Pure Truthiness

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    • Thu Apr 10th 09:46 AM | Rating: 0 0
      Commented on:
      Jim Cramer's Mad Money, 4/4/08: Cramer Vindicated
      Vindicated? Cramer? Hardly. Find someone with a tape or a TIVO and watch carefully.

      Cramer got an email from someone calling himself "Peter in Illionois." The email confirmed that he was the person who sent the March 11, email. He also confirmed that he was talking about several large accounts he held at Bear, and not about Bear stock. He apologized for all the controversy his March 11 email caused. That was as favorable as it got for Cramer. It wall all down hill from there.

      Although Cramer did his best to hide it, the email and the telephone conversation were critical of Cramer and suggested that Cramer had given bad advice regarding whether to keep money in a Bear account.

      After the apology, the email asked why Cramer didn't tell viewers how little SIPC covers. In his conversation with Cramer, Peter asked again why Cramer didn't tell everyone about SIPC coverage.

      Cramer gave the expected gibberish that SIPC didn't matter because the Fed bailed account holders out. Peter said, "Yes, but what if they didn't? With accounts this large . . . ." Cramer cut him off and said, "But they did." Peter said again, "But suppose they didn't. SIPC . . . ."

      Cramer nearly jumped out of his skin cutting Peter off. Unfortunately Peter didn't persist. What can you expect from some money manager or private banking and asset management client who has several large accounts at an investment bank that is rumored to have liquidity problems, and is dopey enough to email Cramer the Clown to find out what to do?

      At least Peter smartened up enough to realize that Cramer's advice was terrible and would put his large accounts at risk. Peter's second communication was aimed at criticizing Cramer, not vindicating him. It is a testament to Cramer's skills of persuasion that he could make the email and phone call seem like a vindication. Now if only his friend Spitzer was as good a lawyer. He'd have convinced us he flew the bimbo down to Washington for secretarial work.
      View article »
    • Tue Apr 8th 16:27 PM | Rating: 0 0
      Commented on:
      Jim Cramer's 10 Predictions for 2008
      I have studied Jim Cramer's main recommendations for one year. Conclusion: He is absolutely the best contrarian indicator I have come across in over 25 years of investing. Bet against every one of his predictions and history says you will hit big on 7 out of the 10 and get rich. Have you all forgotten his 2007 Stock of the Year -- NYX? How about his statement on Jan 10 that the bear market was over and it would be straight up from there. The market tanked from there and hit its previous lows again on Jan 22. Who can forget his terrific contrary success when, with Google at 720 he said, "It has momentum and is going to 1000." The Cramer crazies sent it up to 750 the next day, where I shorted it. In the next few weeks Google took the shaft with no elevator straight down to 400 without passing "Go." Finally there is the greatest contrarian call of all time, the Jan 24 prediction that Beaeeer Stearns would be taken over at a premium to its then price at 84. I shorted again. Bear went straight down to $4 in just 9 weeks and got a $2 takeover. I l-o-o-o-ve Jim Cramer. Finally, as proof of his uncanny ability, with Bear at $4, Cramer said "Sell." Bear was at $14 one week later and now stands at almost $11. You can't make this stuff up. The man is incredible! I don't know how he does it.

      MY PREDICTION FOR 2008: Cramer retires and gives a goodbye speech from the deck of a Navy warship in which he proclaims, "You won't have Cramer to kick around anymore." In what will be later hailed as a brilliant move, CNBC replaces Cramer by hiring that guy from the infomercials with question marks all over his suit to give financial advice in Cramer's time slot. Cramer followers never realize anything has changed.
      Neilson does a special study and discovers the 20% of viewers who followed Cramer and think he is brilliant are the exact same people comprising the 20% of the U.S. population who still think George W. Bush is brilliant and doing a great job.
      View article »
    • Tue Mar 25th 11:15 AM | Rating: 0 0
      Commented on:
      In Defense of Jim Cramer on Bear Stearns
      Consider this. Bear Stearns does not have a retail brokerage. There are NO individual investor accounts at Bear Stearns. Go to the Bear website. Check it out. Better yet, call Bear on the phone. Tell them you are an individual investor and would like to open an account for $100,000. The receptionist will tell you that Bear doesn't take retail accounts. Bear carries accounts for large insitutions only. It is IMPOSSIBLE for the e-mail writer to have been talkiing about a Bear Stearns account. He could only have been talking about taking his money out of Bear stock.

