Wednesday, September 23, 2009

Jim Cramer the “Mad Money” Entertainer Exposed

While checking the news for Microvision stock MVIS this morning, I noticed the news heading…

“Jim Cramer Says Sell MVIS, Q and Buy GRA, AT&T”

“Wow” I said, and went looking for the video clip from the CNBC show. For those that didn’t see the show, here is the link…

Ken Sailor posted [on Yahoo message board] this very informative piece about the Mad Money show…

This clip was at the start of the “lightning round”, the segment of the show where callers ask about a stock, and lightning quick, Cramer makes the call: buy, hold or sell. He starts each lightning round by saying that neither he nor his staff knows who the caller or the stock was ahead of time.

Watch him work. His staff hears the stock, and quickly pushes canned data onto his monitor. He’s looking at the PPS and earnings graphs, along with a few key stats, and probably a short sentence describing the company’s product or service. He digests this data (like a contestant in a hot dog eating contest) while she talks, and in about 5 seconds, he must make the call. After all, people are waiting for him, and there are many other callers to get to.

Now, snap second decision-making works for umpires and skeet shooters, but it’s no way to pick stocks. I like Cramer as an entertainer, but we must realize that there is a big difference between investment advice and entertainment.

Makes me wonder if Cramer took a second look later, after the show was over?  Wondering, “what is this stock about, and why did it make such a big jump these last few days?” He’ll find out that this company is at the tip of the spear on this “Mobile Internet tsunami” he’s talked about before. Or maybe he will just forget about it. In a few weeks, there will be a buzz about a little company making a tiny PicoP display engine, and the “Image by PicoP” projector will shock and awe the public. He’ll notice it and realize the potential, and wonder, “Where have I seen that name before?”

So today will be an interesting one. Like the bogus and self-serving blog, from a short-seller hedge fund, at Seeking Alpha that ran this stock down… which ended up costing the Seeking Alpha web site some serious credibility, this will be a day where fear overcomes logic. The weak hands may fold. The ignorant may succumb to panic. But in the end, rational thought and detailed due diligence will always prevail.

I’ve seen Jim eat crow before. I have an old recipe around here somewhere. Now where did I put that…?

[credit: Ken (I see a buying opportunity) sailor]

If you think about it, seriously, it's very simple. Jim Cramer of Mad Money show is an entertainer and when an entertainer knows nothing about a question asked of him, he deflects into the least risky and most ambiguous posture available to him and that is, in this case, not a BUY, not a SELL, but a "Don't Buy"… which is in the realm of his safe world. It clearly shows that Jim Cramer is a clown and he knows nothing about Microvision and maybe not even know the fact that Microvision just announced commercial launch of the world’s first laser PicoP projector SHOWwx. He may not even know that over the next few weeks, at last three major name OEMs will be signing purchase agreements and salivating to get their hands on to integrate PicoP display engines into mobile devices and Cell Phones… before NetFlix, Blockbuster, Hulu and others start streaming movies and other video content… especially when 4G comes into the mainstream.

Jim Cramer just showed how shallow his knowledge and his show Mad Money is and therefore how much his recommendations should be even considered. Cramer calls Microvision a "Laser Company". Microvision does not make lasers… Corning and Osram make it. Microvision uses RGB laser lights its PicoP display engine. Granted that Microvision have not made money, as yet, from their PicoP display engines, but most of the current investors own this stock for the huge potential it represent in the next year or two. The only part that Cramer might have gotten correct was “speculative”. But if Cramer had been at the Microvision Annual Stock Holder Meeting this past week, held the SHOWwx standalone PicoP projector in his hands, and considered the possibilities, he might not have labeled it as "too speculative”… or “it isn't for me”.

