Consumerist
Jim Cramer, host of CNBC's Mad Money is now something of a laughingstock, after telling viewers on March 11th not to "move" their "money" from Bear Stearns.
He told viewers: "Don't move your money from Bear! That's just being silly! Don't be silly!"The article goes on to quote experts critical of the "Mad Money" show who claim that it encourages a hyperactive short view of investing that's unhealthy, inappropriate and tax inefficient for the average investor.Cramer and CNBC have defended his statements, arguing that Cramer's assertions on the bank were in reference to a viewer's question on Bear Stearns' liquidity, not its stock prices.
CNBC spokesman Brian Steel said that on the Friday before Bear's meltdown, Cramer presciently called the bank's stock worthless. Cramer could not be reached for direct comment."I think that anybody who has a fundamental understanding about capital markets knows the distinction between [a] question about stocks and liquidity," Steel said.
Whether Cramer's viewers understood that the host and former hedge fund manager was not talking about Bear Stearns' stocks is unclear. Meanwhile CNBC's defense of Cramer has not insulated its heavily promoted star.
In recent days, finance and news blogs have blasted Cramer, and Comedy Central's news parody "The Daily Show" gave him a not-so-gentle ribbing: "I love the way Jim Cramer breaks down really complex financial issues into ones that are wrong," host Jon Stewart said.
Upping the snark factor was Fox Business News, which took out half-page ads Monday in The New York Times and The Wall Street Journal, comparing Cramer's words to some of the most infamous quotes of the last century, including Neville Chamberlain's famous statement after conceding Czechoslovakia to Adolf Hitler's Germany: "I believe it is peace for our time."
What do you think? Is Jim Cramer bad for you? Has he turned you into one of those losers from the E*Trade commercials? Wow, man. I just bought a stock from Hong Kong.
Should You Stay Away From Jim Cramer? [ABCNews]
Comments
Everyone forgets about the letter he read in which he was answering. "Should I pull my money out of Bear Stearns?" It wasn't, "Should I sell my Bear Stearns STOCK". Although I can't stand his on-air persona, he was right on this issue and this is incorrectly getting over-publicized. Actually, it shouldn't be publicized at all.
Saw this on digg already - wasn't that quote completely taken out of context? Has anyone else seen the actual video?
For better or worse, stock investing is a lot like poker. If you're a good player, you want a lot of bad players in the game to increase your profit. If there's a lot of people out there making their "buy" and "sell" decisions based on an entertainer's frenetic 15-second analysis on TV, more deliberate investors who actually look deeper into the discussed companies are going to come out on top. Draw your own conclusions.
Jim Cramer is the Billy Mays of the financial world.
Cramer is a big idiotic flapping head. Anybody who invests based upon his opinions and no further research is not making a carefully considered investment.
I saw the video. That is exactly what he said. He said don't be silly, Bear Stearns will be fine. He is an idiot and a side-show. If he could make money, he would not be on TV.
@Front_Towards_Enemy: LOL -- spot on!
I like how he routinely gives horrible advice and then the one time he actually gets something right, that's when everyone gets upset.
here it is on youtube
+ Watch video
Cramer is an obnoxious jackass. Glad I didn't follow hiS advice during the tech bubble All I remember is CMGI! BUY! BUY! BUY! THIS STOCK WILL NEVER GO DOWN! NEVER!
@Front_Towards_Enemy: But Billy Mays sells me such awesome stuff. Who doesn't like Oxyclean?
He was telling people to stay put because it is their actions OF taking it out that causes hysteria and compounds the losses.
This is the problem with stock markets. If people weren't so impulsive, these problems wouldn't be so big. People lose more money through the hordes taking out their money because of collective fear of each other's actions than through the bad decisions of the companies to begin with.
@JustaConsumer: He's a multimillionaire.... Hes on TV because in his mind its a hell of a lot less stressful from what he used to do as a trader. He is very frank on the fact he almost lost his kids and wife because of how into his work he used to be which he had to be in order to be as successful as he has been.
He may be somewhat crazy, but he is not stupid, he has made millions for himself and the companies and people he used to work for when he was a trader.
Looks in-context to me.
I can't really stand his TV show (like the radio show a lot better), but he's being taken completely out of context. He was talking about Bear Stearns the bank, not the common stock. He wasn't going to drum up hysteria and suggest a run on the banks. This is old news.
Does Fox invoke Godwin's Law by comparing Cramer's comment to one made about Hitler? It might not be a direct invokation, but it's damn close... and it is FOX news...
@Falconfire: Yeah, he's made millions, but its not as impressive if you look at percentages. From what I hear, his percentages are right with market average, meaning the only reason he made more than the average person is he invested more to begin with.
Because I'm sure there are so many people who write a letter to Jim about pulling money out of Bear Stearns.
