real Money) -- We shouldn't be talking about bubbles. We should be talking about incredible shrinking bubbles. That's right: Right now, the denizens of pure overvaluation are coming down so hard and so fast in this market that the idea that we are about to see a hideous year-2000-like bubble collapse smacks more of fiction than of fact.

While there could be plenty of damage ahead in the once-amazingly overvalued momentum stocks, you must admit that a great deal has already occurred. Also, we've seen the overall market go higher as these stocks go down -- not lower, as we saw in 2000. The drowning man isn't pulling down the strong swimmers around him. They are just letting him drown and going along their merry way to better, safer waters.

I continue to search for the disconnect between what is happening with the momentum stocks and what is happening with the rest of the market, and I have come to the conclusion that the two markets are collapsing into one. It now appears there is only one form of ordering: the traditional metric of earnings per share.

Must Read: Kass: Nuthin' but a P/E Thang

That's right: We are no longer using two different sets of parameters to measure stocks -- revenue growth on the one hand and earnings growth on the other. We are simply valuing all stocks on the basis of the actual reported earnings growth, and the revenue-growth metric is being discredited daily, even if it revolves around bountiful cash flow. At this moment, cash flow means nothing. Only actual reported earnings per share can inspire a higher stock price.

This discrediting of the value of revenue growth is not in any way, shape or form, similar to the discrediting process that the Nasdaq underwent in 2000. At that point we had sought to value Internet-related stocks not on revenue, but on all sorts of ephemeral data, such as eyeballs, unique users, stickiness of the site and future monetization of contracts that could or could not ultimately occur. In that period the vast majority of the 300 companies that had initial public offerings, and failed, would almost never report a profit, and most had little or no revenue to speak of. If they did have revenue, they were spending fortunes -- and losing them -- in order to get them.

If there is a similarity between now and then, it's this: Then, as now, the market reverted to being valued on EPS. But we must never confuse the revenue standard that the momentum funds had been using in 2014 with the eyeball-unique garbage metrics from the days of yore.

That will be important, as you shall see -- because, as overvalued as some companies got this time around, I think the possibility of most of them failing is not all that great, with the exception of those coming public in 2014. Those are a different and far more egregiously negative story.

You may still dismiss these arguments and hold your ground, claiming that when the leadership component of the market rolls over, the rest of the market must follow down its footsteps. But consider the 2000 situation again. We know that the week the Nasdaq peaked in 2000 was the exact same week that we began to see a rally in the majority of the S&P 500 stocks that had been treading water. You just won't notice it if you look at the charts now because, at that peak, an astounding 33% of the S&P moment was made up of tech stocks -- almost double the current percentage.

We talk about disappearances of tens of billions in market capitalization back then -- but the smaller stocks, the dot-bombs, weren't responsible for most of it. Here are some of the stocks that were responsible, along with their peak valuations:  Microsoft (MSFT - Get Report) at $476 billion -- now $326 billion; Cisco (CSCO) at $448 billion -- now at $118 billion; Intel (INTC) at $277 billion -- now at $130 billion; and Oracle (ORCL) at $200 billion -- now at $182 billion.

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