I've long thought that Jim Cramer should be illegal, along with everyone else who purports to pick stocks on the telly. Further proof that I am right:
Via the invaluable Eddy Elfenbein.
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In Cramer's defense, it usually doesn't make much sense to shift your money around, losing a bunch of it in fees, etc. Unless, of course, the bank looks like it may go bust. He looks bad now because he didn't know how bad Bear was doing, or chose to ignore the reality. Either way, if you offer advice for a living, and you do it LOUDLY, you better make damn sure you're right.
But he's loud, and opinionated, and he has a bunch of cool sound and video effects! Kind of a mix of Howard Stern and Rush Limbaugh. If you're into that sort of thing.
Jim Cramer wasn't talking about buying their stock. He was talking about assets under management. Which would be safe under Jp morgan as well.
In fairness, it's a bit surprising that it happened this was. Normally one would have expected them to get taken over, which provides at least a filip to the stock price. So, honestly, the only problem with getting your picks off TV is that it really only works for long term value investing, and if you do that, you can afford to spend a little more time on it than that.
No. the problem with picking stocks from the TV is that these guys are regularly wrong, just like most of us. In this case he was spectacularly wrong. That isn't really a shocker. People are wrong all the time.
What aggravates me about his show is the bombast and the certainty that he embodies. What keeps smart investors in the red is precisely the opposite of what he espouses. People should have been worried about Bear Stearns or any leveraged investment bank. That worry should have started months ago when the generally more scrupulous of the investment banks started posting subprime related losses. Somewhere there was going to be a marginal bank and SOMEONE was going to pay for it. Rather than stick around to find out if it was you, the best advice would be to shift investments away from funds that deal in these banks and ESPECIALLY in equity holdings of these banks. But more generally, the advice should be to consistently diversify and to hold debt and equity titles that make sense fundamentally. Doing that, the followon advice should be to be calm and not rock the boat.
That is sound financial advice not because of the source (because who am i?) but because of the arguments made behind the claim. Jim Cramer presents advice on the basis of his authority and his bombast. It's his shtick, sure. I understand that. It's the same thing that propels O'Rielly and the like. It makes for bad news and analysis and it makes for TERRIBLE stock picks.
Oops. I meant "keeps smart investors in the black", not "in the red". that's what happens when you think "out of the red" but start typing "in the..."
Well he was right on one account. Bear was taken over.
Only to be topped by your outrageous comment, Megan, that inflation is "realtively predictable." Go ahead, Megan, make a realtively predictable forecast of the inflation rate 12 months out.
This is an amazing example of how important context is...
Jim Cramer said two things:
1. Bear Stearns stock is WORTHLESS.
2. The money you have in an account at Bear Stearns is safe, you don't need to move it.
BOTH ARE STILL TRUE.
(originally posted with a link, but it got moderated)
I'm surprised that the fable of Cramer's telling a e-mailer to hold BSC stock is as widespread as it is.
He correctly said that any money held by Bear Stearns would be ok and in another segment said that the BSC stock was valueless.
He was absolutely correct.
Cramer gets attacked on this everywhere and it is without merit. He was right as others have pointed out. Now I understand that people like Sullivan and Matthews don't understand markets but Megan should know better than this and should correct the post.
Even the linked article points out the controversy... this is not a clear-cut case of Cramer just being flat out wrong. His words were ambiguous.
I wonder why Eddy didn't bother to validate whether or not Cramer really did call the stock "worthless" on Friday? Seems like it's pretty relevant to the discussion and should be easy enough to validate. Surely someone has a copy of the video.
Besides, no one is perfect. Even if Cramer had been flat out wrong, it would have been a mistake. Something that happens to everyone. I don't think Cramer claims to be perfect and he did make a fortune in the market, so it's not like taking stock advice from your garbage man (which is a good idea only if you are Dilbert).
Surely Cramer's style is a big part of the issue here - the manic, bug-eyed insanity makes it hard to tell exactly what he's saying.