Letters to the Editor
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Financial Guru's are Like Spiritual Guru's; dreaming of the herafter
Cramer, like all these financial guru's, make their money working their day job (TV shows)and not with special insight into the "market".
The financial markets have always been a random walk (see, Burton Malkiel). And now that corporate Boards, CEO's, and the "markets", in general, are subverted by outright lying and general deceit, the chance of making sound investment decisions with available info is practically nil.
Not only are interest rates set by a schemeing Federal Reserve, the Fed now encourages speculative investment style that is sure to fail us all.
Cheers.
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How is book reviewing different from TV reviewing?
For one thing, style no longer trumps content when you're talking about nonfiction books. This is a (supposedly) serious book about a (genuinely) serious problem, the coming economic crash that will make all of us poor. Simply talking about the style of this particular snake oil salesman isn't enough.
It is true that his style - a carefully-timed rant about how badly treated people were at a brokerage, just in time to promote this book - was the reason anybody paid attention to this book in the first place. But that rant was also mis-aimed. Nobody is sympathetic to the people who are helping Bush drive this economy into the ground, and seeing them hit the pavement butt-first in their custom-tailored suits is one of the few visceral pleasures we'll have in the coming years.
But while the style of this economic evangelist is the thing that's selling his books, examining the content of the book is something quite beyond the reviewer. Or me. Or most people. It requires someone with a track record in economics, even though none of them know what they're doing anyway. They can at least offer opinions about how many holes exists in Cramer's stuff and nonsense, and have those opinions based in math and history.
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Cramer's horizon is 3 weeks
Cramer is a trader not an investor. Warren Buffet and the disciples of Ben Graham are investors. But Cramer does pretty well on the 3 week horizon and if you followed his tips you'd do allright before trading costs which would eat you alive. So the secret to doing well with Jim Cramer is to be a high volume trader with minimal churn costs. Plus net of taxes is bear too.
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Cramer is an entertainer
This is what to remember. He is fun to watch. Watching his show is eating Pop Rocks - Bang! Buy! Bang! Sell! Not that he isn't smart or decently informed about investing, which lulls the viewer into rationalizing that the hilarity is really giving you something wholesome. It's a floor wax and a dessert topping! Pop Rocks with all the vitamins of spinach!
I learned something about Cramer by paying attention to a few of his buy recommendations. This past March: buy Toyota at $133! Well, it's hovering at around $114 now. It is a good long-term company and Cramer hit all the positive fundamentals, but that doesn't make his timing worth squat. He offered no obvious caveats such as (1) watch out for the price of raw materials such as steel and rubber and (2) watch out for the value of the yen. [I waited, bought at $117; we'll see what happens.] So Cramer is really a performer; sit back and enjoy the show, but for gosh sakes don't actually take what he says as soothsaying.
It seems to me to be impossible to distill that mania of his show into cold text on paper. But I'll check it out at the bookstore, not for serious advice, just to see if it gives the Cramer Chuckles.
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Your article has as much substance as Cramer
To get down to basics on Cramer, Alan Abelson of Barron's accused him of indulging in self-puffery, and the two feuded for a long while. The hedge fund he was running while he was head of TheStreetDotCom, underperformed most benchmarks. He was accused of using Maria Bartiroma, CNBC, (he was a guest on the show regularly) as a tout to hype Mister SOfty, (Microsoft stock) during the great bull market of the 90's. She would hyperventilate over the stock in the morning, on some bit of news, and then he would sell into the rally in the afternoon. They used to high five each other after the show. according to those who thought the whole thing smelled a bit.
He put together a star studded cast of analysts at his website, but eventually they all moved on to greener pastures.
There were a lot of good things, on his website. That said what Cramer means by doing your homework is this. When you aren't sure what's going on with a stock, call the CEO. Of course YOU and I can't do this. And if the CEO would take out call, we probably wouldn't pick up on the subtle code these guys use. In the end it's like a SI article I once read about as famous race track handicapper, who was getting his head handed to him at the Del Mar Racetrack, a place almost as notorious for longshots, and form reversals as Wall Street. The expert, JA, was sitting in the box seats, riding a long losing streak, and he turned and asked a very well connected owner, how his horse was going to run today.
As an aside Cramer claims to have roomed with Andy Beyer in college. Beyer made it, too bad about Cramer.
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Cash Is King
Trying to find a safe, profitable investment in the stock market is like trying to find a game at the carnival that's not rigged. No wonder all these obnoxious "stock market experts" sound like carnival barkers. "Hurry! Hurry! Step right up! Gimme all your money and I'll make you rich, rich, rich!"
True prosperity is having no debt and some extra cash in the bank because you didn't piss it all away at the carnival trying to win that big, pink teddy bear for "the little lady."
To paraphrase P.T. Barnum,"There's a rich guy born every minute."
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And the Motley Fool was a genius when everyone was making money
But contrarianism only goes so far in a normally volatile market. Which is why Motley Fool doesn't sound all that smart any more. BTW Cramer is the first one to say that if you want a safe set it and forget it approach, buy an index fund. It's what you want to do with that money. Some people are genuinely playing with it.