      Did Cramer know this? The very next day, Cramer complained that "the Fed bailed out the hedge funds who held accounts at Bear." He went on to say that the Fed's action was welfare "for the hedgies." Clearly Cramer knew that the accounts at Bear were only institutional.

      If Cramer did not know that Bear does not have a retail brokerage, it would mean that his research into Bear Stearns before he recommended the stock was horrifyingly poor. It would mean that Cramer told everyone to "BUY BUY BUY" without even knowing the nature of the business that the company was in. Would you ever buy a business without knowing what it sells? We must assume Cramer knew that Bear has no retail accounts, and therefore that the email question dealt with money in Bear stock and not money in a Bear account.

      When Cramer attempted to defend himself by claiming that he was addressing a person with money on deposit at Bear, he was counting on the abject ignorance of his listeners and viewers.

      In the end, however, it does not matter whether Cramer thought he was talking to an account holder or a shareholder. Let's rephrase Cramer's defense after he was skewered by John Stewart on the Daily Show.

      John Stewart played the tape of Cramer's advice to a question from a viewer saying, "Should I take my money out of Bear?" Cramer's answer was, "NO NO NO. Bear is fine. They are not in trouble. Don't take your money away from Bear. That would be silly."

      Cramer said at the start of his defense, "I did not make a mistake. I was not saying that people should stay in Bear Stearns stock. Why would I say that when I told everyone to sell the stock?" Cramer then played his own edited version of the tape.

      Inherent in Cramer's statement in his own defense is an acknowlegement by Cramer that the problems at Bear were sufficiently severe that shareholders should sell.

      Cramer's version of the tape carefully edited out the statements by Cramer that "Bear is fine," and "Bear is not in trouble."

      After the tape was played, Cramer said, "Not only was my call correct, but people in the business have praised me for my prescience. I told account holders they were not in any danger because I knew the Fed would bail them out, but I told shareholders to sell because I knew Bear was in serious trouble."

      In essence, Cramer was saying that he knew Bear had severe liquidity problems, but that the Fed would bail out account holders.

      Okay, could Cramer have predicted with any certainty what the Fed might do? The answer is no. The Fed had never before in history bailed out an investment bank. The Fed did not even change its rules to allow investment banks to use the discount window until the Monday after the Bear failure. Historically, the Fed had let much larger investment banks, such as Drexel Burnham, to go under.

      The thought that the Fed MIGHT take a history-making and unprecented could, at best, be termed a mere speculation. Cramer might just as well claim, "I told account holders to keep their money on deposit with Bear because I knew snake eyes would come up at the crap table and they would make their money back."

      It doesn't matter whether snake eyes comes up or not, such advice is abysmally stupid.

      Cramer, however, never said anything he claims to have said. He never uttered the words "shareholders should sell," he never mentioned the phrase "bail out," and he never used the word "FED" or "SIPC," or anything that hinted at the "prescient" advice Cramer claims he gave.

      But let's give the Cramer the benefit of every doubt. Let's assume that Cramer does at least some amount of homework before he recommends a stock, and that he therefore knew that Bear does not have a retail brokerage operation. The email does not say who the writer might be or the amount on deposit at Bear, so let's make the ridiculous assumption that a hedge fund manager was emailing Cramer's show for his advice on what to do with the $1B of securities and cash on deposit with Bear. Cramer, knowing that the viewer was a hedge fund manager with an account at Bear, Cramer gave the hedge fund manager advice about that account. Let's also pretend that when the e-mailer said "should I take MY money out of Bear" he was really asking whether he should take his hedge fund's money out of Bear (since Bear only carries institutional accounts). Since the writer did not state how much money was in the account, we will, for the sake of example, assume that the hedge fund had a $1B account.

      Now, lets further pretend that Cramer actually gave the allegedly "precient" advice Cramer falsely claims to have given, i.e. -- "Bear may have liquidity problems, so all you shareholders out there should sell. But account holder should leave their money at Bear because I'm sure the Fed will bail out account holders."