How many people have a retail account at Bear?? Oh, I guess this guy was.
He was wrong on Tuesday, right on Friday...that's the way Jim is.
@Falconfire: Agreed. He was a very successful hedge fund manager who made tons of money. The point of his show is to get the average investor excited about investing and to think about how companies are valued by the market...not necessarily to give buy/sell recommendations. I watch Cramer for the entertainment value alone and so do most people on the street. Do your own homework when it comes to investment decisions.
Not having cable, I can't watch some of those shows, but from the Youtube clip above, Cramer definitely comes out like an obnoxious idiot.
@K-Bo: FYI...
29% for 37 yrs. - George Soros
21% for 40 yrs. - Warren Buffett
29% for 18 yrs. - Eddie Lampert
29% for 18 yrs. - Peter Lynch
24% for 13 yrs. - Jim Cramer
15% for 20 yrs. - Benjamin Graham
@JustaConsumer: If he could make money, he would not be on TV.
Absolutely brilliant insight I'm sure. Could you perhaps explain for us then the chicken-egg problem of how he could have gotten his show in the first place?
The man made millions of dollars running funds before he had his show. Taken in-context his statement makes perfect sense. And even if not, so what? How many other Wall St moguls made the wrong call on Stearns? If it was so obvious to every single other person except Cramer then why was it a problem at all? Guess what, predicting complex financial markets is difficult. Reducing arguments to 2 second sound bites is like trying to get an entire movie across in a 30 second trailer, I think we can all relate to how accurate that is.
It's stupid to follow his advice. Lots of people watch his show and follow his advice. Everyone goes out and drives the stock price up. That's why I don't follow it
"Should I take my money out of Bear Sterns" can be read as either selling BS (ha!) stock or pulling out instruments created/managed by BS.
Cramer's pathetic denial is just that.
He's to investing as is Paris Hilton is to acting.
@esd2020: And it's pretty clear the context is a discussion about liquidity.
@Bladefist-안녕: If you observe that his recommendations result directly in an increase in stock price then why wouldn't you attempt to make money by timing those jumps? Your statement is as much of an oxymoron as saying "No one goes to that club anymore because it's too crowded."
Cramer Deconstructed: [www.cxoadvisory.com]
@Trai_Dep: What part of the viewer's question: "Should I be worried ... in terms of liquidity," creates the ambiguity?
This is inaccurate. Whether you like him or hate him, if you are going to post a story about him and what he said on this issue, please put it in context.
I love Jim Cramer. He got me into investing, and although I don't really listen to him anymore, I truly believe he wants to help out the little guy. Good for him for motivating people to take control of their own finances. As for his show, you have to take his recommendations (he makes wayyy too many!) with a grain of salt, but his show sure is entertaining.
I don't know one serious investor who listens to a word Cramer says. If you want some day-trade investment advice I would suggest the Gartman Letter every morning. Not taking anything away from what Cramer has done trading, but you can't give good advice without knowing what the investor's portfolio looks like, no matter how awful the stock performs directly after said advice. BSC is/was a historical event that will be studied in B-schools for years and dragging Cramer down for this is ludicrous. If he took the other side it would be argued that he helped ruined Bear Stearns by losing investor confidence. Nothing he says should be taken at face value for an individual investor; this is why the odd-lot theory is still in the study guide for the Series 7.
@LynchMob52: beat me to his figures, I'd hate to be an idiot that made 24% after fees for 13 years....
@Hossofcourse: You sir are an idiot there are mountains of posts on his site about the tech bubble and not getting screwed by over hyped zero profit tech start ups, its also covered in his autobio that was put out well before he even had a show.
It is utterly irresponsible for people to take him at his word without checking other information. Cramer himself makes this blatantly clear on his show, both through his discussions and fairly common sense textual disclosures that amount to "all of my picks might not be right, so get comfortable with the company yourself before you invest your own money."
At the base of it, he's promoting personal equity investment, as opposed to using professionals. For the small player, this can obviously save on the costs of investment. It is a different take on diversification for those that don't have 5+ 0's in fairly liquid assets.
On the other hand, you could just listen to Warren Buffett who believes that a low-cost ETF tracking the S&P 500 is best...
Moving on...
Wasn't this like weeks ago?
Ok, some people are absolving Cramer on the basis that he gave advice to someone who as asking whether or not there was a problem with Bear Stearns liquidity, not their stocks. The assumption is that the current crisis with Bear Stearns, the current stock fall, has nothing to do with liquidity.
But that's not what the SEC is reporting. Here is a letter from the chairman of the SEC, Christopher Cox:
[www.sec.gov]
Here is what he has to say about the liquidity of Bear Stearns, emphasis mine (this is from the bottom of page 3 and top of page 4; cut and pasted and cleaned a bit):
It seems clear to me that at the root of the crisis is a liquidity problem and that Jim Cramer gave bad advice.
