Brouhaha over the Booyah: Timing Reveals All
Jim Cramer has drawn a surprising amount of media fire the past few days over his manipulation comments made all the way back in December. (I first mentioned this in our Christmas linkfest -- 12/24/06)
Why the very belated ire?
Mike Panzner makes a few interesting observations in Ringing the Booyah at the Top?. Mike and I discussed this earlier in the week, and he has a fascinating
theory: Every bull market has it's icon, and Cramer is this bull's
version.
So why now, rather then back in December when it first uploaded to TheStreet.com site?
The timing is what makes this "revelation" truly revealing about those who would hang Jim: This is not so much about Cramer, as it is about a major shift in sentiment. The hostility is coming through now that the markets look vulnerable. Prior to the market cracking in February, no one much cared.
The same sort of action covers why Enron and Worldcom went from shining examples to Pariahs so quickly: Once money is lost, people forget the decision making process and only focus on the outcome. For investors, that is precisely backwards -- they should be process oriented, but they are not. It isn't how a ballplayer does in any given at bat that matters, rather, the on base average, total hits and runs scored over the season is what counts. However, the angry mob doesn't care about such things, they only want their pound of flesh -- and some payback.
If Cramer is the symbol of this Bull run, then as soon as it began to falter, the lynch mob came out. IMHO, it is oh so very telling about human nature and the behavior of crowds mobs.
Has ever two more absurd words been spoken in sequence then "Rational Investor?"
~~~
One other thing: I thought Cramer "confessed" to far worse things in Confessions of a Street Addict
~~~
The infamous video:
>
Sources:
CRAMER REVEALS A BIT TOO MUCH
RODDY BOYD
NYPost, March 20, 2007
http://tinyurl.com/3c6mwp
Jim Cramer draws fire over manipulation comments
Dane Hamilton
Reuters, Tue Mar 20, 2007 6:55pm ET
http://tinyurl.com/29dzl5
Jim Cramer's big mouth
His revelations only confirm what dupes average investors are
Thomas Kostigen
MarketWatch, 12:03 AM ET Mar 23, 2007
http://tinyurl.com/ynletc
Cramer's Response:
The Least I Owe You
Jim Cramer
RealMoney.com, 3/22/2007 6:29 AM EDT
http://www.thestreet.com/_rms/newsanalysis/general/10345939.html
Friday, March 23, 2007 | 06:49 AM | Permalink
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Comments
I wonder what his buddy (and prior hedge fund limited parter) Elliot Spitzer thinks of the revelatory rant?
It's about time that the "manipulators" get spanked. Naked short selling (with no intention of actually borrowing real shares), planting lies, slander, and misinformation are all commonplace...especially from the dark side. They don't have to live by the same "rules" and laws the longs do! Regulations meant to stop illegal shorting has been utterly toothless. Why is planting an intentional lie, or MISinformation about a company any less agregous than buying on insider information?
In fact, Barry deserves much credit for raising this issue...depite being a writer for Cramer's site. I'd love to see you sink your teeth more into my points raised above. A "level playing" field demands it!
Thanks man.
Posted by: Frankie | Mar 23, 2007 8:15:37 AM
Cramer always played at the edges. Pre Reg FD it was a different game. He took maximum advantage, sometimes in grey areas, sometimes over the line. That's who he is. I've got no problem with anyone "gaming" a stock down, as long as he is taking risk, vs talking down the stock via puppets on TV.
Posted by: abe | Mar 23, 2007 8:24:39 AM
Love him or hate him or right or wrong, one thing you can say about Jim Cramer is this: I believe he is sincere in his motives.
Posted by: Guy Lerner | Mar 23, 2007 8:25:46 AM
I used to joke that the bottom of the next bear market would be marked by Cramer getting out of prison and embarking on a new career as a televangelist. Spiting regulators at the onset of a bear market seems like a really good way to make that happen.
Posted by: Turbo | Mar 23, 2007 8:36:37 AM
Since Barry kindly provides the link to Bill Cara's blog, you might want the real take on this.
Bill's take is this:
Marc also asked if the Cramer “confessional” video on YouTube had been removed. Apparently, Cramer is backing down today (see interview with Don Imus), which I opined would happen. Individual traders have little understanding how powerful HBB is.
Cramer now says, “Look, I am no master of the universe. I’m a little glib. I screwed up about CNBC’s Bob Pisani… Now I’m on the hot seat.”
Unfortunately, Cramer couldn't even get his story straight with Imus. I found the interview pathetic.
Every now and then, traders will get some solid insights like Cramer’s and then the horse’s mouth is told to shut up.
The market is marketing. Don’t ever forget it."
This is about Humungous Bank and Broker (HB&B)busting Cramer for telling the truth.
The game owners don't like their secret rules being discussed.
We are supposed to be fully invested until HB&B and their buddies can file out of the exits unaccosted before the lowly riff-raff.
AND, everyone has to get off the guys back (no I don't follow him) he called the top in January when he told his viewers to sell tech. Notice we've been coasting downhill at a decent clip since then.....
