Bogleheads

[HearDoc]

http://www.nytimes.com/2008/10.....html?8dpc


The more Cramer bloviates, the higher his ratings. Is this the dreaded postive feedback loop ? Will his head explode ?

[chaz]

[bookshot]

Why all the hate for Cramer? He obviously appeals to traders, and makes no bones about it - I don't think people are likely to take him seriously unless they already are gamblers. Also, much of what he says about the overall economy makes sense.
On the other hand, if you want really bad economics and even worse misleading and dangerous advice aimed at the average person who is not prepared to gamble, just watch any of the talking heads on MSNBC or Fox Business. They masquerade their ignorance, bias and marketing with fast talking, false folksiness and bogus authority. Hence, they are much more likely to mislead than Cramer and his undisguised antics.
Yes, I mean all of them, including Maria Bart, Hampton Pearson, Ben Stein, Neil Cavuto, Larry Kudlow, the gibbering nitwits on Fast Money, and any of the blond bimbos or populist "advisors" on FBN. Cramer has at least made money on Wall Street, but who are these more somber jokers anyhow?
The bottom of the barrel is probably Dave Ramsey, a glib fast-talker who charges naive morons to tell them the obvious - don't borrow so much money. That would be fine if he didn't also tell listeners how to invest or what is driving the economy, things he clearly knows absolutely nothing about. Cramer and his followers are intellectual giants compared to this guy and his listeners.

[InvestingMom]

I wish they would do a parody of him on SNL. They did Suze Orman last week and it was pretty funny, but Cramer is the one who really deserves it. Well maybe they have already done him....like everyone else I have only recently started watching SNL again.

[HearDoc]

[lucky7]

How much worse is Cramer vs. rest of CNBC? Or for that matter any show on TV that states or implies this is what you now need to know to protect your money, of course after the fact.
Bob
_________________
Scotty, beam me up.

[bookshot]

I have a different impression: He is obviously over the top for the sake of entertainment. I don't know how seriously he takes himself, but I doubt he expects anyone else to do so. Inexperienced investors are likely to just laugh at his antics, and experienced investors to take it with a huge grain of salt.
I find more "serious" commentators and advisors who aim their pitch at newbies a lot more dangerous to newbies and insulting to the knowledgeable. An example: Ben Stein was telling people just last month that if they didn't think they had enough money to retire they either needed to earn more (right) or take more risk, as in buy more stocks (deadly wrong).

[ddb]

[InvestingMom]

[bearcub]

I usually find that when their are 3 to 6 talking heads predicting the market or certain aspects of the economy that, the lone voice that is being attacked or laughed at for his views is usually correct. You will see the others fad away as if they never said anything. Replaced by new jokers speiling the same crap. It is amazing how much money some get payed for incompatence. I do not watch CNBC any more, just Bloomberg News sometimes. Skeedaddy + booyah to all.

[bookshot]

bearcub, I agree from what I've seen Bloomberg is the best of the lot.

To the others, I just find Cramer an amusing entertainer. Even though he is a crazy egomaniac, he is very smart and so it appears to me he doesn't really take himself that seriously, either - to me it's an over-the-top act that telegraphs itself as not being meant to be taken seriously. My wife absolutely can't stand his yelling and walks out of the room when he comes on, but somehow I think it's like complaining about a gnat when we're surrounded by rattlesnakes. Besides, I don't have to work with the guy, thank God.

[cdelena]

[djw]

bearcub, here's a similar story that you may enjoy.

I've run a group decision making exercise called "Desert Survival" a few times over the years. After reading about crashing in the desert in a small plane with a dead pilot and limited supplies available, each person answers a questionnaire about what they would do to survive. The group then debates this question and eventually the group comes to a consensus and fills out a group questionnaire.

What I have found in leading these groups is that invariably the person who speaks the LEAST in the group is the one whose individual questionnaire had the best answers while the person who speaks MOST and LOUDLY had given the worst answers.

Also, the groups never took a "Group Inventory" by going around the circle and asking each person to describe what knowledge and skills they could bring to bear on the situation. One time the wisest and quietest member had lived out in the desert for many years and knew it all, but no one ever bothered to include him in the discussion and he chose to sit back and let the blowhards bloviate, knowing that he would have no problem surviving with or without the group.

[lucky7]

Investing Mom, you missed my point. It wasn't that Cramer isn't so bad because he's one in a crowd, it is that they virtually all are extremely bad. Everytime a show talks about what you now need to know to protect your money, etc. etc. as though they had been ahead of the curve of whatever the current situation is, it is equally as distasteful to me. As to whom the most dangerous or worse is, ultimately I suppose it is me, if I am foolish enough to listen.