      Remember, at that point the Fed had never before in history bailed out account holders at any investment bank. JP Morgan was not yet in the picture. Bear was not in any buy-out discussions, and the Fed had not yet declared that for the first time brokers could access Fed funds directly. The Fed had no legal obligation to bail out account holders at Bear, and many politicians were already objecting to the taking of such an action.

      All we had to support Cramer's opinion that the Fed would bail-out Bear account holder was that Cramer believed it MIGHT happen. We'll give Cramer the benefit of the doubt and make the silly assumption that Cramer is so "prescient" that there was a 99% chance that the Fed would bail out account holders if Bear should go under, and only a 1% chance that they would not.

      Okay, now let's look at how smart it would have been for Cramer to advise account holders to keep their money in Bear accounts. Cramer was advising that account holders make a bet on whether or not the Fed would take the historic action of bailing them out. The probabilities of the bet were:
      99% chance the Fed bails out my account.
      1% chance there is such a public uproar that the Fed decides not to take such first time historic action, and to let Bear and my account go down the tubes.

      Is this a good bet?

      If the 1% probability comes in and the Fed decides to let Bear and my account go down, the hedge fund manager loses $1B instantly. He will be reimbursed $100,000 by SIPC after waiting about one year. The reimbursement will paid with no interest.

      So what does the hedge fund manager gain for taking this 1% risk of losing almost all of his investor's money? The answer: Absolutely NOTHING. He gets to keep his own money. Of course, if he took the money out of Bear, he would also get to keep his money without taking any risk at all.

      Thanks Cramer, you gave great advice to account holders. Heads they win nothing, tails they lose everything. You are right. Failing to take such a wonderful risk would be "silly."

      Incredibly, Cramer's defense indicated infinitely greater stupidity than if he had merely told shareholders to hold Bear stock. Why? Because if Bear doesn't fail or is bailed out by the Fed, shareholders might see their shares rise. Shareholders had a possibility of gain for taking the risk. Account holders had no possibility of gain whatever for leaving their money in an account at Bear.

      Cramer is such a financial genius that he could not even figure that his phony defense made him look dumber than the actions he was defending. Cramer may be a lawyer, but he has a fool for a client.
      View article »
    • Mon Mar 24th 14:14 PM | Rating: 0 0
      Commented on:
      Tracking Jim Cramer's Performance: January 2007 Stock Picks
      Michael - I have the greatest respect for all the work you have done in tracking Cramer's calls, and I think everyone should appreciate the warning your work sounds. It is, therefore, with deep regret that I must point out that all your work is for naught.

      Cramer constantly states on his show and in his books that his lightening round picks are not well-researched and are not necessarily his real selections. If your work shows that the lightening round calls performed well, Cramer will no doubt take even more credit than he deserves. The potential claim is, "If my off-the-top-of-my-head calls are that good, imagine how great I must be with some real analysis. Buy my action alerts plus." If his performance with his lightening round calls is poor, however, he will simply dismiss the results by saying, "I always tell you to be very careful with what I say based on 15-seconds of analysis in the Ligntening Round. In the latter statement he will be absolutely correct. What does his performance with a 15-second analysis mean?

      To get true measure of Cramer's Mad Money performance you need to track the performance of his featured selections each day. That job, however, is a fool's mission. Cramer's greatest expertise lies in making it impossible to track him. He almost never makes a sell call on his show. He reiterates buys at varying prices. Do we track Cramer's results on Google from his call fot Google to go to $650 when it was at $550 and assume everyone sold at $650, or do we track his call from when he said with Google at $700 that it would go to $1000, or do we pretend there was a fictional one-year holding period and say he recommended it at $500 and it fell to $400?

      If we create a fictional holding period of one year, do we measure his loss from the "buy" call at $500 or the "buy" call at $700, or both. Unlike responsible market gurus who make clear buy and sell calls, Cramer tells people to sell if the reason you bought the stock changes, but average down geometrically if the stock falls, and to "take some money off the table" at unspecified points as the stock rises.

      Since he does not base sell signals on fundamentals, like the characters in the movie "Two For the Money," Cramer's has his earlier followers selling to those to whom he is now recommending a "buy." When you give out both sides of the game you are always winning for someone. Cramer has taken this old trick of the race and sports touts and perfected it for the world of the stock tout.

