A Net Fairy Tale

Gee, I want so much to agree with Herb Greenberg's laundry list of Net woes. Oh, there is that nasty eBay (EBAY) - Get Report execution risk. And that Yahoo! (YHOO) : No guarantees of continued ad growth there, no way. Can't be too cautious about @Home, (ATHM) - Get Report given its run-up and the woeful state of the cable companies' balance sheets.

But I can't agree. In fact, the amazing thing about the Net is that it keeps breaking the right way. It keeps getting BETTER! Yahoo! didn't slow down after Christmas.

Amazon's

(AMZN) - Get Report

taking the quintessential long-term view instead of trying to cap growth and show instant but unsustainable profitability. And

America Online

(AOL)

? I can't recall a company as hated as this one at one time that is now doing so well. I love my AOL and go there constantly, just to see what's going on, in the way I used to dial with my clicker. Instant messaging? I am so addicted that it is a wonder anybody in my office can get any work done with the darn thing on.

I keep waiting for the growth to stumble. I keep waiting for some management to screw it up or for the Web not to work as a strategy for someone. I keep thinking the numbers have to slow or that the adoption must stop at some point. Even television ran out eventually. I keep thinking that it has to be over when guys like

Jeff Bezos

say, "If you want to make money fast sell my stock."

But it isn't.

A few months ago I wanted to get out of the Net as it got too hot for me. The stocks were all in margined hands and were trading so nutty that I wanted nothing to do with them. I was beginning to really piss off all the market makers in my insistence on buying what they did not have to sell. They bubbled and bubbled and then burst right before my eyes. Then we had that big bond scare where interest rates shot up, causing all long-dated assets to retreat in value. (If that confuses you, please go to my Taster's Choice

archive, as I cover this issue well in several pieces, and heck, this is the Net and links like this work.)

And we had the massive secondaries and incredible insider selling, as well as a mammoth calendar of Net stocks. Then we had the sellout, when Bob Davis played the role of the mother in Jack and the Beanstalk, throwing the worthless colored beans out the kitchen window. That was the most shocking cut of all. I was just waiting for the rigor mortis to set in. Now look what has happened. We passed the insider supply test with some 40% and 50% declines in the group, and then a remarkable trip back, to the point where the

TheStreet.com Internet Sector

index top-of-all-time is about to be toppled. The cynics said the DOT's formation caught this group at the top, and it would never ever see these heights again. That looks Wrong!

This comeback has been nothing short of remarkable and unprecedented in the annals of manias -- a true broad-based rally back to life! Then bonds stopped going down and the economy cooled ever so slightly, but not the Net.

In fact, a cooling of the economy might actually be pro-Net because it would cause more of a computer price war, giving more of an impetus to buy the appliance needed to get on the Net. Not to mention that most Netizens go Netting, like shopping, in order to SAVE money. Heck, it's a bargain, no denying it.

And then the

Lycos

(LCOS)

seeds blossomed into a beanstalk that "Jack" Wetherell mounted, taking the Golden Goose back from Big Bad Barry. Fee fie foe fum, I smell a better deal.

Now the floats of the stocks are big, the stocks are getting institutionalized and the numbers keep getting exceeded. Most of the biggies are seasoned and no longer have that crazy, scary volatility.

It's not the margined players doing the buying; it is the

FIDOS

and the

Januses

. Sure there are plenty of deals in the hopper, but the appetite so far remains unsated. Of course this creation of stock could tip the balance. But when I was reading Herb's piece, I could not help be struck by the virtual hollowness of it all, the same old Achilles' heels and straw men. The usual suspects of ridicule and caution.

It made me want to go out and buy.

Which I did.

Random musings:

Nothing like doing a hatchet job on

J.C. Penney

(JCP) - Get Report

and then getting a half dozen letters from people agreeing with me and only one negative note.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At the time of publication, the fund was long AOL and Yahoo!, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending an email to letters@thestreet.com.