Sad Money: The Backlash Against Jim Cramer

"Mad Money" host Jim Cramer, that chrome-domed hero of trashy TV addicts and armchair-finance junkies alike, has fallen on hard times. He appeared on "The Today Show" on October 6th, imploring viewers: "Whatever money you may need for the next five years, please take it out of the stock market. Right now." To say this statement fanned the flames of the Wall Street crisis is an understatement. A more apt analogy would be to say that Cramer dumped rocket fuel on a tire fire. The subsequent torrent of criticism which rained upon Cramer provided an excellent lesson in personal branding: stick to what you're good at.

In Cramer's case, he's very good at pointing at the camera, hitting buttons, and yelling "Booyah!" It makes for great TV; in fact, since the meltdown kicked into high gear, the "Mad Money" viewership has nearly doubled. What Jim Cramer is not good at is reliably predicting the stock market. He has a long, distinguished history of making terrible calls, defying even coin-flip odds of making money with stocks. In 2006, Cramer's aggregate recommendations actually lost money, "despite nearly every major equity market on earth being up between about 15 percent and 30 percent" (according to convicted felon/securities fraud expert Henry Blodget). Earlier this year, he told viewers to hold on to Bear Stearns stock — actual quote: "No, no, no! Bear Stearns is fine!" A week later, Bear Stearns had sold itself to JPMorgan at $2 a share, after trading at prices more almost 100 times greater mere months before.

So Cramer has a history of being wrong. That's indisputable. But Cramer isn't on cable TV because he's a financial genius. If that were the case, he wouldn't need to scream for an hour on CNBC every night. Cramer's on TV because he makes for great TV - a brash, energetic, personable Wall Street insider who can get people to believe what he says. If Cramer were able to consistently make market calls that made all of his viewers filthy stinking rich, he'd average more than about 220,000 people per night. People watch Cramer because they enjoy stylish and savvy amusement, and the man delivers.

That's what Cramer neglected to remember on "The Today Show.". He can get away with making foolhardy and knee-jerk claims on CNBC, but not so much on national TV during a time when the country is looking for financial gurus for sage and rational advice. Cramer insists that his "five year" comment is "one of the best calls of [his] life." But not a week later, Warren Buffett humbly asked the American investing public to buy American stocks, because that's precisely what he's doing. Who's more credible? Buffett, naturally. This country already trusts the Berkshire Hathaway billionaire to dispense with such an admonition. Cramer would be wise to remember that at the end of the day he's just a smart guy with a shtick. He should shtick to doing just that.

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