The Moral of Ulta, Lulu and Lumber Liquidators

SAN DIEGO (TheStreet) -- Yet again names like Ulta Salon (ULTA), Lululemon (LULU) and Lumber Liquidators (LL) prove that the only thing that matters is when the company itself concedes that what was believed to be, isn't. That theme continues to rage through this Greater Fool's Theory market, as I have called it, leaving all who dare question the king looking like the joker ... until they aren't.

That's something to think about as companies like Green Mountain (GMCR) continue to win favor in this super-caffeinated market, with the hype and hope of new products years out. A momentum-driven market like this rewards hype with the valuations of hope.

It's perfect for the "buy on the rumor" pump, which can lead to valuations that for all but perfection leads to "sell on the news" dump.

And when that happens (reality check!) he who gets left holding the bag is left for dead as chump.

-- Written by Herb Greenberg

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Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security.

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