After I defended Jim Cramer's seemingly bullish comments on Bear Stearns (NYSE: BSC) -- and received some hate-mail for it -- I'm now feeling obligated to go back to slamming Mr. Cramer.
Back in July, Cramer said in an interview for TheStreet.com (see YouTube video below) that "if every loan that was subprime in 2006 blew up, we would still not notice it ... It has no relevance whatsoever ... it's been divided and split among so many different entities that no one guy is actually being hurt other than the dumb guy who ran Bear Stearns."
Well James Cayne got hurt -- and so did every other shareholder in the company. Cramer also said, in a stunning display of condescension that financial journalists are trying to "look like they in the room with the big boys. It's a fascination with trying to prove that you know as much as the hedge funds."
It looks like the omniscient hedge fund masters of the universe got it wrong -- and journalists like Herb Greenberg got it right.
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Reader Comments (Page 1 of 1)
3-22-2008 @ 5:57PM
william lindblad said...
If you put do much credence in Cramer you gonna be in trouble! One of us is out of touch with reality and I don't think that it is me. One of his latest comments was how Pa. handled the mortgage problems. This may be, but if so, it's one of the few things that the State has managed to get right. Go take a ride there - check out the roads (pray when you go over a bridge), ask the residents how they like their taxes and check out how far you have to go to a hospital or stores. If Jim thinks that this is Utopia he really should move - bet he lives in NYC. Jim has a TV show. Jim has lots of opinions of which some may be good. However, I doubt that he could nail two sticks of wood together without bashing his thumb and his electrical knowledge would probably get an RIP. He should stay away from housing as it's a lot more complex than just getting financing. Thinking that all sub-prime going belly up is not a problem is on the same plane as the Miami residents of the late 1920's that came out of hiding during the eye of the storm - they thought it was over. Surprise!!
The current is not over yet either.
3-22-2008 @ 6:10PM
Michael Schneider said...
On hedge funds, there is a very good short article in this weekend's Wall Street Journal which has a double interview with bond expert Bill Gross and with Ed Thorp the investment wizard and pioneer of card counting techniques. At one point, Ed Thorp, who learned not to bet too much for his stake in playing blackjack, notes that there are many more hedge funds today going after fewer investment ideas with more and more use of leverage needed to keep up returns-- consequently the bets are too high for whatever edge they might have.
3-23-2008 @ 10:25AM
Steve said...
I love Jim Cramer and the insight he brings to the general public. Many people out there have taken up investing because of him which should be a good thing. Now, if everyone follows Jim blindly, they will find themselves often in the hole. But he explains themes and trends well and tries to simplify concepts but everyone still needs to do their DD on everything he says. Don't forget, I believe he once said he made gains of $300 million when he ran his hedge fund but he also said he had losses of $100 million - a net gain but it means he's certainly not always right.