      His Mad Money calls can never be tied down. If Google goes to to 1000 he will claim he recommended it at 500 and doubled everyone's money. If Google drops to 400 he will claim you should have taken your money off the table as Google rose to his initial target of 650. For those who bought when he recommended Google at $700 he will say they should have taken some off the table at $750 and that they should have "done their homework" and sold when the "reasons for buying changed." What were Cramer's reasons for recommending Google at $700? The only reason given by Cramer at that point was that the stock had momentum would go to 1000. That reason for buying could, after the fact, be said to have changed on the very first down tick, or even on the first low volume day with a gain.
      If Google drops from $700 to $500 and rebounds, Cramer will cite the advice in his book and on his broadcasts that you buy on the way down in pyramid format.

      So what are the results of his followers? When should buy on drops or sell on drops. Should they hold when Cramer re-recommends a buy, or should they sell on the way up no matter what he says. Who knows?

      Every once in awhile Cramer will make the mistake of locking himself in. For example, Bear Stearns. He cannot claim that the reason for buying had changed because as late as three days before Bear's collapse he clearly stated, "Bear will be taken over." If his adherents were following his advice, they should have buying more and more Bear in pyramid fashion all the way down. There was no escape. Cramer's initial reaction was, incredibly, to misrepresent his recommendation with regard to Bear. Once again, shades of "Two for the Money."

      In the case of NYX. however, Cramer was foolish enough to call it his "Stock of the Year." Yes, the analogy to sports touts continiues. Sports touts have a "Game of the Year" and Cramer has his "Stock of of the Year." He couldn't take that back or misrepresent it. NYX never had a sufficient upmove to claim you should have sold it. Cramer was finally forced in an unusual corner. He beat himself with a whip (literally), begged for forgiveness is Jim Baker fashion, and continues to use NYX as proof that he is honest and admits his mistakes.

      You cannot validly track any stock selector to an arbitrary date. If you tracked Warren Buffets new buys for only one year he might or might not look any good, but your numbers could be validly criticized ojn the basis that Buffet holds most stocks for 5+ years. If you track him for 5 years and he sold one stock 3 years earlier your tracking could likewise be criticized as inaccurate.

      The only way to legitimately and accurately track an investor's results is to track him from his actual purchase price to his actual sell price. The only way to do that with Cramer is to track his
      purchases and sales in his Action Alerts Plus portfolio. Cramer keeps those results well hidden from the public eye. It may cost you a fee to get to the portfolio, but you would make that up in the saving of time required to track Cramer's daily Ligtening Round nonsense.

      We can only surmise Cramer's Action Alert portfolio results from the fact that he never publicizes those results, and the suppostion that if they were good he would shouting the numbers from the rooftops. Shining the light of day on that portfolio would be a great service to the public.
      View article »
    • Mon Mar 24th 12:06 PM | Rating: 0 0
      Commented on:
      Cramer on Bear Stearns, March 11: Stick Around
      Ben2384 says above:
      This is the full question..

      Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter
      ======================...

      Ben -- Could you enlighten us as to the source of this text including the name of the person who sent the alleged email that Cramer read on the show. I have watched the show segment a number of times, and I do not believe that Cramer ever mentions the name "Peter" or any other name as the sender of the email. Are you someone with inside information in this regard?

      pgens says:
      "Cramer was talking about moving money out of _accounts held_ at BSC, not about common stock. The post is extremely misleading. Cramer didn't call everything right with BSC, but to knock him for believing their financial reporting, when Sarbanes-Oxley is supposed to enforce truth in financial disclosures, is unfair. All you can fault Cramer with in this case is believing reported financial statements."
      ===================
      The email could be interpreted as referring to an account or as referring to an investment in stock, or an investment in the bonds, except for one big fact -- Bear Stearns has no retail brokerage operation and does not open and no longer carries any accounts for the public. Bear Stearns acts as a broker for large institutions only. The alleged email says, ". . should I get MY money out of there."

      It is impossible for any individual to have been referring to an account he held at Bear Stearns. Assuming the email is legitimate and not a set up question of the show, there are only two conclusions that can be drawn:
      1. If Cramer knew that Bear does not carry individual accounts then Cramer's claim that he interpreted the email to mean the writer had an account at Bear is false, and when Cramer made that statement on Friday he was attempting to misrepresent his statements to his naive viewers.
      or
      2. Cramer's research and knowledge of Bear Stearns was so horrifyingly poor that he did not know that Bear had no retail operation before he made his multiple recommendation of the stock to his viewers.

