Many of these moves were breathtaking. In one six-month period, beginning in August of 1999, Ariba rallied 296%, Brocade 222%, Broadcom 215%, JDSU 399%, Juniper 292%, Qlogic 259% and VeriSign 380%. During that same period, the S&P advanced 3%. You simply had to chase performance or be crushed.
Now there were other more egregious, nonprofitable ones that come to mind from that bizarre era. InfoSpace went from $800 million in 1998 to $15 billion in 1999 before crashing to $261 million in 2002. CMGI went from $1.5 billion in 1998, $11 billion in 2000 and then $161 million in 2002. ICG Group (ICGE), which wasn't public in 1998, went to $44 billion in 1999 and then $100 million in 2002. Webvan, which wasn't public in 1998, rose to $5 billion in 1999 and then crashed to nothingness with a pit stop at $200 million in 2000.
But what people forget when they get all hot under the collar about momentum tech's valuations now is that the biggest and most insane valuations actually belong to the biggest and most sane companies. Consider these. Microsoft (MSFT) went from $152 billion in 1997 to $476 billion in 1999 to $199 billion 10 years later. Intel (INTC) went from $115 billion in 1997 to $277 billion in 1999 to $78 billion nine years later. And Cisco (CSCO) went from $53 billion in 1997 to $448 billion in 2000 and $86 billion in 2002.
In other words, don't blame the Red Hots for the wild overvaluation. But also keep in mind that while the Nasdaq ultimately brought down the S&P, it was the overvalued large-tech portion of the S&P that was the true undoing, not the packaged goods, drugs or financials.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Editor's Note: This article is part 1 of a five-part series and was originally published at 11:45 p.m. EST on Real Money on April 27.