DealZone

Update: Cramer capitulates (or does he?)

October 7, 2008

(Adds Cramer’s next day comments)

jim-cramer.jpg

As global markets were routed amid quantitative signs of investor panic, there were more than a few strange sights on Monday. But perhaps none stranger or more sobering than CNBC’s famously bullish analyst Jim “Mad Money” Cramer interrupting middle America’s morning coffee with a warning to sell its stocks. Right. Now.

“Whatever money you may need for the next five years, please take it out of the stock market right now, this week,” he told The Today Show. You could almost hear the morning coffee spit-takes in kitchens and living rooms across the nation.

Or, as the FT’s Alphaville blog put it: “Capitulation, BOOYAH.”

But perhaps Cramer’s ominous sell recommendation is a contrarian indicator that the tide is soon to turn? Barry Ritzholtz of the Big Picture blog wrote: “DAMN if that headline doesn’t smell like a giant buy signal. The market down 30%, the VIX spiking to 56, and Cramer giving a panicky SELL on TV this morning. … We are putting a toe in the water here.”

Are you? Cast your vote on hubdub:

Will the market fall 20 percent?

On Tuesday Cramer returned to the Today Show to explain his comments, saying he is “an innate optimist” and that “the stock market is a good thing.”

“I’m not so arrogant as to think that I affected (Monday’s) market,” he added. “What happens if there is a fire in the building?”

St. Petersburg Times TV/media critic Eric Deggans had this to say about Cramer’s twin morning show appearances:

Cramer’s squirming today just exemplifies a problem many TV business analysts face every time a big economic bubble bursts. Hobbled by past cheerleading and missed calls, it’s tough to take their reporting seriously as conditions deteriorate; if they couldn’t catch these problems before they became big news — and built big audiences riding the same wave that made millions for their CEO pals — why should anyone trust their analysis now?

All this is made more ironic by the fact that Cramer gave essentially sound advice Monday; people should be taking short-term money out of a plunging stock market, despite the fact that it makes the plunging get worse. But when you’ve been a cheerleader for so long, sometimes it’s tough to step into a new role without surprising a few people.

Comments
15 comments so far | RSS Comments RSS

Cramer has been as wrong as many times as he has been right. It wasn’t too long ago he was calling a bottom. None of these people know. However, that doesn’t mean that Cramer doesn’t have anything worth listening to, just don’t trade based on what any one person says.

On a different note, it amazes me that none of the media or politicians are talking about gasoline price gouging. The public is still being taken at the pumps, which was the catalyst that started this whole mess. It probably would have happened anyway, but the quick onset was due to the rapid increase in energy prices, which caused more income to be disposed at the gas pump, and not spread out into our economy.

Posted by Anthony | Report as abusive
 

I specifically rember being taught there is no such thing
as a U.S. Fed. reserve in N.Y.

Did any of you news paper people think to invent the Euro. counterbalance factor. After-all if the worlds a better place if everyone used the DOW brothers work…

 

If Cramer says ‘sell’, I’m getting straight on to my broker to buy.

He has no understanding of how markets work and, no matter how many times he is completely wrong (most of the time) people still give him air time. It is very strange.

Posted by Mike Wilson | Report as abusive
 

Such concern over the American public’s welfare from the same individual that said, with relish I might add, “The American public doesn’t know Jack.”

America……meet Jack.

Posted by Edwin Turner | Report as abusive
 

It is appalling that someone like Mr. Cramer who has been heavily associated with hedge funds is allowed to go on National TV and spew his opinions. Many people panicked over his announcement on the Today Show Monday, Oct. 6. I actually feel that what he did was largely unethical.

Posted by Bonita L. Busta | Report as abusive
 

If Cramer told everyone to kill their families I wonder how many people would do it.

Posted by joe | Report as abusive
 

I think his record speaks for himself, he is a person who started with nothing and is worth a reported 50 million today. You don’t get that far without knowing what you are doing, and obviously he’s been right more times than he has been wrong. Sure he’s not your traditional Ivy League analyst, but he knows just as much and isn’t a yesman. Anyone in the industry knows the other analysts are out to protect their own treasure chests and they are HEAVILY censored by the companies they work for.

Posted by Aaron | Report as abusive
 

Cramer is an alarmist! His panicky comments are not helpful. Talk to your broker and stop watching these nuts. There story and strategy changes as much as the weather.

 

I think he is doing people a dis-service, as we are obviously closer to a bottom than a top in the market. Don’t sell when everyone else is panicking!

I have been reading Cramer for years, and have found his advice unreliable. There are much better sources of trading and investment advice, if one would only turn off the tube and look.

Posted by Merrill Grinch | Report as abusive
 

Hubby and I took every penny out of Stock Market 18
months ago (who could not see this coming???) and into laddered cd’s (only 5 to 2.3% interest but not DOWN
25%!). What was Cramer saying 18 months ago? He’s a fool.

Posted by colleen | Report as abusive
 

Cramer is from CNBC. CNBC belongs to GE. GE has been established long time ago by JPM. JPM seems to be doing quite good now… as good as many decades ago (almost a round date).
I forgot, Mr. Gasparino is a genious and can predict every next sitting duck to be shorted, CDS-ed down to the ground.
(by the way Mr. Gasparino… you may wish to watch movie Wall Street… the end might be of particular interest for you)

Posted by jojo | Report as abusive
 

I enjoy watching Cramer but after TIN fell to $ 10 after an earnings call I sold the stock. In the next day or two Cramer says it’s going to $ 18. And, it went right up there. TIN only made about 8 cents a share, the stock price went up 100x the actual profit. Where are the fundamentals in that ?

Posted by Thomas | Report as abusive
 

Can anyone confirm that Cramer did NOT hit the sound-effects switchboard to underscore his point on the Oct 6 broadcast? My sources say no. I think any person with half a brain knows that all bets are off if Jim doesn’t go to the sound-effects.

On a different note, I (largely) believe that pork-rind price-gouging at gas stations preceded the gas hikes.

Posted by L. Thurmond Mungwort III | Report as abusive
 

The problem is that there has been too much interference in the markets. If one bank gets bailed out and another doesn’t, what kind of sign does this give to world markets. Since the whole wide world has started to talk about world wide bailouts, has this caused the markets to rise. Completely the opposite. Since starting this mess with panic rate cuts last year the Fed has made this credit crunch as bad as it can be. Another rate cut would be just as catastrophic in the end. Rate cuts have not, I repeat not reduced lending costs to anybody and will give more wrong signals to the markets. We have to let the markets take their course. Natural selection must be the way. Pumping billions and billions of dollars into a failed economic system will, in the end, fail itself.

Posted by Neil | Report as abusive
 

I have followed Cramer off and on both on TV and The Street.com. for years. He is an amazingly prolific writer and generally right about stocks. He has always been right when he called a market bottom and I lost money when I didn’t agree. Can’t fight the guy, he is a genius (and a bit of a maverick). Never has he come close to this kind of market warning. Always in the past he has been able to move between market sectors and find good buys even in the worse of times. Not now. If Cramer can’t see an end in sight, hang onto your hat….

Posted by Frank | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/