      From Cramer's later statements it has become apparent that he knew that Bear has no retail accounts. Note that the next week Cramer said repeatedly that the Fed bailed out the "hedge funds" and again that the Fed saved the "hedgies." Cramer did not claim the following week that the Fed bailed out the mom and pop accounts of individual investors. Indeed Cramer complained the past week that the Fed hurt the shareholders while saving the big insitutions (the only account holders at Bear.)

      Now let's look at what Cramer claimed in his own defense to the skewering he received at the hands of John Stewart on the Daily Show. Cramer aid: "I wouldn't mind except that the skewering was wrong. I've made a lot of mistakes but this wasn't one of them. I was absolutely correct when I made my statements last Tuesday about Bear."

      Cramer then played what he said was the tape from Tuesday. In the Playback, Cramer reads the email, and then screams "NO NO NO." Carefully edited from Cramer's version of the Tuesday show was the remainder of hs remarks. Cramer's entire answer to the email was as follows, "NO NO NO. Bear is fine. Bear is not in trouble. They are more likely to be taken over. Don't take your money out of Bear. That's just silly."

      After playing the edited tape, Cramer said, "I was talking about an account at Bear, not Bear stock. Why would I tell someone to keep their money in Bear stock when I recommended on Friday that Bear be sold? In fact, people have told me this was the most prescient call I have ever made. I told account holders to keep their money at Bear because I knew the Fed would bail them out and their money would be safe, while telling the shareholders to sell because Bear was in trouble."

      Interesting, but unfortunately for Cramer, a complete misrepresentation. IF Cramer had recommended on the following Friday that Bear stock be sold, it would have no relevance to his statements the prior Tuesday. On Friday, Bear stock was 32 points lower, and Bear had stated they were illiquid and would need to declare bankruptcy. That would be a good reason to tell people to sell on Friday even though you recommended a hold on Tuesday.

      But Cramer did not recommend that his viewers sell Bear that prior Friday or any other time before the skewering by John Stewart.

      I watched the Friday show before the Bear takeunder. Cramer nothing about Bear whatever.

      At Cramer's website, theStreet.com, if you pulled up the BSC page it indicated that Cramer recommended the stock on Tuesday March 11. After Cramer's defense on Friday March 17, the page was changed by removing the indicator for a March 11, buy call.

      The following Monday, with Bear having accepted a $2 buy-out offer, and some of Cramer's followers having experienced devastating losses, Cramer was too busy celebrating his three-year show anniversary to mention Bear or apologized. Not even then did he recommend that Bear be sold. An audience filled with hand-picked Cramer worshippers failed to say a word either.

      Can we fault Cramer for relying on Bear financials from the prior December given Sarbanes-Oxley? Of course we should fault Cramer. It was not impossible for an experienced stock analyst to know that BSC was walking on very thin ice.

      In early January Charlie Gasparino at CNBC reported that Bear might be indicted and that no investment firm had ever survived a criminal indictment. That matter still has not been resolved. Even though his own network broke the story, Cramer was completely unaware of it when he made Bear a screaming buy in mid-January. It was not until two weeks later, when Gasparino approached Cramer personally and warned him that Bear was toxic, that Cramer became aware of the danger but chose to ignore it. Specifically, Cramer said on Mad Money, "My friend, buddy, pal Charlie Gasparino told me that Bear might be indicted and that no firm has ever survived a criminal indictment. I do not believe Bear will be indicted." (Cramer had absolutely no basis for this opinion, and apparently pulled it straight from the nether regions of his hind quadrant.)

      Back last December, one of the most respected and experienced financial industry analysts on the Street, Dick Bove of Punk Ziegle Research, called Bear "the worst company in which to invest one's money at the present time." Given the problems with companies like Ambac and MBIA, that was quite a statement. Bove cited the financial risks inherent in Bear's 20-1 leveraged balance sheet and the danger to the valuation of Bear's assets. Cramer could have analyzed Bear exactly the same way.