If you want to know who Jim Cramer really is, read the blog post about him by Patrick Byrne from March 2008…

Numerous well-regarded money managers on Wall Street consider Jim’s career as a hedge fund manager was mediocre until he moved to TV. Whatever is the truth, Cramer’s primary affiliation is now with CNBC, where he has his own show, Mad Money (though Cramer continues to work as a part-time analyst and director for

“Whatever the truth is in that regard, it is clear that Jim Cramer’s investment horizon is short. Cramer believes that the market is irrational and that “buy-and-hold” is just “brainwashing that Wall Street relies upon to keep you from taking back your assets under its management.” (Jim Cramer’s Real Money, 234). In his writings he proudly describes how he trades on short-term volatility. Given Cramer’s access to both public and institutional information channels, it is plausible that he has been tempted to create the volatility upon which he trades. In recent writings, Cramer displays awareness that, as both a journalist and an investor, he is potentially conflicted.”

This blog post quotes Jim Cramer…

“I know it may look to some that I am corrupt because I praise stocks I own, even though I tell you I own them. But think about the logic of it: I champion the stocks I own because I like them enough to put my money behind them. I champion the stocks I own because I think they can make me money and you money, too. By similar logic I knock stocks I don’t own because I think they are too rich and you could lose money if you buy them. I try to explain this all of the time on radio and TV. Nevertheless, people confuse my motives and believe that I am picking on bad guys and pumping stocks I own so I can make money. If only life were that simple and if only I were that powerful!” (Jim Cramer’s Real Money, 58).

“Given the sheer size of Jim’s body of work it is difficult to know whether Jim Cramer uses his position as a public figure to manipulate prices. He has written thousands of articles and mentioned individual stocks many times over, at different times, as both a bull and a bear. Cramer’s opinions change so often that it is difficult to know what he believes. In fact, this inconsistency has become a rallying cry for critics. One well-known example is Jim’s shifting attitude towards Wharton Professor Jeremy Seigel, author of Stocks for the Long Run. In 2000, Seigel wrote an op-ed in the Wall Street Journal warning investors of excess valuations. Cramer responded in a piece on as follows:

“I really have no use for theoreticians of the market. They make you no money. We are in a casino-like market and I want to game the casino. The absurdity of a Jeremy Siegel from Wharton coming out with some statement about valuation and how he thinks it’s wrong is just poppycock. Valuation is what it is. If you could sell only thousands of dollars worth of stock at these prices, then I would be wrong. But you can sell trillions of dollars worth. So what does it matter if an academic says the prices are wrong. They are the prices. That is the hand you are dealt, so figure it out or get lost.”

Most recently, on March 12th, the host of “The Dailey Show”, Jon Stewart, interviewed Jim Cramer of “Mad Money”…

Jon Stewart fed Jim Cramer his words and took everything that Jim Cramer didn’t want to see or hear and finally said: “account for yourself sir” and forced Jim to defend his double speak. Jim Cramer kept talking about “shenanigans” and saying “they… they … they” trying to divert everything from himself… except to say that he wants to defend us, the investors.

So, do we really know who Jim Cramer is?

• Is this same Jim Cramer that has publicly admitted to “'gaming the system” by publicly denouncing a company while buying up its shares, or touting the company while all the while selling its shares, paying people in the press to do his bidding?

• Is this the same Jim Cramer that said buy… buy… buy stocks just before the bottom fell out last year?

• Is this the same Jim Cramer, whose record for picking stocks is less than 46% over time? A chimp throwing its “poop” at a stock page would do better!

• Is this same Jim Cramer that is little more than a shill for his hedge fund buddies?

• Is this the same Jim Cramer that cried on TV saying the Fed had to act or all the hedge funds would go tits up? Which was followed-up with Treasury Secretary Paulson [Goldman’s former CEO] manipulating and blackmailing Congress into the biggest government bailout of Wall Street in the history of mankind?
I hope it is. Because we know the spots on this leopard that wants us to believe he is an investment “guru” and has our best interest at heart… au contraire.

“Unfortunately there are many Cramer(s) on Wall Street handling investor’s money who don’t give a damn about their client’s interest but only about their personal greed!”

Anant Goel