I’m sure many of you, like me, have followed the Jim Cramer/Jon Stewart spat with relish. I’ve never been a big fan of his show, though he is entertaining in an O’Reilly, Hannity, Chris Matthews sort of way. However, my reasons for not being a “Cramerican” have little to do with his infamous Bear Stearns and Wachovia stock picks, but with his disingenuous and misleading rhetoric. I have to agree with Ben Stein that you can’t condemn someone for bad stock tips, no matter how stupid they might be (NYT).
The first I ever heard of subprime was Cramer’s August “meltdown.” In this segment of Mad Money, Cramer raves that Bernanke and Bill Poole have “no idea” what’s going on in the market. He yells: “I have talked to the heads of almost everyone of these firms in the last 72 hours, and they have no idea! My people have been in this game for 25 years and they are losing their jobs! The Fed is asleep!”
There is so much ironic about this segment I don’t know where to start. First of all, he blames Bernanke and Bill Poole when it is his “people” that are the problem. (Especially his good friend Angelo Mozilo who frequently appeared on Mad Money promoting Countrywide) Secondly, he starts the segment criticizing Bear Stearns’ for disrupting the market by calling fixed income market worst of 22 years; however, in calling financial markets “Armageddon” he does the exact same thing. Third, while he is raving about the problems financial institutions are having, the subtitles on the screen say “Bear Stearns: leveraged finance positions manageable, well-hedged, prudently funded.” This final example is why I can’t stand Jim Cramer.
On a later CNBC show, as a guest commentator, Cramer goes on a rampage about how the individual investor is getting screwed. He calls financial institutions “disingenuous,” saying they are taking advantage of
The problem is not Jim Cramer, it is CNBC and financial media. He should never have been slated to give investment advice. He is not even an investor. He is a lawyer or a trader not a security analyst. He calls more bulls than a cattle rancher. The only reason he has his job is he is loud. And that is how financial media works, whoever yells loudest is listened to. Before the crisis got too bad, CNBC would bring on bears like Nouriel Roubini and Nassim Taleb and laugh at their prognoses. Bulls rule CNBC, that is why I do not watch it.
And this isn’t even Cramer’s first big bust. His first bust was during the dotcom bubble. He started a dotcom (TheStreet.com) that reached up to 60 a share before falling to 6. Described as one of the loudest voices of the internet bubble (big surprise), he said afterwards on the Today Show, “and I can tell you, that it’s a sobering and humbling experience. I feel I went from being, you know, top of the game to pretty humiliated. Yeah it’s over. The gold rush is over…What’s next for me? It’s called coaching fifth grade soccer. There I can accomplish everything I want in life. I can make everybody happy at home and have something to show for it in the end. I’m done with the material stuff” (Clement Schonfeld, “High Price of Research” Fortune magazine).
He should have kept his word.
