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Is Jim Cramer the anointed king of pump and dump?

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I may have mentioned previously that for some odd reason I often have the very daunting privilege of entertaining some deeply intriguing questions. The query put to me today was issued in form similar to this:

If I could virtually guarantee you that by following my instructions on when to buy and sell stocks you would reap a profit at least 70% of the time, would you listen to my instructions and follow them? The only catch is you have to be the first one to take action based on my advice.

This question was brought up in reference to Jim Cramer and the tone of the question was not nice. It was implied that something less than honorable might be taking place behind the scenes. I stand in Jim Cramer's defense (as if it's even required).

Although at times he annoys me with his on screen antics, I have never had cause to believe that Jim Cramer's prognostications encompassed anything less than good, solid business analysis, thorough historical trending and conservative (although sometimes very wrong) performance projections. I have never known Mr.Cramer to lie about anything and he backs up every claim he makes with experience and facts.

While it may be true that often times his recommendations have immediate powerful affects and that sometimes the laggards then get caught in the backwash, I don't think that Jim Cramer is at fault for anyone doing anything just because "Jim Cramer said so." Least of all, he's certainly not responsible for anyone else's poor timing. The only times that I would claim Mr. Cramer is actually telling someone how to invest would be when he states, "back up the truck," and in those cases his picks are generally not what I would consider to be time sensitive.

It was surmised along with the above question that people close to Cramer must get some lead time with his information and that those privileged lackeys then run to their brokers to buy Cramer stocks before his show. Then, it is speculated, the buyers preschedule those stocks to be resold at the opening of market the next day and an average 3% profit is realized in less than one day's time. The concept sounds rather far fetched to me in and of itself.

To play devil's advocate here and to leave the floor open for discussion, can anyone tell me if the producers of Jim Cramer's show preclude the executives, staff and crew from making advanced stock buys based on what Mr. Cramer will be speaking on during that episode? I think there are even laws to control things like that, similar to the laws and/or company regulations which prevent employees and their families from entering into contest promotions offered by their employers. I would be interested to get any input that anyone may have on this subject. Please feel free to comment!

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Last updated: November 25, 2009: 08:09 AM

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