When Net companies buy other Net companies with stock, the strangest thing happens: Sometimes the recipients can immediately dump the stock, inundating the market with supply nobody expected.

So, when

Digital Island

(ISLD)

buys

Sandpiper Networks

, the Sandpiper recipients can offload a ton of Digital Island.

When

E.piphany

(EPNY)

buys

RightPoint

, the recipients can blow out of a massive amount of E.piphany.

Take a look at those two stocks. Tell me that you can live with that amount of pain, that you can handle that level of discomfort as these insiders take their stock off the table.

If you can, I salute you. But if you can't, then you understand my predicament. I never wanted to sell any E.piphany, but I have to sell some if I am going to manage my risk.

All of my trading life I have had to understand the fundamentals first, the macro environment second, and the charts third. It has never been in my lexicon to have to know the insider-selling rules. They have never played this big a role in the stock market. Since the start of the new year, however, they are the dominant force on the

Nasdaq

.

Now, however, it is ironic that the most material piece of information in this market is not earnings, or revenue, or guidance. It is float. Or, more accurately, the "moving float average." (I just made that up, but boy would it help to know the moving ratios of how much stock is outstanding over how much trades.)

Let's take

eToys

(ETYS)

, which is my favorite example. One week the stock is at 59. Another week it is 19. What happened? Stock was released. Lots of it. Millions upon millions of shares. And it got the stuffing knocked out of it.

Let's think about the eToys situation. It really did have a pretty respectable Christmas, certainly a better one than

Toys R Us

(TOY)

. You have to admit that it has great brand recognition and that it has massive revenue for a young company. It has executed fairly flawlessly. It will be a winner in the dot-com retail world.

But a phenomenal amount of stock was free to trade, much more than any other dot-com, and the stock simply fell under its own weight. I also have no doubt that the selloff in

Yahoo!

(YHOO)

is similarly engendered by people who can sell who could not before.

Why do I take a pasting in Yahoo!? Because it has delivered flawlessly and has managed its growth fantastically, and because I don't think that all of the insiders are that anxious to sell, even up here. I could be wrong, but I am betting that the selling dries up in a matter of days, not weeks or months. I saw the same thing in

Microsoft

(MSFT) - Get Report

. The amazing thing with Microsoft is how little insider-selling there was from the top honchos on the way up. They believed. They wanted to own. They even bought on dips. With the great companies, people aren't so eager to bail.

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TSC

Message Boards.

This share issuance has become so important that I wish the

SEC

would make the companies spell it out much better. Instead of allowing it to be buried in filings, the SEC should mandate that any large amounts of stock that are for sale should be publicly disclosed. Right now only a handful of people know about some of these private sales. That's great for the sellers, but terrible for the buyers. In a world where the single most material piece of information is the size of the insider sale, you would think it would have to be made public at the time of sale.

Until it is, I have had to scale back our exposure to many of these highfliers. It is too difficult, too unknowable to trade them. They trade madly, unseasoned, as if they were small-caps. But they are billion-dollar companies.

One last example.

Tibco

(TIBX)

is a multibillion dollar company that went down 50 straight points on a lockup expiration. It then traded back 40 straight points after it ended.

But who knew other than the market makers that it ended?

Yet it was the single most importance piece of information you needed if you wanted to buy the stock

. Nothing else mattered.

It is time that the rules about insider-selling changed. There should be more notice and more knowledge. Until then, these unseasoned stocks can't be a big part of my portfolio. I just can't manage risk the way I have to if I am going to stay in the business of trading stocks.

Random musings

: To the dozens of people who thanked me for the

warning about not to trade on that first number with

Intel

(INTC) - Get Report

and to the others who thanked me for suggesting that you might be able to buy it right after that number, I say you are welcome.

The number was reported incorrectly, the stock fell on heavy volume, and then the bullish guidance and real number surfaced and the stock tacked on a quick 10 points. Real money.

Which reminds me, those kinds of updates will only be available in

RealMoney.com

come the second quarter. Can you afford to miss them? And why not lock in the low subscriber price for RealMoney now rather than wait until the package costs $200? See more information in the

press release.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Yahoo!, Microsoft, Intel, E.Piphany, Tibco and TheStreet.com. Cramer owns stock in TheStreet.com. 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.