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The Old Days

Cramer considers whether his youthful derring-do would have better suited this tape.
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When I started trading 20 years ago, I used to bet the whole shooting match on one or two hunches. Everybody told me I was a fool to do so, but I knew they were wrong. My instincts would protect me, and my youth would give me a chance to make it back if I lost it all.

Five years later, I was still operating on that same bet-the-house principle. I loved taking all of the money I had and sinking it into

Gulf Oil

calls or



puts. I managed to become, by any standard, independently wealthy doing so. People thought I was a lunatic, but I was laughing all the way to



Then I went to

Goldman Sachs

and I learned that you can't roll the dice with your net worth. At some point you will come up snake eyes. I began to work on a more balanced, prudent method of investing. I still liked to make big bets, but they were in the confines of some diversification, much less what the texts said, but more than the youth who traded out of phone booths between antitrust and corporate tax class.

Twelve years ago I started my own firm, where I began to make big bets with other peoples' money. Again, I refined the process more, making rules about how much could be put into one position, how much should be taken off the table, how much to exit when I see froth or craziness. It saved me in the '87 crash. It kept me alive in '90 and '94. It still enabled me to make a ton of money, though, when things were good.

Now comes 1999, and all I can say is that I would have been much better at my job in 1984, when I would take my net worth and bet it all on the


(IBM) - Get Free Report

August 100 calls. Monday's action, euphoric and exciting to most, was actually discouraging to me. Back then my portfolio would have been 100%






out-of-the-money-soon-to-be-deep-in-the-money calls.

I could just see myself running from class to class at

Harvard Law

giving everybody the big high five, pretending to be excited about the


, when in reality, I was bursting from great trading.

Instead, yesterday, when Yahoo was up 90, I sold the last bits of my favorite stock. With earnings coming in, and the possibility that a real event could cool the stock off, I jettisoned it. I took a lot of AOL off the table. I sold a bunch of little Net plays. And I realized that this 43-year-old could not do what he could as a 23-year-old: throw all caution to the wind and bet the farm.

Perhaps it will turn out that Monday was the top, that the froth had at last reached 1929-like proportions, but I don't think so. I think I am going to be forced to get back, maybe even at higher prices. But even I, giant Net bull, could not hold back from selling Yahoo up 90 points. I had never made 90 points in a day in my life, and I wanted to take it. I had learned too much not to.

As soon as I had booked the gain, I asked myself what I would have done in July of 1984, when I had some of my biggest wins. And I know exactly what I would have done, I would not have sold. I would not have let it ride. I would have doubled down.

The troubling thing for me is that I know I am one hundred times better at this craft than I was when I swung for the fences every single time at bat. But the fact that the reckless -- some would say downright crazy -- Jim Cramer of 1984 would be much better at this market than the cool-headed 1999 version, well, that just seems wrong to me.

They are paying you for recklessness now, paying you for heady, eyes-wide-shut trading. And I guess I have to go back to that '84 playbook to find a way to incorporate it into my trading, before I get passed by.

The ironic thing? Nobody believes in the Net more than I do. You know that more than anyone. You wouldn't be reading this now if I didn't.

Random musings:

If there were ever a time for strategists to downgrade their equities views, it would be now. Take

Merrill Lynch


for instance. Isn't this when it should be saying take profits? But I hear nothing. Perhaps they are as shell shocked by this Net rise as I am and want to see how it plays out before squawking.

James J. Cramer is manager of a hedge fund and co-chairman of At the time of publication, the fund was long AOL, IBM and Motorola, 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 a letter to at