      Unfortunately, the American Educational System is one of the worst in the Western World. Most Americans have received no grounding in finance or economics. They also have not been taught to think critically. As a result they are ripe to be fooled by the Cramers of the world.

      Sarbanes-Oxley is no help. Bear's management was most likely completely honest when they issued their financials for 2007. When it comes to investment banking, you need to look beyond the last numbers rendition. The average amateur investor does not have the tools to do this, and probably should not be investing in the industry without professional help. If Warren Buffet can say about an investment, as he so often does, "It may great, but I'm not smart enough to figure it out," then you should not be ashamed to say the same thing.

      Here's why the statements of management and the last financials don't matter in the case of Bear. As Cramer or any professional anlayst could have easily realized, and with any reasonable degree of due diligence should have realized, Bear Stearns was leveraged 20-1. The management of Bear truthfully presented that fact in their last set of financials. Bear's entire business had been the underwriting of mortgage-backed securities. As a result, Bear more exposed percentage-wise to such instruments than most. The mortgage market is currently precarious at best. The 20-1 leverage means any move down in the price of the $52B of such securities that wereheld by Bear would be magnified 20 times. Any good financial analayst should have been able to see that Bear was an accident waiting to happen.

      Bear's financials were a month old the day they were released, in a business in which the fundamentals can change in a heartbeat. The Fed gave Bear $30B on Friday morning. The financial situation was deteriorating so fast that the entire $30 billion was gone by Saturday morning and Bear was right back to being bankrupt. Under such circumstances, an analyst expressing opinions based on month old financials should properly be dismissed as a charlatan.

      Book Value in the financial banking industry is very different in meaning from the book value of your local furniture store. Cramer claims to be able to understand this and to be able to advise the poorly educated home gamers who don't. Cramer fell down on the job.

      Cramer can be fairly blamed for failing to do sufficient due diligence and research to see the obvious before screaming "back up the truck" to people who had no business in a stock with that much risk, particularly with absolutely no warning about the risk. The average Joe has no ability to do the homework required with a stock like Bear, and Cramer failed to do the homework for him.

      Cramer can be blamed even more for the hubris which caused him to ignore the dangers of Bear even after being personally warned about them.

      Cramer often seems to be emotionally unsuited to his role as an adviser. In this case, he put his ego ahead of the financial well-being of his followers, and refused to admit that he had been wrong two weeks earlier. Instead, he prayed that someone would buy Humpty and take him off the wall at a premium before Humpty made a misstep in his jig and tumbled.

      Most of all, Cramer can be fairly blamed for his failure to take responsibility for his poor job, and for misrepresenting the facts to his audience. Not only did he not apologize, but he had nerve to tell all the folks who lost fortunes from following his advice that his call on Bear was one of the most "prescient calls" any adviser has ever made.

      Cramer falseclaimed that his call was "prescient" because he told the email writer to keep money in an account at Bear while telling the shareholders to sell the stock. Cramer alleged that he knew the Fed would bail the depositors out, but that the shareholders were in danger.

      It was impossible for Cramer to "know" on Tuesday that the Fed would bail out the depositors. The Fed had never before taken such action for an investment bank in the past -- not even when a much larger firm than Bear -- Drexel Burnham Lambert -- went under. The Fed had no obligation to take such action. In fact, when the smoke cleared, the Fed did not bail out the depositors. The depositors and the shareholders were saved by JP Morgan agreeing to lend their own credit to Bear Stearns in advance of the buy out.

      There is nothing in Cramer's statements on Tuesday that sounds anything like "depositors are safe because the Fed will bail them out, but shareholders should sell." If Cramer truly believed he were talking about deposits wouldn't he have first mentioned SIPC, and differentiated account holders from shareholders?

      Despite Cramer's claims in his defense, the video indicates Cramer said nothing about SIPC, he never uttered the word "Fed," he never mentioned the term "bail out," and he never uttered the phrase "shareholders should sell." Instead Cramer said "Bear is fine. Bear is not in trouble." That statement was the exact opposite of what Cramer claimed he said and knew, and Cramer edited it out of the partial tape of his statement that he used in his defense. In order to even offer his ridiculous defense, Cramer would first need to be convinced of the abject stupidity of his listeners. And why he shouldn't he be so convinced. He tells them that Ben Bernanke makes policy based on what Cramer says, and he tells them the FCC acts based on Cramer histrionics, and tens of thousands in his audience accept it hook line and sinker. Such is the state of critical thought in the United States.

