A Very Brief Defense of Jim Cramer
October 11th, 2008 by 
James Cullen
There are many things Jim Cramer says that I don’t agree with. Now that I’ve hedged by opening that way, the hate-on-Cramer crowd takes far too many liberties with deconstructing everything he says. The best (worst?) example of this I’ve ever seen comes from this sensationalisticly titled, sickeningly self-serving piece.
It’s pretty low to bash Cramer for saying what he said before market open on Tuesday, and leave out the following detail:
S&P 500 Open, Tuesday - 1097
S&P 500 Close, Friday - 899
Net Change - (18%)
Then again, details like that might not get the desired effect.
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October 11th, 2008 at 1:57 pm
The “sell everything” Cramer that was saying the market is too risky for the next 5 years is now saying, within a week, to hold your nose and buy back in. WTF??
I’m not a Cramer basher. His record speaks for itself–he makes really great calls. I’ve been following him on Motley Fool’s Caps, and he’s good; I just don’t understand his bi-polar views on the market at times.
October 11th, 2008 at 3:06 pm
Don’t forget this is the same guy that said Bear at $30 is a great buy. Anyone who made that trade would have lost 66%. Cramer is not the be all and end all of wisdom about the market.
Frankly, his “sell everything” announcement (hopefully) helped us find a bottom in this market.
October 11th, 2008 at 5:58 pm
well what can you do, he is in a totally different type of business.
October 11th, 2008 at 8:41 pm
I dont agree with your defense here - so he yells fire, then because the market goes down further, he is redeemed?
1) IF he told today show that “everyone should sell out” then he is irresponsible. I’m not sure that he actually said this - on his own show, I thought I had heard he said “if you have known cash needs in the next five years, I want you to sell to get enough liquidity for that”
Anyone who tells long term investors after a 30% decline that they should dump all their stocks is not being wise. Yes, the market kept going down. Probably coincidence as I doubt all the Cramer-heads out there really obeyed and sold enough to make any increase in the trends.
But to tell someone to “get out” - there is a big risk that that person will still be on the sidelines when the market rallies. Then, they will think they are missing out once the Dow heads above 10,000, and they will have just sold low and bought high.
I agree with that author that Cramer should be espousing virtues of holding tight, but then again, that would make for a pretty boring show, and lets face it, he is there only for entertainment……
October 11th, 2008 at 9:22 pm
Hogan,
I’m not defending him on any specific call, but I really am bothered by the treatment he gets from articles like the one I linked to. Yes, he’s part entertainer and comes across as over the top because of it - and unfortunately, that sometimes masks an otherwise reasonable message. The overlooked thing here is that Cramer was talking about people who would want their money out of the market in less than five years…
October 12th, 2008 at 12:42 am
I’m actually with Cramer on this. I’m very bearishon the next 2 yrs ..atleast. It’s sort of a no brainer to not be over allocated to stocks if you need to be conservative short-term.
October 12th, 2008 at 12:43 am
Yes and I agree with you on that - his message basically is that if you NEED money for the short term, don’t be assuming that the market is going to rise by X% per year no matter what. Because we’ve all just seen that it doesnt always, and history shows that it also doesn’t always snap right back (interesting graphs on pg1 of WSJ Friday, showing the market stuck for 15 YEARS……)
October 12th, 2008 at 12:43 am
kudos to him for protecting peoples capital who don’t know what their doing.
October 12th, 2008 at 12:46 am
20+ years of deleveraging is a *itch. This could be a short depression.
October 12th, 2008 at 5:40 am
It’s a free country, and he’s got the right to say what he likes. I haven’t paid him much heed since 2000, when he was telling people to buy JDSU around $1000. He kind of has two hats which seem to clash: market prognosticator and dispenser of momentum trades. But I respect his call from a year back when he warned the whole thing could come crashing down if something dramatic wasn’t done fast. It wasn’t, and it looks like the whole thing may be crashing down. I just don’t see the economy picking up anytime soon, so I’ll stick to health care.
This earnings season, by the way, is going to be tricky, because it’s hard to know what’s going to get hit by credit contraction. A good way to play it is to wait until the big players in whatever space you’re interested in report, scrub that for any potential problems, and then if everything’s OK, go into the smaller, faster-growing companies (this is the way I’ve been playing the CROs for the past few quarters: looking at earnings from the big players like PPDI, and then if things look OK, go into PRXL and ICLR).
And be aware, if, like me, you’ve been trading companies that get rev boosts from the weak dollar, that play is over.
October 12th, 2008 at 6:02 pm
I’ve heard some goody things about this blog. The content has really been useful a great balance of text and pictures.
October 12th, 2008 at 11:24 pm
I’ll admit that I’m nervous about earnings, because Europe (not to mention the emerging markets) have been lagging in terms of economic deceleration… so all the companies that were supposedly good plays on that might have to stand on their own shaky fundamentals. But that’s been my disposition for about six weeks, so at this point I’m actually just waiting to see what gets whacked because of too much priced in.
On the whole, there’s not a lot that looks good near-term right now. Maybe you’ll have the last industry standing with the CROs, because there aren’t too many competitors left that I know of outside of large-cap consumer noncyclical.
October 13th, 2008 at 3:29 am
I’m nervous even about the CROs; I doubt big-cap pharma has pulled back on their testing, but CROs also do a good chunk of their business from biotechs, who might not have the same access to cash as the pharma companies. I’m watching closely the cancellation rates when the big players report.