Guys, seriously, every market pundit mis-called this economy recently. If you listen to them, you do so at your peril. Six months ago, this looked to everyone to be a minor blip.
Kramer was talking about not pulling your money out of Bear, as in don't be stupid and make a run on the bank that doesn't have to happen. And it didn't have to happen. But it did happen because people were worried, and made emotional decisions rather than business decisions. And when all those people pulled their money out of Bear, Bear lost liquidity and had to be taken over. The whole thing wouldn't have happened if people had left their money in Bear.
This was all a run-on-the-bank fabricated by stupid people who made emotional decisions. Traders are famous for that. Let's not blame everyone else, it's the traders who pulled their accounts out of Bear that caused this mess.
The day after the Daily Show skewering, Jim Cramer spent at length trying to explain why Stewart's clip got it wrong.
Bear Stearns the stock is a far different story than keeping your money AT Bear Stearns.
The recommended selling the stock the FRIDAY before the meltdown. As for people holding their money at Bear accounts (NOT the stock,btw) The money is SAFE and still is.
the biggest problem I see is since when did people start writing into his show regarding the safety of deposit accts vs their stock investments?
Seriously I see both sides of the arguement, but this still rests on the fact how this letter was placed. kinda like asking him if I should leave my money in Washington Mutual CDs. It's really out of context for the show if he and others believed this was regarding their personal accts.
@lemur: You've sort of defeated your own point. His advice was to forestall the self-fulfilling liquidity panic that you cite. If everybody had followed his advice (which was correct) the firm would not have faltered.
@ Front_Towards_Enemy
im Cramer is the Billy Mays of the financial world.
LOL!
Fox news is all bs. You could easily, on a daily basis, take out an ad about the lies they spew on their network. Too bad there's no laws for fake news.
@jtheletter: Because you want to buy low, sell high. Buying at the tail end of his advice would have you not making a lot of return. duh
@hi: Ya thank god for CNN, NBC, and CBS for all their non-biased 100% fact, Bow down for Obama news. woohoo. Screw Fox, bastards.
Cramer is an idiot for the average investor.
@nequam:
1. If someone tells me not to worry about X and then X becomes a problem, why X became a problem has no bearing on whether or not the advice was good. It was bad advice. Why the advice was bad is secondary. Why it was bad may help me decide whether the person who gave the advice was honestly mistaken or just plain stupid but not whether the advice was good or bad.
Note also how Cramer said it would be "silly" to take money out of Bear Stearns. It is one thing to give level-headed advice and be wrong. It is another thing to engage in histrionics and label as fools people who do not follow one's advice. Actually, this gives credence to the thesis that Cramer's advice was stupid.
2. The clip that has been linked above shows Cramer giving advice on March 11th and on that same day, according to the chairman of the SEC, Bear Stearn's liquidity fell by 36%. The liquidity problem was occuring at the time Cramer gave his advice.
@K-Bo: Thank you for the link of evidence. So many people spew BS here with no credible foundation for their claims.
Still, the things he said were taken out of context.
LOL that should go into the annals of LOLFed.com. Seems lately there have been way too many finance blunders. I personally can't stand that guy but my husband watches him every day.
He was right, he didn't talk about stocks, he was talking about deposits aka liquidity... your deposits are protected up to 100k under FDIC. Your stocks have no such protection.
if you track down his blogging through the network then you will see he says that he was still right... very weird.
I know a little about finances, and as far as I can tell no one was talking about stock in the cramer clip, in fact, I didnt even think of stock when I saw the consumerist headline (since "taking money out" would be referred to as "selling", which is more concise and less confusing). No, I wouldnt have taken my money out of bear stearns bank either (unless I had over 100K in there). It wouldnt default, it will be bought/bailed out...just as cramer said. His advice was right. you can keep your money in their bank. I would also be surprised if people with over 100K (in one bank) would take financial advice from TV...so I would say Cramer was right for most people, wrong for a few, and slightly unclear. But not balls out wrong.
now stock is a different story....
P
@orielbean:
Stocks are backed by the SIPC
[www.SIPC.org]
@lemur: Your earlier comment was all about the WHY, so you cannot now credibly argue that the why didn't matter. If you have a basis to criticize his advice, it cannot be your conflation of the liquidity issue and the stock value.
Your timing issue (that Cramer gave his advice even as liquidity fell) is compelling only in an efficient market, which does not exist. It is the weakest part of your argument.
Once again, the liquidity disaster was caused by people heeding the opposite of Cramer's advice by pulling their money. In any event, it was not a foregone conclusion. BS could have satisfied its customers and forestalled a run on the bank. The fact that they did not do so successfully is independent of Cramer's advice.