Posted by: Craig | Mar 23, 2007 8:37:04 AM
Why go so far in the past of an individual miss happening? when we may see every day, stock markets manipulations at a scale never ever seen (please look at today's markets graphics in Europe at the very same time CAC SMI DAX), this is today's and for now two years news (stocks and bonds)! Those markets have not been designed and executed through software’s programming and execution without an aim » a big scale market’s manipulation » supported by a vast population of insiders.
Browsing through the street.com my conclusion is that whoever was willing to speculate on the beneficial side would have been rewarded, as whoever wants to preserve its mental health is better off reading the Big Picture.
Those events are absolving all and every legal precedents and have absolved any future and past legal infringements.
The main question will remain are they the true markets representation or the future design ?
Posted by: Philippe | Mar 23, 2007 8:46:03 AM
I kind of like Cramer; I think his takes on particular stocks are often pretty savvy.
Posted by: Tom B | Mar 23, 2007 9:02:30 AM
A question: didn't Cramer basically admit the same thing a few years ago in his book? I seem to recall a small hubbub at the time, but it never made the MSM.
I think Barry's assessment is dead-on. And I can't feel too sorry for JC. He came of age in a bull market, made a fortune in the greatest bull run in history, cut ethical corners to do it, and is proclaimed (by some) as a near-genius. Hmmm. Probably not, though he is obviously no dope.
Besides, I can't help but have a problem with a grown man who acts like a four-year-old. That book he wrote spelled that out, too. He was sorry for being such a jerk, he said, but while he may have curbed his abuse of others (and objects), he still acts like a four-year-old.
I'm sure others have other opinions. He does seem sincere in his motives, but then, has always was. Even when his motive was making money any way possible.
Posted by: dark1p | Mar 23, 2007 9:17:07 AM
Barry--
Can I humbly propose Efficient Markets to stand alongside Rational Investor?
And to commenter Frankie, I'd suggest that the disinformation promulgated by the long side is as intense and intentional, and far greater in quantity, as that put out by what you characterize as the dark side. Take a look at sell side research, or tune in to CNBC, if you don't believe me. And given the upward bias of the markets, and the cheerleading character of the media, it's a lot easier to manipulate stocks upward than down. Year end bonuses/paydays provide powerful incentives to mutual funds and long-leaning hedgies, and not all of them are immune to the temptations.
Best regards.
Posted by: Scott Frew | Mar 23, 2007 9:24:41 AM
Cramer is definitey the driver of the short bus....love him, hate him, or whatever he has LOTS of followers. The trend is your friend. Just don't drink the Koolaid.
Posted by: KP | Mar 23, 2007 9:27:30 AM
Has the power of the Cramer Factor rolled over?
Posted by: Winston Munn | Mar 23, 2007 9:28:19 AM
Dark1p, In that sense Berry is right. Who would care if the market was up, up, up?
No, they only care because he goofed with their plan early.
He admitted plenty in books and TV but mostly to reveal it for his readers or viewers. If he didn't DO it he would be an idiot trying to tell regular people how the street works wouldn't he?
The only reason it matters is timing and obviously, what he says is true.
Posted by: Craig | Mar 23, 2007 9:29:58 AM
Why is this a shock. The market is always manipulated. You buy/sell stocks that a analyst from your broker's company upgraded/downgraded. You buy/short because something has crossed a moving average or has formed a pattern. And various other "technical" indicators or "professional" advice. The market will always be maniuplated, there are the bookies and the bettors and the bookies are the only ones who make out. The only difference in the market is you can limit your loses and profits are unlimited.
Posted by: costa | Mar 23, 2007 9:36:15 AM
The hedge funds are more creative now. They use foreign newspapers (harder for the SEC to investigate, plus UK newspapers have much lower standards when it comes to fact verifications) like UK’s Sunday Express to inject a bogus rumor of Alcoa or Dow takeover for example.
It is interesting that nobody has complained and nobody has minded the manipulations when the manipulations were directed to move the prices up, but everyone gets upset when the manipulations become directed to bring the stock price down (as in Cramer’s example).
There are interesting double standards imbedded in the psychology of the mob – manipulations are ok as long as they are directed to drive the stock prices up.
Posted by: V L | Mar 23, 2007 9:38:37 AM
BTW, YouTube pulled the video (due to TSCM's copyright demand).
I put the original TheStreet.com video up in its place . . .
Posted by: Barry Ritholtz | Mar 23, 2007 9:51:11 AM
Try this:
"The Least I Owe You
By Jim Cramer
3/22/2007 6:29 AM EDT
URL: http://www.thestreet.com/newsanalysis/general/10345939.html
You may have seen some articles the past several days attacking me about an interview I gave recently where I discussed the kinds of manipulative trading practices that go on every day in the investing community. Let me say this: No one knows and respects the securities laws more than I do. (I didn't go to Harvard Law School for nothing!)
