As the final stock bell tolls in 2015 the world has been issued a warning from the two most media worthy stock market advocates. These hedge worthy pundits may be just stating the obvious in order to preserve their right to justify that "I told you so" after the corrections are in the rear view mirror. Further dissection of their daily pontifications will reveal that they should disclose their thoughts before the bell tolls not after the market closes. The following reviews by Ross Aldridge in Las Vegas describes that the these incredible successful wealth mongers have their own interest at heart and what's wrong with that strategy? Our hats go out to Jim Cramer and Warren Buffett and if they could drop a few billion in our hat as it is passed please do so before the bell tolls!
Fund manager J. Carlo Cannell has switched from a passive to an activist investor in TheStreet.com and is outraged at the compensation being showered upon fellow shareholder and co-founder Jim Cramer
Jim Cramer under attack from Cannell Capital
In a letter from Cannell Capital dated December 2 and filed with the SEC, CNBC celebrity host Jim Cramer came under blistering attack. The often dry and humorous letter underscores the frustration of stock holders who have seen the company value decline from $1.7 billion in 1999 to just $75 million today. This as Cramer's compensation was on an "up-trend," the letter says, pointing to a contract laced with excess.
The letter documents that from May 1999 to December 2013, Jim Cramer has extracted more than $14 million in cash compensation and garnered millions more in stock options, riches typically reserved for those driving stock prices higher.
"Were there to have been wealth creation we would characterize your robust compensation as accretive," the letter said. "But there has only been wealth transfer, we characterize this as dilutive."
But the perks of being Jim Cramer don't end at the cash register. TheStreet.com provides Cramer "considerable non-pecuniary compensation such as a perfumed sedan driver(s) and assorted assistants who spray ionized lavender water on your barren cranium," the letter dryly observes.
Cannell offers Jim Cramer two options
Cannell offers two options for Jim Cramer to right the wrong and save his "legacy."
One option involves Cramer quitting his employment at CNBC, where the letter notes his show, Mad Money, recently fell to an all time ratings low. "To which entity do you ascribe your greater allegiance?" the letter wonders, then considers his simultaneous employment with two business media companies "would appear to be a grand structural conflict."
Along with quitting CNBC and focusing on newsletter subscriptions, the second option asks that Cramer alter four year employment agreement, signed just over a year ago. While noting Cramer's significant brand, the letter points out the contract rewards at least $3.5 million per year, which is 5% of the market capitalization of TheStreet, Inc. (NASDAQ:TST) and more than the cumulative dividends expected to be paid out this year to common shareholders.
If he doesn't agree to this option, Cannell suggests selling the company, which he considers considerably undervalued.
And why should Cramer do all this?
"You are 59," Cannell, whose firm controls 8.95 percent of the stock, wrote. "When you lie upon your deathbed, how will you reflect upon on your legacy? Once a $70 stock, TST is now $2.20. You have done well, but how has the common shareholder done?"
For its part, the web site of TheStreet.com seems to think Cramer is a bargin. They claim "Jim contributes free content on TheStreet; additionally, TheStreet staff provides a Mad Money Recap."
Investors planning to celebrate the spate of new highs the market has hit recently may want to reconsider. We've gone longer without a 10% market correction than at almost any other point in the past six decades, and there are a couple of reasons to think that such a decline may finally be at hand. For one thing, stock values are at point from which they've headed down in the past. For another, the bull market appears to be driven up by fewer or less aggressive buyers as investors become less active in the equity market.
No less of an authority on investing than Warren Buffett has said on a number of occasions during the past 15 years that when stocks reach the levels they are at now, they are too expensive. He judges value by calculating the ratio of total market value to
gross national product (GNP), and the lower the ratio the better. A good time to buy stocks is at 80%, Buffett has stated, while he becomes cautious at 100%. The total market value-to-GNP ratio now stands at over 120%, more than 50% above Buffett's stated comfort level.Must Read: Warren Buffett's Top 10 Dividend Stocks
Nobel prize-winning economist Robert Shiller would likely have to be in the same boat. His highly respected Shiller price-to-earnings ratio stands today at 26, or 50% higher than its historical average. Nor is the standard 12-month forward price-to-earnings ratio bucking their views. It's at 17, higher than the historical average of 14 and more above than it was below -- at 12 -- after the last correction in 2011.
There may not be a gilded share price at which investors would rush to the exits at once, but there are signs that they'd rather have their money some place other than in stocks -- trends that have become more pronounced of late. Corporations are hoarding a record $2 trillion plus in cash. Investors are trading fewer stocks, with New York Stock Exchange trading volume plunging below two billion shares daily.
Conclusion: As Ross Aldridge in Las Vegas projected in the November 2013 blog, this market will top out between Dow 17,500 - 18,000 and this is before the bell tolls.