After the Federal Reserve raised interest rates on Wednesday, CNBC's Jim Cramer wanted investors to get a feel for the state of the U.S. economy.
"Higher rates can kill the bull if they make bonds competitive with the return you get from stocks. We aren't there yet," the "Mad Money" host said. "A quarter-point rate hike from these very low levels won't really do much damage to either the economy or the stock market."
Cramer used a quote from the late legendary investor, Sir John Templeton, to explain the current state of affairs: "Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria."
"We're currently in stage three. We're in optimism," Cramer said. "We're optimistic about 2018. We're optimistic that the Fed won't kill the economy, optimistic that inflation's under control, optimistic that more jobs will be created, augmented by the tax bill, and I'm optimistic that stocks can keep running."
Yet amid all this optimism, there isn't much euphoria, the "Mad Money" host said. There are still plenty of people skeptical that the stock market's gains can last. There's still money on the sidelines.
Cramer argued that the most euphoric part of the market is in the world of cryptocurrencies like bitcoin, which Fed Chair Janet Yellen said on Wednesday was still a "very small" segment of the payment system.
"I get the sense that when — not if, but when — they become big potatoes, the Fed will have a more forceful policy," Cramer said. "But right now, Yellen, even after repeated questioning, didn't seem to take the cryptocurrency bait. She just didn't think they're that important."
But there are still plenty of areas in the market to be concerned about, the "Mad Money" host said.
The money will fund 500 new jobs at Finisair and refurbish a closed-down facility in Texas, where Finisair will manufacture chips for Apple's latest devices.
"Without this injection of capital, I think Finisar would struggle versus foreign competitors," Cramer said. "Good work by Apple."
Second, long-term interest rates (which are not controlled by the Fed) have remained stagnant even in the face of aggressive bank deregulation by the government, meaning there's not enough lending. Cramer said he hoped that might change with new Fed Chair Jay Powell.
Most of all, the "Mad Money" host wanted investors to keep an eye out for the signs of euphoria.
"First, if we see a tremendous amount of insider selling and secondary stock offerings that get lapped up by the market, something that happened near the peak in 2000, we might be too euphoric," he said. "If we see people trading houses like they did back in 2007, we might be too euphoric."
"If we see investors taking down a gigantic amount of margin debt in order to buy stocks, we might be too euphoric," he continued. "If we hear outrageous price targets for stocks and start bidding up the prices of companies without any earnings or even any revenues, you better believe we're too euphoric."
But none of that is happening, Cramer said. Ten years after a financial crisis shook the economic system to its core, we're simply optimistic.
And there are still plenty of people in the United States who were so scarred by the 2008 recession that they don't want to invest ever again, Cramer added.
"Am I giving you permission to party down with stocks? No way," the "Mad Money" host said. "We need to be careful not to own the stocks of companies that are doing poorly. We need to remain vigilant against euphoria. We should always be willing to take something off the table. No one ever got hurt taking a profit. Build up some cash on the sidelines."
Disclosure: Cramer's charitable trust owns shares of Apple.