      In the end, it doesn't matter whether the email was from a bear depositor or a Bear shareholder. It is no smarter to keep your money in an account at a failing bank than it is to keep your money invested in the stock of that bank.

      Think about what Cramer is actually saying in his own defense. He is saying that on Tuesday he was not telling shareholders to stay in Bear, and that he knew on Tuesday that Bear was in danger. He is further saying that he believed depositors should keep their money in accounts at Bear because the Fed would take historic action that had never been discussed or hinted at by the Fed. Let's see if Cramer's claimed recommendation makes any sense.

      If the depositors follow Cramer's advice, they are betting every dime of their free credit balances over $100,000 that the Fed will take action that it has never taken before. If Cramer is correct and the depositors win the bet, what do they get? They avoid having to call Bear to request their stocks be transferred immediately to their own names, and they would avoid the $15 fee to have their credit balances wired to their bank. The downside if the Fed decides that they don't care what a guy who throws eggs at a wall thinks, and that they are not about to make an historic exception for Bear Stearns? The depositors lose every penny in their accounts at Bear except for the first $100,000 which will be paid to them by SIPC after a wait of about one year and with no interest. Now, would make that bet? Heads you win and save $15 and a phone call, or tails you lose the $1M of excess capital in your account at Bear?

      Incredibly, Cramer's defense is that he gave advice to depositors that was even more stupid than if he had merely advised shareholders not to sell Bear. At least sharereholders had some prospect, no matter how small, of a gain if they remained in Bear. The depositors would gain nothing keeping their money at Bear.

      PT Barnum was right. "There's a sucker born every minute, and most of them "Stick with Cramer."
      View article »
    • Sun Mar 23rd 21:58 PM | Rating: 0 0
      Commented on:
      Bear Stearns Should Go for More Than $6 - Barron's
      LONG LIVE BARRONS! LONG LIVE RUPERT MURDOCH! LONG LIVE RUPERT'S REPORTER ANDREW "Dopey" BARY!

      I was short Bear all the way down from 84. It was a once in a lifetime hit. Barrons, Bary and various other rumor spreaders are now pumping Bear back up so that Rupert and I can hit it again. I love it. If an author wrote this in a work of fiction, I'd criticize him for making his story too fanciful

      Somehow, I just knew we'd great quality analysis and reporting once Rupert Murdoch took over at Dow Jones.

      The only problem is -- I can't decide if the story is out of Charles Dickens, Hans Christen Andersen, or the upcoming unauthorized auto biography of Eliot Spitzer.

      Chapter 1: That nice guy, Jamie Dimon, really wants to pay $20 to the poor raggedy stock sellers at Bear Stearns, but those evil bankers, Bernanke and Paulson, conspire to force Dimon to pay just $2.

      Chapter 2: Bernanke and Paulson are visited by the bunnies of Easter past, present and future. After being flogged and chastened by the $5000/hr bunny of Easter future named Kristen, the evil bankers avoid public disclosure by admitting the error of their ways. Henceforth they become great philanthropists, and remove their hands from Jamie Dimon's throat.

      Chapter 3: Kind-hearted Jamie Dimon goes to the JPM shareholders, shows them pictures of the starving BSC shareholders and employees who used have millions but are now selling matches in the street, and the shareholders of JPM immediately insist that Jamie give the poor BSC folks $2.36 billion instead of just $236 million of the JPM shareholders money.

      Chapter 4: The value of the little match girl's stock increases 10-fold, she is saved and does not freeze to death. The Lewis family has their fortune restored and can now afford to get Tiny Joey the operation he needs so he can walk again. Little Jimmy Cayne can afford to buy weed once more. Alan Schwartz and the Bear executives have their $10M bonuses restored. All this extra money flows immediately into the economy, increases the value of the dollar, ends the recession, real estate foreclosures, and the credit squeeze, everything is right with the world, and we all live happily ever after. -- THE END.

      Yup, sounds like a "reasonable bet" to me, and to show you my heart's in the right place I will personally use my very own funds to sell shares to all of you desiring to buy them this Monday.
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