About My Schizophrenic Net Pieces

Is Cramer pro- or anti-Net?
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Is Cramer pro-Net or anti-Net? I mean, on the one hand he is warning us about

Picturetel

(PCTL)

, some apocryphal anti-Net vision, and on the other he is saying forget traditional benchmarks, close your eyes, hold your nose and plunge! What gives with this guy?

When my email isn't about how slow the site is -- told you they would

listen, and they changed it to go much faster!!! -- it's about my schizophrenic Net pieces.

In my defense, all I can say is that I am confused and will always be worried about buying stocks that are up 10 points or tenfold. It worries me because it has never worked for me before. It thrills and excites me because it is working for me now. Part of me says, "This is the greatest time I have ever had" and part of me says, "They have to take it all away." That's my hard-wiring. I am 43. I accept that's how my brain is programmed.

If you don't have those thoughts, my hat is off to you. You probably have already made so much money that you just read these columns for fun now, anyway. But if you do have those thoughts, you have come to the right place because every minute you have to be as worried as I am that this, the greatest ride we have ever been on, better than Space Mountain, better than those cool ones at Hershey Park, better than the Great American Scream Machine, has to, like all others, end. You simply hope it doesn't end while you are still on the ride!!

So let me categorize the worries and get you familiar with them. If someone had to put them all in one sentence, like a thesis at college, it would be, "Is the valuation of the Net stocks justified, based on present or future fundamentals, or is it a mania ready to burst at any moment?"

Let's parse this, again, like the thesis we may have all had to write. First, is the valuation of the Net justified? I have for a year now been saying that if these companies execute, then indeed they could be worth what they are trading for. There may be some gun-jumping, but they could make sense. The fundamentals of Net companies are still unbelievably strong.

But those who think they are going to get in on the ground floor of the next

Dell

(DELL) - Get Report

or

Intel

(INTC) - Get Report

are gravely mistaken. We are on the eighth or ninth floor of what we hope will be the Sears Tower, or whatever they call it now. The bet from these levels is that it better be the tallest building in the world, or we have vastly overpaid to be on the ninth floor. The mania phase has far more to do with what happens next, when the not-as-good companies come public, the ones that weren't as exciting and didn't have as much revenue growth as the

Amazons

(AMZN) - Get Report

and the

America Onlines

(AOL)

.

Right now the market is confused between the mania and the tremendous growth camps. Those who are thinking mania have, for the last year, put their money where their mouths are and have been shorting the Net. They have been wrong so far, dead wrong, but they know that if they catch the top of the tulip-bulb biz they are set for life, so they are drawn to such a trade.

These short-sellers have been victimized by two unforeseen factors: The stock market had been very unkind to new offerings in the second half of 1998, virtually shutting the door on all new kinds of stock, Net or otherwise; and the growth of Net traders who are not price-sensitive and are quick to movE has caused the whole system of stock containment to break down.

The commodity of Net stocks is still in short supply. If we are in a mania, in three months enough stock will have been created to alleviate the short-selling problem, as bankers can

always

be counted on to issue supply to meet demand. But the growth of Net trading, that is a different story. Take a look at the Amazon top 100 books. After you get through the books that have been written by TV anchormen, it looks like many of the bestsellers are books that how to tell you to trade! These people, not wiped out by the retreat of last September, seem to be here to stay.

They make the mania call that much tougher. To me, the answer is always the same: own the good Nets, stay away from the bad ones, and don't fabricate Net, don't play in the

Borders Groups

(BGP)

that want to cross over. Own companies that enhance the speed and growth of the Net; avoid those that could be hurt by the Net.

That's my mantra.

Random musings

: Congratulations to the

Big Board

for heeding the call of eliminating

S&P 500

chaos. I thought the S&P's reasoning about not going along with

Grasso

was incredibly hollow and told me how hard this problem must be for everybody to solve. But Grasso listened and I say thanks.

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At the time of publication the fund was long Amazon.com and America Online, though 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.