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Trying to Make Sense of Cramer's Advice

by: Babak October 13, 2008    

Babak

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Here’s a recent screenshot of TheStreet.com:

cramer contradicts his own advice

In the first article, he is pessimistic about the outcome of a concerted financial rescue plan and offers the kind of target that I’m used to seeing from Bob Prechter:

Why I’m Negative Now (2:02 PM Sunday)

This strategy, which I presume will not be adopted, but which makes the most sense, would allow for shotgun weddings for all the weak banks to eliminate the bleeding. Without this kind of action I am reverting to a downside target of 6,700 for Monday and then 4,700 for Tuesday in keeping with the hopeful ‘87 playbook.

A few hours later, as Asian markets and overnight futures traded higher showing confidence back in the markets, he writes:

Don’t Fade the Opening (9:13 PM Sunday)

I say, play it out, don’t sell. Let’s see if we can’t get something going for a couple of days, unless you have some stock you bought into the down-600 moments from Friday. Even if you are down a lot, you are being too greedy…

Within a time span of a few hours, he has contradicted himself. But that’s not all. Here he is, just a few days ago telling people to sell and take their money out of the market:

Whatever money you may need for the next five years, please take it out of the stock market right now, this week…I don’t want people to get hurt in the market.

Got that, Cramerica? Clear as mud, right? Booya!

It looks like Cramer is just throwing everything at the wall and hoping something will stick. Whatever scenario plays out, he will have ample “opinions” to choose from and point to, and many others to conveniently sweep under the rug.

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This article has 38 comments:

  •  
    Oct 13 04:23 PM
    why this guy isn't in jail yet? fxck!
    Reply
  •  
    Oct 13 04:25 PM
    this guy is a nutcase..Cramer has cost more people more money than you can even count....
    Reply
  •  
    Oct 13 04:29 PM
    Cramer has proven that he is no different than all those other idiots that ran LEH, BEH, MER, FRE, FNM. He should be put off the air and out of his misery!!!!
    Reply
  •  
    Oct 13 04:32 PM
    Honestly, I think Cramer is just reflecting the mind of the average investor. As usual. When we're all bullish, he'll be bullish again.

    We don't look to someone like Cramer for *guidance*... we look to him to tell us what we already feel... either by agreement or contrast, he pronounces the "buzz" on the street, not the prognostication.
    Reply
  •  
    Oct 13 04:33 PM
    Honestly, I think Cramer is just reflecting the mind of the average investor. As usual. We are chaotic, so he is chaotic. When we're all bullish, he'll be bullish again.

    We don't look to someone like Cramer for *guidance*... we look to him to tell us what we already feel... either by agreement or contrast, he pronounces the "buzz" on the street, not the prognostication.
    Reply
  •  
    Oct 13 04:37 PM
    At least Cramer has the guts to change his mind and publish it...Most pundits will just let the market run over them and thier followers...Just make up your own mind and don't follow the talking heads.
    Reply
  •  
    Oct 13 04:41 PM
    Cramer is an idiot savant. Many times he's a moron, but sometimes he's a genius. It's up to you to decide what's what. That a look at this:

    www.thestreet.com/p/rm...

    Anyone who shorted or sold those names when he made that call, made out very well.

    Now, if you read his comments below the list, you can see that Wm, CFC amd GM were on his RADAR too. His advice on them was crap, but the fact is that they were on his screen.

    The best way to use Cramer's information is to glean it for data points you had not considered recently and then vet the pro/con arguments for each name he mentions.

    When Cramer mentions something of his own accord as he did in March '07, it's a good idea to evaluate the names he mentions very carefully.
    Reply
  •  
    Oct 13 04:42 PM
    Jim Cramer is entertainment and can give conservative advice in the front part of his show. He is no worse or better than most of the "free" advisors or even the paid advisors. Looks like everyone is fishing around for someone who can see the future! The ones who make money do so off of the ones that panic!
    Reply
  •  
    Oct 13 04:45 PM
    The bad part is if half the college students that follow his advice, had any clue how Cramer and kudlow gave bad advice on their show during the .com bubble ........ no way would they be listening to the bad advice he is giving know.

