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Why the Bridge to the New World Is in Trouble

And why the wrong set of numbers this week and the wrong words from Greenspan could create havoc.

We are always searching for metaphors and analogies to describe the Internet and its impact on our daily lives. In these columns, I have tried to relate it to everything from


and the invention of alternating current to the Tin Man and his quest for the oil can.

Right now in the securities business, I think we have stumbled on a more troublesome analogy, the Web as the bridge to the New World, which, suddenly, but unequivocally, has developed cracks in it before the job is done.

Imagine, indeed, had there been a bridge to the New World instead of all of that flotsam and jetsam that passed as the Santa Maria, the Nina, the Speedwell and the Mayflower. Imagine how much more could have been accomplished faster, especially if we had the capital and the combustible engine.

Now consider that maybe the Internet is all of those things. It is a faster, cheaper better way to get to the New World without all of the fits and starts and weather and time delay and expense. The more people who can get over this bridge to the New World, the more likely that great riches and nations can be created much faster.

That's where we are right now. The bridge has been built. There are millions of people going across it. Some of them are capitalists who have staked out on-paper riches that are dependent upon the bridge not going out for some time. Others are financial people who helped the process immensely, the venture capitalists and corporate finance professionals. Still others make the equipment for the Internet to work, the technology behind the Net, the only area of the market that is still making you any money to the long side. And then there is you, the investor, the person who makes it all work. You, the individual, make the bridge worth having.

It certainly isn't the mutual funds. They don't have much money coming in, and with the exception of a handful of funds, they have not been supportive of this bridge. Only the individual investor allows the capital to keep flowing, and that allows the infrastructure to be built for this New World.

Now, everybody who has profited from the bridge to the New World is worried that the Internet settlers won't take the chance and won't cross that bridge.

They are worried for the following reasons:


The individual investor, after shooting the lights out for so long, has been striking out since April. It is now June. How long will the individual hold out and continue to take a beating.


The Web itself turns out to be more vulnerable than we thought.


(EBAY) - Get eBay Inc. Report

goes down. Billion-dollar companies just don't go down. It is inconceivable that a


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or a

Home Depot

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could have a system-wide shutdown. But it happened at eBay, which, in my eyes, went from a great long to a screaming short in a heartbeat.

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The .com creation machine is on overload. When

Lou Dobbs

quit his day job for

, you had to think we were getting late in the game. I know I can't afford to be too skeptical, as I said the other day, because people laughed at me with

. But from the time is up and running to when it can have a track record to when it can have bona fide financials will be at least two years. Will there be an IPO market then for money-losing .coms?


The bricks and mortar crowd smells its own death, and it'll begin to sabotage the Internet with its own spinoffs and tracking stocks and National Gift Wrap.coms that sop up needed capital for pioneers.

All of these weaknesses affect the whole bridge of capital. If the individual gets turned off to the stock market, I think it is safe to say that the bridge will cease functioning. Nobody knows the answer. But it is all that people in the brokerage industry talk about. What will the do-it-yourselfers do if they keep losing money in the market? Will they go back to something else? Will they switch back to mutual funds? Will they find another game?

As a professional, I hate it when I lose money. It is a painful and horrible experience. When rates move higher, you lose more, when rates move too high you lose more than you win. But I can short if the market turns bad, and I can make decent money shorting, as I did in '90 and '94. The average individual, though, is a long-side player. If he or she calls it quits and the


and the


stop growing, then the ipo market wilts and the public .coms lose their biggest backers.

Personally, I believe the individual is here to stay. I think the individual likes the stock market and likes doing it himself. But this whole move to the New World needs a continual conversion of individuals to owning and trading stocks. I don't think the market, as it is currently trading, will allow that growth to continue.

That's why I think the bridge is in trouble. It is why the wrong set of numbers this week and the wrong words from

Alan Greenspan

could create havoc for the whole New World.

I'm staying off the bridge until the coast is clear.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. 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