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What Matters in This Market?

Cramer assesses the tone of the market.
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As is typical when things get this hot, the market makers, none of whom have an ounce of stock coming in today -- have to contain the market by making us pay up huge for our first purchases. Remember, they see it too. They feel the heat of the buyers. Heck, they smell the breath and hear the footsteps. The specialists in New York and the OTC gang have to cool things off by doing so in this time-honored fashion. They have to take things up to where they can find sellers, because they can't lose their whole years in a morning.

Typically, what happens in these situations is that people get discouraged. They kick out what they bought too high, others say, hey, at these prices, I have to boot, and still others say "looks like a mammoth top, I have to short it and make money on the downside."

All of these patterns are so ingrained that it amazes me every time it happens. So what matters? Again, what matters is what you have conviction on. If you think


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is in the early stages of a big, big move, so what. You hold on. If you think the whole thing is one big mania, then you boot. Same for


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, or anything else in the sector.

I try to play these things in a business as usual fashion. I don't pay up for what I have already, I pay up for a small bit of what I want to build, and I kick out the marginal positions that I am up huge on. I have one eye on the interest-rate picture, which is not pretty, and that causes me to worry. The only thing that could really hurt this bull is higher interest rates, and they certainly look like they are on the way. That is a new view of mine, and has to be considered part of the equation. While we may think that the Net is the next big thing after electricity, we never want to lose sight of this dog-e-o bond market.

James J. Cramer is manager of a hedge fund and co-chairman of At time of publication, his fund was long America Online, @Home 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 by sending a letter to