Bob
_________________
Scotty, beam me up.

[Wading Ashore]

Anybody watch Wealthtrack? At least it's quiet . . . (!)

[Taylor Larimore]

Hi Bogleheads:

I met Mr. Cramer one time. It was during Diehards I in Miami in March 2000--at the peak of a long bull market. Jack Bogle and Jim Cramer were Keynote speakers. Mr. Bogle warned against the bubble in the market--particularly tech stocks.

Mel and I were standing in the back of the auditorium when Mr. Cramer spoke. He told the audience to get paper and pencil and write down his list of 10 (tech) stocks to invest in.

I subsequently read that Mr. Cramer's recommended 10-stocks had an average decline of more than 85% in the bear market that followed.

It is important to be careful who we listen to. Fortunately, Bogleheads follow the selfless wisdom of Jack Bogle.

Best wishes.
Taylor

[CrossOverGuy]

Cramer always reminded me of a financial version of the Bulldog character on "Frasier".

[bookshot]

Cramer I suspect is dumb like a fox. Could be he hypes individual stocks he already holds, watches them rise after his recommendation, then dumps them at the first sign of weakness.

[bearcub]

wading ashore- WealthTrack with Consuela Mack is excellent. Mr. Bogle along with many Boglehead favorates often appear as guest on the show.Informative without all the hype.
DJW- thanks for the story, I enjoyed it-how true it is.

[ddb]

[Gekko]

"Mr. Cramer's stock market calls since May 2000 have low consistency and approximately coin-flip accuracy. Mr. Cramer is right about 50% (25 out of 51) of the time with his stock market predictions. His predictions sometimes swing dramatically from optimistic to pessimistic, and back again, over short periods." - CXO Advisory Group

[ddb]

[danwalk]

[larryswedroe]

From an article I wrote I called Mad Money

Jim Cramer, ex-hedge fund manager, has become one of the most recognizable faces in the investment world. And his show, Mad Money, in which he dispenses rapid fire investment advice, has been wildly successful for CNBC—it is their most watched show with almost 400,000 daily viewers. But has it been as successful for investors who follow his advice? Three Ph.D. students at Northwestern’s Kellogg School of Management sought the answer to this question.1

At first glance, the answer would appear to be yes. After Cramer recommends a stock volume soars. For example, the researchers found that on the smallest quartile of stocks volume is almost nine times more than normal on the day after his recommendation (and stays above normal for about four days, with the effect decreasing with time). The increased demand led to an overnight rise in prices of about 5 percent for the smallest stocks (where they can have the greatest impact) and about 2 percent for the entire sample of the 246 unconditional recommendations examined between July 28, 2005 and October 14, 2005. Unfortunately, the profits turn out to be as illusionary as the tooth fairy—run-up in price completely reverses within twelve trading days. The original gains turn into nothing more than market impact costs. In other words, after costs Cramer’s picks have negative value to investors who act on the buy recommendations. However, the market is so efficient that there may be people that are benefitting from Cramer’s picks.

While the demand for Cramer’s stock picks increases, there is also an increase in the volume of short selling (bets that the stock will fall). In the opening minutes of the day following a recommendation short sales increase to almost seven times their normal levels, and they remain elevated for three days. Who are these short sellers? Likely candidates are hedge funds who are exploiting the naivete of individual investors. Through their actions, short sellers are helping to keep the market efficient.


There is another group that benefits from Cramer’s recommendations and the actions of naïve investors. Market makers in the stocks of the recommended companies benefit from the greatly increased trading activity.

One other point is worth noting. The authors found that the stocks that Cramer recommends have excess returns for the three days prior to his actual recommendation. They provide two logical explanations for this behavior. The first is that Cramer is simply recommending stocks with short-term momentum (of which there is evidence, although after trading costs the positive momentum is difficult, if not impossible, to exploit ). The second explanation is that there is leakage of information as to which stocks he will recommend.

Thanks to Barron’s we have more evidence on Cramer’s picks. In an August 20, 2007 column, Barrons reported that they studied 1,300 recommendations and found that over the prior two years viewers holding Cramer’s stocks would have been up 12 percent, while the Dow rose 22 percent and the S&P 500 Index 16 percent. Barron’s also studied another database of Cramer’s recommendations on an astounding 3,458 stocks. The recommendations were mostly buys, but included some sells. They found that over the prior six months these picks were flat to down in relation to the market. And that is before accounting for trading costs. Barron’s also found that the stocks Cramer recommended jumped 2 percent the day after he mentioned them. From there, they usually moved sideways or down for the following thirty trading days.2

[trefoil]