It's CNBC That Has Not Yet Hit Bottom
I am no fan of CNBC. It's not just the insufferable pomposity, smugness and arrogance of its anchors or the faux frenzied reporting from the floor of the NYSE that I find offensive. It's how it works to mislead investors by providing so much misinformation. Great credit to Jon Stewart for taking them on and exposing their most memorable screw-ups.
The relentless self-promotion of talking heads posing as "financial experts" provides a steady stream of drivel that both confuses and alarms investors. CNBC understands that fear sells. It sells fear, masking as financial news.
The breaking point is its commercial for Jim Cramer, captioned "In Cramer We Trust." Over 600,000 viewers agree and they tune in to his inane show. Many of them rely on his advice.
NBC, CNBC's sister company, perpetuates the harm by having Cramer appear on otherwise serious news programs, like Nightly News with Brian Williams, a journalist I otherwise admire. For these appearances, Cramer appears to be on valium as he solemnly dispenses his version of financial wisdom, sans "boo-yas", references to "CramAmerica" and other nonsensical utterances which he rightly believes might not go down well with a more discerning audience.
Objective studies by Barron's and others conclusively demonstrate that Cramer's stock picks typically underperform the market. From May to December 2008, the market lost 30%. Investors who followed Cramer's advice would have lost 35%.
According to Barron's, there may be a way to profit from Cramer's recommendations: bet against them. One study demonstrated shorting his picks earned investors over 25% a month.
Here's the bottom line:
There is a reason for the self-confidence of CNBC's anchors and its Mad Money star: They are desperately hiding a secret. The network is premised on a fundamental lie. Watching CNBC is harmful to your financial health. No amount of information, however slickly packaged and promoted, will help you "beat the markets." If you figured that out, the money machine at CNBC would come to a grinding halt.
In stark contrast, CNN's Ali Velshi and Gerri Willis explain and educate, in a calm, reasoned and intelligent way. They make no pretense of providing "inside information" on stock picks and market timing. They elevate the discourse. CNBC lowers it.
Investors want to know if the market has bottomed out. The answer is: no one knows.
CNBC has not yet bottomed out, and that is contributing to the problem.
The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein.
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Dan Good points. I'm happy that Jon exposed CNBC for what they are. a paid commerical program- that should have a disclaimer. ' This show is not intended to be factual - So use due diligence before you invest any money ' CEO's lied to Cramer-and he wanted to believe it.
TheCEO's and fat cat stock brokers that came on CNBC had no clue the crisis was at hand - although .if they had given it some thought- the signs were there. Wall ST & Banks were UN regulated & putting folks money into high risk derivatives. They were no safe guards - to protect the public from Wall St incredible greed. So who suffers-not the fat cats- just taxpayers.
If a Co is too big to fail- then it is TOO BIG TO EXIST !! Yes- Dems Sen Dodd & Barney Frank did fall asleep at the switch. But the fact is: Policies of deregulation of banks & Wall ST is a GOP policy !
Clinton did sign one ' bad ' bill-under GOP congress pressure. But the genesis was Reagan and then both Bush's pushed it along. That's not opinion - IT"S FACT. Check it out.
There were a bunch of us individual investors who routinely made money by betting AGAINST Cramer's advice from his show because his lemmings would run right out and buy his recomendations the minute the stock symbol left his mouth. All you had to do was wait until 10 AM next morning, buy put options on his buy buy buy picks and wait for the cash to roll in on the trade by end of day. Once he warmed his lemmings to stop their knee-jerk buying and do their homework, that gravy train dried up...but it was very lucrative while it lasted.
Too bad the NY Times and Washington Post, etc, aka MSM, do the exact thing Kramer and all business news does. Suck up!
Stewart whooped him good. Now, when does he do begin to do that to the rest of the main stream media. Anybody ever heard of WMDs in Iraq?
The news sucks in this country.
its crazy...
but now the best financial investigative reporting is coming from a comedian!
this is crazy! what have we done? we have to get a handle on our media and what they are doing and not doing.
aRe you kidding me?
The problem Stewart is trying to highlight with the MSM and its financial reporting of Wallstreet is there is NO "investigative reporting" from CNBC or any other media outlet in the US.
I guess the comedian Stewart is less reliable than the comedian Limbaugh?
Sorry, I misunderstand you message. You are right. Exactly!!!
Why is CNBC bad? Because they have negative opinions about Lord Obama?
I know, they're sending out the message.....question Obama and be burned at the stake. Its okay to not like or hate cnbc, but the furious criticism coming from basically nowhere has made the motive pretty transparent. None of this criticism about cnbc is new, it could’ve easily been pointed out at the beginning of the recession – but now after the Rick Santelli moment and some of Cramer’s comments about Obama, apparently a line has been crossed.
Cramer has been slammed for years by people, way before Obama. It seems to me that Cramer has made a much bigger deal out of his "disappointment" with Obama than he ever was with praise for him. Cramer is nothing more than a CNBC sideshow.
Did anyone on CNBC criticize Bush about anything economic, while he was in office?
