Update: Cramer capitulates (or does he?)
(Adds Cramer’s next day comments)
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:
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.