Juxtapose a massive run-up with higher-than-expected revenues, and what do you get? A selloff. Maybe that's all we are seeing in the Net stocks right now. Maybe that's the sum of it.

That's what is behind all the scenarios in

the NORAD game I am playing with my associates at my firm. Notice that under no scenario am I selling the Net, and it hasn't occurred to me to go short. All of these scenarios are still basically bullish ones.

Why is that? Why not just walk away from the sector entirely? Why keep coming back?

Because, in the end, this pattern of stocks running up in anticipation of good news and then selling off on the news is a time-honored practice, so ingrained that it even infects the Net. And I refuse to be spooked by it.

At my firm, we love stocks that have not run up in anticipation of good news. These are true upside surprises, the

Aetnas

(AET)

of yesterday, so to speak. Or the

Geons

(GON)

, if you want to speak cyclically.

But let's use the example of

Cisco

(CSCO) - Get Report

. I can't tell you how many times this decade I have seen Cisco run up in anticipation of good news and then sell off brutally when the news is actually released. I can't tell you how many times I have felt like a jerk for holding on to my Cisco.

I also can't even count the amount of money Cisco has made me this decade. It may even top

Intel

(INTC) - Get Report

,

Microsoft

(MSFT) - Get Report

and

America Online

(AOL)

as the biggest overall contributor to my bottom line. It has been a huge winner. To not be spooked out of Cisco may have been the

hardest

lesson for a stock player this decade. Let's look at the Net through the Cisco prism.

Why do stocks run up like this? Really good stocks have fans who get excited. Some of these fans get disappointed no matter what. Others get panicked out when they hear things that they think are a change at the margin. Still others like to take profits. (We did this in

Tellabs

(TLAB)

recently. We took the profit thinking we had made enough money. We very much regret it. But we did it. We don't like greed.)

I thought of this scenario when analyzing

eBay

(EBAY) - Get Report

, AOL and

Amazon.com

(AMZN) - Get Report

. These, along with

Yahoo!

(YHOO)

, are the stalwarts of the Net. They are the seasoned -- if you can call anything on the Net seasoned -- players out there. Let's look at each one. (For disclosure purposes, I am long eBay, AOL and Yahoo!, but have no position in Amazon.)

eBay, AOL and Amazon all exceeded expectations. OK, so maybe the expectations were set by acolytes or people who want the sector to win, in conjunction with the companies' guidance -- whatever you want to say. You may think the whole process stinks and is driven by corruption and investment banking and future underwriting fees. But it is the one the Street plays, for better or worse. As a trader, I cannot outthink that and stay profitable.

In a world where some benchmarks must be beaten, these three beat the benchmarks that were set. They beat them handily.

Pfizer

(PFE) - Get Report

did not.

Procter & Gamble

(PG) - Get Report

did not.

McKesson HBOC

(MCK) - Get Report

did not.

Cadence

(CDN)

did not. Every day there are companies that did not beat the benchmarks. These companies get sold or slaughtered. So let's accept that something was done

right

here by all three companies.

Now, let's break them down. eBay was the best of the three in my opinion. Execution flawless, tight control over expenses, great vision. The stock ran up sharply both before and after the news, but now it's retreated to below where it was when it started. That meteor is a pattern that is Cisco-like. It's discouraging. Heck, the thing did great and it got killed. That seems like the kiss of death. For now.

AOL's quarter was extraordinary. Great execution, terrific top line. But no big number bumps after, which depressed me. (I tried to get Jamie Kiggen from

DLJ

to raise numbers live on

CNBC

, but he didn't take the bait.) This is still Cisco-like. You usually get a bump of a couple of pennies from Cisco, and we didn't get it from AOL. But when Cisco was in an extremely conservative mode, it did not let the Street raise numbers either. You couldn't be spooked out. That's why, I believe, AOL dropped 10 points after rallying hugely in anticipation. Discouraging reaction, but again, understandable.

Amazon is much tougher in my opinion. Amazon, quite simply, is not very Cisco-like. One may argue that it is thinking bigger than anything Cisco ever did. But Cisco never let expenses get out of control or out of focus. Cisco may never have faced so many opportunities either, but this company is not run in a Cisco-like manner. (Therefore it is not a coincidence that I am not long it right now.) Still, it is absolutely true that if Amazon pulls it all off, if it does everything it wants to do, this stock has to be bought, not sold.

So why am I not buying everything in sight given my positive predilections on all three? That's the toughest question. Because I wonder whether we are seeing a shakeout, a la the networking business in the mid '90s. For most of the early '90s, I played anything networking -- Cisco,

Bay

,

Synoptix

,

Wellfleet

,

Cabletron

(CS) - Get Report

,

Newbridge

(NN)

. I didn't even care who was good at managing growth; the sector was so hot that it didn't matter. Things matured a bit, and suddenly it started to matter. By the late '90s, only Cisco was working.

My takeaway from that network evolution was this: Even when you love a sector, you never know when it is going to slow or hit bumps. But when it does, you have to have the right management team in place to handle those bumps. I am more confident right now about eBay, AOL and, yes, Yahoo!, if we are in the winnowing-out stage that hit the networkers. But I am not sure. So I cut my bets back and bet that AOL, Yahoo and eBay are just Ciscos of the Net.

That's where I stand right now. Yes, the cyclicals are easier for a trade, especially ones that have upside because of huge leverage and have bought back stock. But that's been the case a half-dozen times vs. Cisco since the latter came public. I don't want to miss 500 points in the next Cisco just to catch 12 points in

Dow Chemical

(DOW) - Get Report

. Of course, ultimately, I want to catch both.

Which is why I keep coming back to the Net and back to whatever works in, yes, the church of what's happening now.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long America Online, Cisco, eBay, Intel, Microsoft, Newbridge Networks 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 at

letters@thestreet.com.