When I was a hedge fund trader in the 1990s, I played fair, and I did nothing that violated those laws. But others did not play fair, and that's why I started TheStreet.com and have been writing about these abuses for nearly a decade -- to explain to my readers how the markets really work. I wanted to give transparency to the market and tell people the good and the bad.
Some professional traders don't like it when I expose how their game is played, and some of the TheStreet.com's competitors don't like it when people are interested in what I have to say. But I am going to continue to write and talk about how the markets really work -- in my own sometimes hyperbolic and tongue-in-cheek style -- and call them as I see them. That's the least I owe you."
Posted by: Craig | Mar 23, 2007 9:52:42 AM
Do you guys really not understand that Joe and Jane six pack now own a much, much more stock than they used to. Before they relied on working for the same company for 30 years and retiring with a defined benefit pension. They really didn't care if the market went up or down. However, now most all companies only have 401(k) plans which participants depend on for as their only source of retirement funds. When the market falls (as it did from March 2000 - March 2003) the pain is overwhelming as people lose their hopes for retiring at a decent age. Thus, anger when the market falls is now amplified.
Posted by: Jdamon | Mar 23, 2007 9:57:49 AM
Barry,
I read econ blogs all the time, and the first time I ever heard of Cramer's YouTube video was a couple of days ago on one of said blogs.
Although *you* (and perhaps many in your professional circle) seem to be aware of the existence of this video, I don't believe you have brought it to your loyal reader's attention. So to me, at least, this is brand new news.
Frankly whether someone first viewed this video in December or today, it comes across as both distasteful and illegal; unfortunately this is not unexpected behavior from Wall St.
Ethically I don't see much difference between this and backdating options, something that you were very upset about.
So now the news has gone beyond a page on YouTube and into the MSM. If there is a growing sense of righteous indignation over the idea that Cramer gamed the market and ripped people off with illegal methods - well that's probably the correct emotion.
Maybe he will be the next Bad Boy poster child: Up there with Lay, Boesky, Milken and Keating. At least those people were discreet enough not to admit to anything they did in a TV studio with the camera rolling ;)
Posted by: Idaho_Spud | Mar 23, 2007 10:02:45 AM
Cramer marked the exact low of this past "correction" to the hour. He called for each sub-prime blowup to result in a down 200 Dow and said there were a dozen more to come.
The SPX bottomed at 1370 almost exactly when that article was posted and hasn't looked back since.
Posted by: Michael C. | Mar 23, 2007 10:06:29 AM
Idaho, do you read?
Try reading what he said and watch the video. Cramer is EXPOSING others, not himself.
Posted by: Craig | Mar 23, 2007 10:07:49 AM
"I don't believe you have brought it to your loyal reader's attention"
Idaho_Spud,
Barry posted a link to the video a few months ago.
Posted by: V L | Mar 23, 2007 10:10:17 AM
Wait, I apologize. I forgot, this is the country that attacked everyone trying to warn us about the war in Iraq, went after Valerie Plame, all those who left the WH, Congressman Jim McDermott, all the genrals, etc. and defended Bush and the murderer Cheney.
Of course they would attack the news bearer and not the NEWS. This country is in deep shit.
Mediocrity is winning.
Posted by: Craig | Mar 23, 2007 10:14:26 AM
If that video is a revelation to anyone then they need to get into another profession.
Cramer is totally playing that like a violin. His followers cheer his "admission" as some sort of sacred information that no one knows about while positioning himself to look like the little guy by sitting back and watching how it's handled by the talking heads. If anything happens to him, I seriously doubt it will because all he's done is provide a documented and not easily erasable "evidence" of what anyone who been in this business for more than 10 minutes would already know.
Cramer is simply selling books and he knew what he was doing way before any of this got any real press. He is simply placing himself to be in a position to be championed by the uninformed.
Sorry I see right through the BS and this should not be made out to be anything other than yet another salesjob.
MS
Posted by: Michael Schumacher | Mar 23, 2007 10:24:04 AM
I don't know, Mr. Schumacher. Cramer doesn't seem like a BSer--at least, not really someone who does it consciously. I don't think he's just trying to sell books or whatever. He acts like he has a compulsive need to actually tell more of the truth than he should. And the idea that he does it to 'expose' others who do it...boy, is that a leap of faith. Great rationalization, though.
Paging Dr. Freud...Dr. Howard...Dr. Fine...
Posted by: dark1p | Mar 23, 2007 10:33:51 AM
Craig, Yes I read. Even your posts.
I am addressing Barry's notion that everyone was supposed to have known about this video. I did not... most people in the US likely did not either.
I am also addressing the notion that Cramer is suddenly being tarred and feathered just because the market is suddenly weak in the knees. I suspect he's getting negative attention because he's rather eleganly described insider criminal activity on TV.
His sly way of explaining *precisely* how a clever hedgie guy could manipulate the market (without actually mentioning his own involvement), is like OJ writing a fictional book called: "If I did it".
I'm not saying OJ killed anyone or that Cramer did anything illegal while managing a hedge fund mind you... lol.
Posted by: Idaho_Spud | Mar 23, 2007 10:40:48 AM