And yet look what Bush did, what he left us, the results of the very policies he pushed for, and believed he hadn't been successful enough in pushing...
Did anyone at CNBC criticize financial deregulation, SEC incompetence under Bush?
Wait..actually Cramer DID call out the SEC...said they knew nothing- NOTHING!...even while he was advocating manipulating the markets, breaking SEC rules, and MONTHS before he actually gave that buy recommendation on Bear Stearns...
And he wanted interest rates LOWERED, even more, the money supply INCREASED- that's how much nothing the SEC knew...
It is perfectly proper and Obama's duty to call out these people when they have been wrong, wrong, wrong- yet want to b***h, blame, and recklessly hurt the country in an effort to save face and stake out partisan territory.
Anyone who hasn't been wrong, wrong, wrong on CNBC? Let them be the one to offer a voice of principled opposition. It's only right...
No . Because they hype the highs , blame-game the lows and are largely incompetent the rest of the time. Santelli not prepared , then lies , then hides behind his wife then cancels on Stewart . Kudlow : analysis dripping with partisan nonsense ,calling several false oil highs and more than a couple false Dow bottoms . Never mind his never finding fault with Bush for 6000 dow points but blaming only Obama for the countuation of the already established bear market . Cramer : Tell me where Stewart has it wrong ?
Obviously oblivious.
CNBC creates rather than reporting news.
It is not just CNBC. It's every main stream media outlet that reports on Wall Street. Stewart is making a point. The same media mistakes made in reporting financial news was made in the lead up to the war in Iraq.
When the media becomes a bullhorn for those who want to get a message out, we all lose. Remember how much the media loved Donald Rumsfeld before and then during the outset of the Iraq war of 2003?
"If he says it is, it is." No questions asked.
I think the overall point here is that CNBC is not really doing finance journalism. CNBC is beholden to the interests of it's parent company General Electric. So how is CNBC going to really be able to call out GE's corporate customers if the Cramer or one of the other guys thinks something is wrong.
You would have a basic conflict of interest.
Has nothing to do with Obama. Everyone is entitled to their own opinions, just not entitled to their own facts.
CNBC - conservative national broadcast corp. - it is so right wing. I wrote to them about 2 weeks ago and told them that the best thing for the market would be if CNBC went off-air for 3 weeks.
I never knew the Left hated CNBC so much. Could it be they are willing to "eviserate" Cramer ( who is a lifelong democrat and voted for Bam) because he spoke out about how Obama is destroying the wealth in America? Tell me how wrong that was.....it was his own opinion. We must get rid of that damn First Amendment.
We need to destroy some people's wealth (ill-gotten gains). All the people who profited from the collapse need to give back the money or have it taken from them. The bankers should lose their jobs and be replaced (and their money taken away for taking such stupid risks with the entire world's economy). The pundits should also lose their jobs and salaries and be replaced with actual journalists who research their stories. There was a class war, and the rich won. It is now time to end their monopoly on power and their incessant greed. Multi-generational wealth means that those who are born into it are immune from working and are automatically our overlords.
If someone managed to figure out a way to get ATM machines to give them any amount they wanted to take out, and went around collecting money from every ATM they could find, would that be illegal? Well, the Wall St. types did basically the same thing on a larger scale. If the ATM thief was caught, he/she would be arrested and would have to give back the money. Not so, apparently for the white collar thieves.
I prefer to refer to CNBC as financial pornography.
Whenever I do have it on the tv, the volume is always off. I appreciate the tickers onl
They are. They certainly aren't news.
Cramer was skinned and stretched tight over a drum frame ... people will be beating on him for years.
LOL! The imagined scenario is worth it!
Cramer market strategy : Jump in on the over-boughts , ignore the trend and major moving-averages and when those two gems pound you -- dollar cost average . The last refuge of the truly desperate (Paul Tudor Jones calls it "losers averaging losers")
NO wonder why Barons found Cramer useful in the reverse. You want to make money ?
Fade CNBC probably , fade Cramer definitely
schicklet3 said, "Jon Stewart did the world a favor by exposing Cramer and his CNBC cronies.
It's hysterical to watch Cramer run to the Today Show and other NBC channels trying to save his skin and make Stewart look foolish. Trouble is, Stewart is right and Cramer is wrong.
Stewart backs up his words with proof positive - Cramer cannot."
If you want to let Cramer and CNBC how you feel, vote in the online poll at
http://www.pollpub.com/is-jon-stewart-overhyping-the-war-with-jim-cramer-and-cnbc.aspx
On-target commentary. The title captures it perfectly.
Regarding shorting Cramer's picks as a profitable strategy, for a long while Cramer touted stocks that made breakout moves. Until he roped that in somewhat by telling prospective buyers to wait a bit after the breakout (probably after receiving many complaints by followers losing $), for years he NEVER mentioned waiting to buy at the retest of the breakout. Even average traders know that breakouts most often retrace to their breakout points after early buyers take advantage of the short-term activity and move on. Then, one tries to determine if the breakout is true by looking at critical signs of accumulation occurring prior to the real move up.