    Odds are half the calls that you listen to are coming from a phone bank in the back room of his own people making phone calls praising him.

    I'm trying to remember the money talk show that was on the radio 15 - 20 years ago that thats what they found ..... it was a whole sham and the host of that show went to prison for a good 10 years.

    Just like Cramer brags about buy shares for his charitable trust ........ ya 100 shares.

    Half that stuff is $40 stock ...... who weeee that makes a big impression, the multi millionaire just put $4000 dollars out there with the charatable trust able to make capital gaines on that money.

    Ok I give him credit for doing something but I'm guessing people are thinking his charitable trust has a lot more money in it ,then it does.

    Yep Cramer's track record id way worse then his followers know ........ if you dont bielive it just look at what you have lost.

    YOUR NOT ALONE ...... He is doing it to everyone else too........ They just don't take those phone calls on LIGHTNING ROUND.
    Reply
  •  
    Oct 13 04:48 PM
    Manic bipolar.

    I have the daily "Cramer" emails from SA, so I can search back through easily and see the contradictions. Google at $500 was a "buy of a lifetime"; a couple of weeks later, Google at $400 was overpriced. Buy Apple at $140, but then don't buy at $100.

    Very recently, doing the opposite of Cramer was proving to be very lucrative. On that, it's too bad that he's now openly taking both positions. I was enjoying doing the opposite.
    Reply
  •  
    Oct 13 04:49 PM
    Cramer made another excellent call in July '08 on the "Financial Dirty Dozen":

    www.bloggingstocks.com.../
    Reply
  •  
    Oct 13 04:50 PM
    You people know nothing about Markets, and how they change every minute. If Cramer is such an idiot, why are you all reading his website?
    Reply
  •  
    Oct 13 04:58 PM
    Another Goldman Sachs alumnus. They're in charge, one way or another.
    Reply
  •  
    Oct 13 05:03 PM
    Jim Cramer is the only financial comentator that I have heard in 40 yrs. of investing that has the courage to tell you to put a part of your money in a safe place. I used to follow Lou Rukeysors show close. Names like Gabelli, Forbes, Lynch, and many others were regularily on the show and not once did I hear any of them warn when they knew they should. In 2000 Lou R. spoke like Allen Grenspan when he wanted to warn but did not have the courage to do it. If any of them would have told us what they really believed was going to happen I would have more to loose now. Thanks Jim, I removed 26% of my portfolio and now that cash is 45% of what I have left. If I had followed the advice of Dr. DiLiddo I would be up about 90%. I just never believe things are going to get that bad.
    Reply
  •  
    Oct 13 05:10 PM
    Because Cramer moves stocks. Just look at the Cramer Effect on Clean Energy Systems. He moved it from $16 to $20. After a few days, the Cramer Effect wore off (PhD dissertations have actually been written about this). One can make money off of Cramer without taking Cramer's advice. In short, Cramer and his minions move stocks, so investors need to listen to what he says. At least, while he still has a show...
    Reply
  •  
    Oct 13 05:18 PM
    God, it sounds like he has really lost it and completely morphed into his psychotic media personna.
    Reply
  •  
    Oct 13 05:24 PM
    Entertainment? Maybe for a 3-year-old who loves frenetic clowns who make a lot of noise. I can't stand the arrogant ass.
    Reply
  •  
    Oct 13 06:33 PM
    The man is a.. "showman"...... Fox was closer to the object of his conversation than that of our "classic" showman...........
    ........than...maybe that is his oblation to the Financial Gods.....
    Reply
  •  
    Oct 13 06:35 PM
    His sell everything call last week was right on the money and you people can't stand it.
    If you actually read through the two clippings posted above, he says he's negative BEFORE there was a european plan on the table last night and it seemed like Morgan would go under. That's the 4700 target. Today he said basically don't fight the tape, although if you read all his comments he's not that impressed with today's rally.

