The

Fed's

tightening is hitting home. The Street's talking negatively about both the steel stocks and the paper stocks. Price increases aren't sticking. Estimates that had just been boosted a couple of months ago are now coming down.

Think back to the lessons of 1994: People tried to buy the cyclicals, thinking they looked cheap on next year's earnings estimates, and then the tightenings kicked in and caused the estimates -- and the stocks -- to come down.

Hence our thesis that it is better to be in the

Pepsis

(PEP) - Get Report

, the

Mercks

(MRK) - Get Report

and the

Bristols

(BMY) - Get Report

than to be in the papers, chemicals, steels or coppers -- despite the low multiples to earnings of the latter. Those will increasingly become sucker plays UNTIL THE FED IS DONE.

Can you own the cheap cyclicals through this tightening? I don't know. I thought long and hard recently about buying

Shaw Industries

(SHX)

, the giant carpet maker, because it seemed so darned cheap. But last night, it blew up -- higher mortgage rates and higher raw costs -- and now I know the answer: Stocks are cheap for a reason. In other words, cheap could be a danger.

Don't be sucked in.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long PepsiCo. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may 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

jjcletters@thestreet.com.