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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3 Comments

  • Jennifer Swofford

    For the umpteenth time, when he was talking about Bear Stearns being fine earlier this year, the caller did not ask about Bear stock, the caller asked about having their money invested with Bear. You may have the actual quote, but not the actual question. It was an unfortunate misinterpretation made by many, but it was a misinterpretation.

  • Chheang Yang

    Wait a minute. How can you just go spewing that cramer bashing rant? I don't watch cramer all that often and I take everything he says as "think about it" advice. About 1 month ago, before the 700B BAILOUT was approved, I watched his show out of curiosity of what he thought. He said, "take 20% out, the market's too volatile." Things just don't feel right. I didn't feel his advice was all that good. I thought, you know, the idiot representatives are going to approve the bill, there's too much lobbying power and wealthy people's money at risk (trust me, your money is peanuts... you think people care about your 100k in the market????). The market dropped 15% since. Maybe it was a guess for him, but you know, he guessed correctly! I wish I had taken that 20% out. My losses (and I'm diversified) have been 30%+ YTD. I'm absolutely pissed. The only reason it's 30% is that I took out about 15% right around July thinking one of my stocks was hitting a high.

    Honestly, don't go blaming Cramer for his advice or his rants on TV. You can blame your elected officials, greedy wall street cheaters, and f-ing irresponsible mortgage purchasers / neighbors (yes, buyers... you get all the paperwork, if you're too stupid to read it and you sign up for it... it's your arse - predatory lenders my @ss - anyone who can't afford their mortgage needs to rent - and who says property values need to ALWAYS APPRECIATE????).

    Just my $0.02. Leave Cramer alone go pay your mortgage.

  • Gordon Steen

    Wait a second. Hasn't the market dropped 15% since Oct. 6th. And didn't he say if you needed the money in the next 5 years? Some people don't have the luxury of waiting 5 more years for the market to go back up 30%. Buffet says buy, Jim says sell. That's what makes a market.