    To me it's a classic suckers rally and I'll short into it. No volume, just retail and short covering.
    Reply
  •  
    Oct 13 06:35 PM
    Babak, thanks for calling him out on this! With the simple text you presented - there's no denying the obvious. Brilliant!
    Reply
  •  
    Oct 13 06:45 PM
    If you hate him so much, don't listen to him. It just kills you that he has such a large following and you don't. No one cares what you think or suggest. Your jealousy shows everytime you bash him. Grow up.
    Reply
  •  
    Oct 13 06:54 PM
    Cramer frequently introduces his audience to interesting sectors and gives occasionally interesting insights, however his specific stock recomendations have been abominable over the volalitliy of the Summer and early Fall. If you listened to him you would have lost your ass in; (choose the ones you like), CHK, FSLR, JOY, AA, RIG, Frontline, Mosaic, Colfax, Skyworks, the list goes on and on. Most of these were touted at all time highs and have been murdered worse than most. He's irrationally against Chinese stocks and loves infrastructure most of the time.

    Of course Cramer reverses himself all the time, and in this volatility it might be hard not to, but he has not acknowledged how ghastly his mistakes have been with some of the above names. He put his viewers on 52 week high momentum plays that would have broke anyone if they followed his advice down the wire. He's mispredicted the oil pull back, the commodity crash, and set many naive investor up to take a bath. The fact that he continues to tout the same stocks regardless of their performance maybe worse than reversing field without acknowledgement.

    Bottom line, like any advice, you can look for insight, but you must discount the tips and be highly selective based on researchable criteria and trends. I will admit that I have played a very few selective Cramer tips and generally did quite poorly with them, but on the other hand his ideas caused me to consider other ideas, sectors and strategies that I wouldn't other wise have. I feel lucky to have avoided his biggest losing touts such as CHK and FSLR.
    Reply
  •  
    Oct 13 07:18 PM
    What I don't get from people is why they get mad about it. If you don't like what he saids, then ignore him. How many posts have I seen ppl say, "put him in jail!" yeah, sure....and the CEO from Lehman (Richard S. Fuld Jr) walks away w/ over $350M in pay, yeah....lets put Cramer in jail, he's the problem........
    Reply
  •  
    Oct 13 08:13 PM
    thank you Babak for an opinion based on fact, which is refreshing compared to Jason S on his call for Cramer to be suspended.

    I like Cramer but the guy is shot full of arrows from his recs in this market.
    Reply
  •  
    Oct 13 08:15 PM
    Ok Cramer haters.. listen up again..
    1st. He is human and makes mistakes.. he owns them and at least is willing to say he screwed up. You forget he also has money in the game? You think he gets a pass and doesn't loose money or something? If you can say he has not taught you anything (positive) by watching his show I say your either not being straight up or just hate the man that bad that you will fabricate a story.
    I will admit he has a tendency to be a stark raving madman but I will call that conviction. I follow his Actioners trust and I know he lost his ass too. Nobody got out for free. Nobody!!
    But I do know he bought all he way down. hey so did Buffet, but why doesn't anybody call him a loon? Oh, it must be because Cramer says buy buy by and it the market goes south hard and fast.. doesn't he have the responsibility to at least redirect that energy to get the hell out now? What is so wrong with that. If you don't like him.. bail geze so many haters and I guess nobody ever made a dime on his due diligence.
    Come on. Wadexyz, right above me speaks some truth. Don't watch him. If you cannot handle it any more, don't watch him. It is that easy. But then if he is that bad go hang with Fuld and the rest of thosefrickin theives.
    Would it help any of you haters if CEO's came on his show and he called these guys liars when they started giving fundies? Woa, I might be onto something. Would that make you happy? So they come on. Tout their corp/company and then he says.. in essence.. he will endorse it because the man is a friend of the show, a long time personal friend, one to be believed and then the stocks gets asskicked. WTF? Thats Cramer's fault?
    Or.. they come on the show open their mouth and then are blasphemed all the way out the door "those lying bastards!" We, and I am using that loosly here, don't work that way. You want to believe your friends especially if there is that much dough riding on their reputation.
    Bottom line here folks is hate if you must but at least pick the right team to hate and Cramer is not that guy. Oh and by the way, who stands up and calls the spade a spade when they are screwing the pooch on your dime? Yup you guessed it again. As I have said I am not a favorite fan but I appreciate what he has done for me tryhing to keep me in the game. What homework I do is because of him ranting all the time about what it takes to navigate this violent market. I will now go get my free lunch (divvies)
    later haters
    Reply
  •  
    Oct 13 08:18 PM
    If you throw a handfull of darts, One of them might hit the bullseye. That's what he does.
    Everytime I have been foolish enough to follow one of his picks,,I HAVE LOST MONEY....................
    Do your own thing, don't listen to cramer.
    Reply
  •  
    Oct 13 08:42 PM
    62 years old and no wrinkles,,, does he use BOTOX??
    Reply
  •  
    Oct 13 09:23 PM
    Cramer is a JOKE... this guy apparently shorted LDK and try to downgrade LDK so as to cover his ass...

