Money Is What You Want - TheStreet
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The more I dig on this DSL-cable modem story the more I think, wow, how incredibly linked this process has become. I have now communicated with thousands of you about this installation process and the remarkable thing is how many of you are trying to make money off it with me.

So, with that common ground, let me give a huge caveat that everyone must understand, especially you new people: Just 'cause you had a good experience with

Covad

(COVD)

and a bad experience with

BellSouth

(BLS)

, or just because you liked the

NorthPoint

(NPNT)

folk but thought the

SBC

(SBC)

people hurried, you can't just invest in NorthPoint and Covad.

Let me tell you why: A good customer experience may mean a terrible earnings experience. Many of you have sent in laudatory comments about your Covad installation. Often you annotate your Covad praise with how the workers were willing to come out over and over or had to put up with Regional Bell meddling repeatedly, but still persevered and got the job done.

Ugh!

These companies are struggling precisely because they are often trying to do the impossible. While the law is clear that the local exchange carriers have to help them, often the LECs' offices simply can't accommodate the work the Covads and NorthPoints need to get to wire your house. The incumbents can make it awfully rough on these independents and still be legal.

It worries me that so many of you are willing to buy stocks because of a positive experience with a company that may not be able to make money serving you.

Similarly, it's not enough to see the name "

Alcatel

"

(ALA)

on the side of a piece of equipment, or to ask a worker about the "

Westell

(WSTL) - Get Report

" product he just installed. "I've installed a bunch of them around the clock" is not a reason to buy Westell. Or

Broadcom

(BRCM)

. Or

Efficient

(EFNT)

. These companies can have many lines of businesses and a lot going on. There is much, much more to the process of buying a good stock than getting a high sign from the

InfoSpeed

installer. That's not how it works.

I never want to criticize zeal or enthusiasm when it comes to investing. But please, please, don't get sucked into doing what so many people did with the Net -- like the site, buy the stock. That game has cost people billions. Don't repeat it with this installation process.

Do some homework, first. Are the installations leading to losses? Are the companies making their aggressive installation targets? Are the companies able to "scale" or make good on their claims to become big companies fast? And don't be drawn in by ranges. A stock could be much closer to its low than its high and

still go much lower

. (Please read my sobering

PlanetRX

(PLRX)

story if you have any doubts.)

Almost a generation ago,

Peter Lynch

made fortunes for people by telling them to look around at their own world and pick stocks based on their experiences, not on tips. Bank on stuff you know, not hot scoops from people who are long and want out.

But understand that Lynch

started

with these experiences. He didn't end with them. These days we seem so eager to buy what we experience that we're taking Lynch too literally.

Fortunes have been lost this past year by picking the stocks of those sites and installers you got a kick out of. Don't be a casualty of your own enthusiasm. Make a few searches. Check out some research reports. Look at the history of the company.

Don't just act.

You can't make consistent money that way. Never have been able to; never will.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Alcatel, Efficient, SBC and Broadcom. 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.