Cramer advocates momentum trading, while insisting he ONLY looks at fundamentals. He consistently rejects technical analysis (with the patent "it's voodoo", that many of his ilk insist is true), ignoring accumulation signs indicating that REAL buying is occurring. In many cases he's proven to be a crappy momentum trader, yet one of his biggest hooks is to stir up the crowd based on the sentiment of momentum. It's sad that many have lost money following this advice, while there is PLENTY of better advice out there for traders.
Not all of his analysis is bad or wrong; he's not a complete idiot. But he, CNBC, and parent company GE, with it's deep ties to financing & large exposure to the derivatives market (50% of their business), are far from being self-serving.
Oops, meant to say "far from NOT being self-serving" in the last line.
well put
A pundit is a pundit is a pundit... Whether they be on CNN, Fox News, CNBC, or ESPN.
By this argument; an ex-baseball player 'masquerading' as a subject matter expert on baseball is no different than a former hedge fund manager 'masquerading' as a subject matter expert on the markets, or a former surgeon 'masquerading' as the surgeon general.
In today's on-demand culture it is so much easier (and arguably much more successful) to attack someone for their failures than praise them for successes...
Is this Jim or is it Joe? Your logical fallacies sound like just like one of them.
Bad analogy. Cramer doesn't masquerade as an expert, he is one (and the network touts it as such) but dispenses schlock just the same.
A pundit IS a pundit all day long. An expert who becomes a pundit who dispenses schlock is irresponsible, if not complicit.
Show me any advice or action by a baseball player or surgeon that has cost so much for so many.
I join the Jon Stewart accolades! Long time coming!
Aside that, is anyone else driven crazy by CNBC's seizure-inducing graphics (multiple crawlers, layers of headlines choking the screen)?
The screen crawl, along with the revolving graphics, tag lines, sound effects whenever a chart or statistic is shown, etc., is just part of the razzle-dazzle. To a fair degree, that stuff is there to mesmerize the viewer into some sort of complacency, compliance, and dependency on their shows. Remember, they're more interesting in viewership, and probably less interested in actual reporting.
Fox News started the trend, and I think that's how they continue to draw an audience. Some people are mesmerized by the graphics, and some people like more substantive news. Also, Fox seems to be more of an infotainment channel lately. All they seem to be talking about when I flip through is stupid gossip stories about Kaylee Anthony, Chris Brown or some missing white girl. While those are probably important to some people, they affect very few people. I want stories about what's really going on behind the curtain on Wall St., Afghanistan/Pakistan, Iraq, WMD proliferation, and how we are going to clean up the various messes Bush left in his wake (and how to prevent the next admin from letting it happen again). I don't know how a large corporation could own a financial news network without it automatically being a conflict of interest or market manipulation, but I'm not a lawyer. Some people just love shiny objects, I guess the same applies to graphics.
The Barron's analysis of Cramer's picks was deeply flawed. The key to successful investing is the price you enter and the price you exit, as well as cutting your losses short via careful money management. Cramer does not give the exact price as to where to purchase a stock he recommends. Many of his viewers simply go out and buy the his recommendated stocks after-hours at inflated prices, or the next day at inflated prices when viewers pile in. Cramer frequently tells his audience not to buy the stock for some days after he recommends it and to cost average in as it goes down. Barrons analysis does not take all this into account. Folks should also be aware that no one at CNBC can tell the future with any high degree of certainty. No one can. Investors, including Cramer, will change their views as new information and data becomes available. So he may say something one day, then get new information, then change his mind the next or later in the week. As for the collapse of Bear Stearns, it happened very rapidly. No one believed the company would collapse until hours before it did. There is no way Cramer could have been aware of the collapse unless tipped off by top insiders at Bear. Last, I hope folks give Cramer credit for telling people to take all the money they'd need in the next five years out of the market at over Dow 9000.
"What's important when you are in that hedge fund mode is to not be doing anything that is remotely truthful, because the truth is so against your view - it is important to create a new truth to develop a fiction," Cramer advises. "You can't take any chances."
http://www.huffingtonpost.com/2009/03/11/jim-cramer-shorting-stock_n_173824.html
check him out
You made a great point and I applauded Mr. Cramer at the time when he told people to get out of the market. Why exactly did that stop? Why was he not saying it in the days before Bear fell? Was it only that one specific day of his famous meltdown that it was appropriate? Why wasn't he saying it everyday? Because saying it would not draw viewers with the illusion of getting rich! If he felt it was the truth that one day why did he stop and thus start lying by omission?
Mad Money and CNBC only have viewers when people think they can get wealthy watching, pure and simple. Jon Stewart, and now others, are simply pointing out the fact that the folks at CNBC are not the reporters and industry critics they advertised themselves to be.
There is no good defense of Cramer's or CNBC actions. CNBC is just a bunch of variety shows that pretend to give solid investment advice and reporting, when in fact they were doing the opposite to get access to industry stars. A lot of people got hurt by what they did and now they have the gall to imply they are not responsible. Some joke about it, but not those who beleived it and are now in serious trouble. Try making your shallow defense of Cramer to one of those people, you'll see how silly it is real fast.
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