    Never listen to this stupid guy... period!!!!
    Reply
  •  
    Oct 13 09:38 PM
    Read winners of the new world and tell me if any of these stocks are still around.

    www.thestreet.com/fund...

    They aren't:

    marketprognosticator.b...
    Reply
  •  
    Oct 13 11:29 PM
    Frank
    What did you suggest last weekend?
    As far as reversing himself the market did also. I recall one AM the futures were up 300 then at 0 within minutes. Did we not have a 700 decline turn into a +300 rally then a 100 decline.

    I was not like throwing darts but dropping cluster bombs over a wide area otherwise Cramer would miss but I'll give the man kudos for trying. I've made money doing oppsite of what he suggests but I usually do my own homework and then flip a coin. In this market coin flipping is about as scientific and you can get.

    How do you call that? Again what did you suggest.
    Reply
  •  
    Oct 14 12:25 AM
    Today, 10/13:

    Lightning Roung: "Microsoft, like a lot of stocks, went up Monday, I can’t recommend it at present levels after it just moved 3 points."

    Stop Trading: "[Microsoft is] a cheap stock. Microsoft shouldn't be that cheap, given the fact that it's got a powerful franchise and how they dodged the bullet with Yahoo!"

    Yes people make mistakes. Some people calm down, focus, learn from their mistakes, and become a better professional. Some, not all.
    Reply
  •  
    Oct 14 09:41 AM
    think for yourself.all have an agenda.watch "family guy".its a lot better life.i watch no talking heads.you dont really need all these phonies coming into your life.you know they are all liars.
    Reply
  •  
    Oct 14 11:25 AM
    Cramer is just a lunatic who can't help himself. Larry Kudlow is, by far, the biggest jerk of all the financial talking heads.
    Reply
  •  
    Oct 14 11:40 AM
    Jim Cramer is first and foremost a teacher.... but all of you numn*ts consider yourselves oh-so-sophisticated and take yourselves so seriously, it just kills you to see your precious made to something the "common-man" can understand.
    What could possibly be your motive.. hmmmm?
    Reply
  •  
    Oct 14 02:57 PM
    I think you have to put aside the schtick. I have read his books and believe I am a better investor. I watch his show, but do my own research and reach my own decisions. There is a lot of focus on the short-term but from my perspective, it is only a paper loss until or unless I sell. I bailed on Freddie Mac, Sirius, Citigroup and Johnson Controls before they tanked. Jim Cramer is a polarizing figure, probably does contradict himself but is capable of more useful insight and analysis than many of the posters on this forum. (Don't get me started on the Yahoo message boards; a complete waste of time.) He is one of many sources for ideas, not the best, not the worst. He is probably better on big picture concepts than on individual stocks, but I can't see wasting the energy some put into bashing him. If you disagree, ignore. That's what I do with Bill O'Reilly or Lou Dobbs...
    Reply
  •  
    Oct 14 06:18 PM
    The calls with questions are taped early in the day and then played back later while the lighting round is live, research his suggestions like you would do with anyone else.
    Reply
  •  
    Oct 14 10:39 PM
    Cramer is no different than any of the dozens of analyst who really do not know what they are talking about. They make weather forecasters look like geniuses............

    If there was a way to hold financial analysts' be accountable for their forecasts, all this nonsense would cease ....
    Reply
  •  
    Oct 14 11:41 PM
    Don't pick on Kramer. He offers non-traders consistent insight into which direction not to go.
    Reply
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