Why You Should Never Listen To Jim Cramer

"In Cramer we trust," went the old CNBC promotion for his show, with Jim crossing his arms looking into  the camera at an angle, assuredly, like a Wall Street gunslinger having just shot up the robbers (Goldman and Sachs) the corpse of the front-running, high frequency trading firm lying at his feet.
You see the promo a few times- 'This guy must be good,' the mind states, taken in by the promotion's slickness and ever confident note.  (see embedded video at bottom of column if you are unfamiliar with "front-running")
So you tune in and watch Mad Money, and Cramer speaks with knowledge about the market, with a certainty so great, you're somehow willing to overlook his juvenile antics and sound affects. Then comes the lightning round, when Jim quickly explains "Buy, Hold, or Sell." He's got energy, he's got certainty. "Buy! Buy! Buy! This is a screaming buy, they're doing great."
Shoot he knows more than I do, maybe I should buy. Oh man, I want to make money off my money. Screw it, I'm entering in the order.
A year later, how's your Cramer stock doing? Up or down, it doesn't really matter, you bought for the wrong reasons.
Cramer, I'm getting a headache too
That's because Cramer's job is not to make you money, it's to generate viewers, to entertain. That's what he gets paid for. His network, CNBC is jointly owned by General Electric and Comcast Cable (or as Jack Donagey refers to them on "30 Rock"- KableKlown.) They make money from advertising. "Get the viewers Cramer, or we'll find someone who will."
Cramer used to manage a multi-million dollar hedge fund, he has knowledge of the markets, he's an entertaining old man, I like him, but there's a big difference between investing his own money in a stock, and offering you his half-baked opinion.
Everyday he has to answer questions about any of thousands of stocks. He can't possibly know the ins and outs of every company, of their finances, their cash flow, the new products they have coming to market, their current valuation. He might know some, maybe even well, but there's no possibility he has intimate knowledge of every ticker symbol people throw at him.
"Booyah Jim, what do you think of Dell."
"Well, honestly, I'm not familiar with the new products they have or how they compare to the IPad as it erodes the PC market. I really couldn't tell you."
"Access Pharmaceuticals?"
"Never heard of them."
Would you watch that? No! Bye bye show, bye-bye Cramer.

Instead this intelligent man turns into a Klown, hitting things with mallets, producing goofy sound affects, expending as much  as energy as I've seen from any man his age.
"Cramer, tell me about Dell."
"Once a prominent company now producing an insignificant commodity. SELL SELL SELL!"
"Access Pharma?"
"Small company, most people have never heard of it, they've got things in the pipeline. BUY BUY BUY."
"What about Goldman Sachs?"
"Front running mother fuckers."
That's what people tune in for. That's what enhances GE's and Comcast's bottom line. More viewers Cramer! "BUY BUY BUY," he raves.

That doesn't mean he can't help you understand what's going on in markets, nor does it mean he's a bad guy, he's likable. I'm especially appreciative of his stance for the common investor against high frequency trading (Goldman Sachs + other big banks), and his points are here spot on. http://www.cnbc.com/id/39172111/Terminator_No_Salvation

But when it comes to individual stocks, he always has to have an opinion. If he doesn't, there is no show, and anybody relying on his unceasing stream of words to make their financial decisions is headed to "the house of pain."
And as long as the powers that be continue to resurrect Goldman from Cramer's and my bullets, and allowing them to front-run (steal) in the name of "added liquidity," you might want to pick up a few shares of the company. If you can't beat them, join them! ... BUY BUY BUY!
Feel free to subscribe/ or follow (on the column to the right of this entry)

if you don't know what Front Running is, here is a brief explanation


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