Jeff Zucker, the Chief Executive of NBC Universal, dismissed Jon Stewart's criticism of Jim Cramer as "unfair" and absurd." He's wrong.
Cramer gets a lot of attention for his outsized personality and outrageous antics. But the balance of the programming on CNBC is much more insidious. It consists of an unending stream of well-educated "financial experts" pontificating to CNBC's viewers about the direction of the markets, "hot" mutual fund managers and stocks to buy "now."
There are no "boo-yas" from this crowd. They talk like serious people whose advice should be followed...until you take a closer look.
CNBC recently interviewed Michael Katz who runs the Matrix Advisors Value Fund (MAVFX).
Mr. Katz had a prediction for CNBC viewers. He was bullish on the market and thought that it would start to recover "about now."
He may be right. But that misses the point. Does he (or any other CNBC pundit) know more than you?
Let's take a look at the performance history of the Matrix Advisors Value Fund. Mr. Katz has been the lead manager since July, 1996.
The results are troubling. While the fund had great years in 1999 and 2003, it has underperformed its benchmark (the S & P 500 TR index) year-to-date, for the past year and for the past three years.
For the past 5 years it ranked in the last quartile of all funds in its category (by total return).
Mr. Katz' stock picking skills are also questionable. He did an interview on October 24, 2007 with Justin Fuller, an "equity strategist" at Morningstar. Mr. Fuller extolled the stock picking virtues of Mr. Katz, noting that he is "one of the managers I closely follow."
Mr. Katz made the following recommendations:
Merrill Lynch ( formerly MER) -- Mr. Katz noted that "when people decide that they are not going out of business, and they are not....easily the stock should sell in the mid 70s to low 80s...once people decide that the financial world is not coming to an end." No comment on this pick is necessary.
Time Warner (TWX ) -- He saw "a lot of upside" because his "sense" was that the assets were worth "$25 to $27" per share. At the time, Time Warner stock was selling for $18.01 per share. Its current price is $7.87.
Covidien (COV) -- He thought this stock a great buying opportunity for those who could wait two to three years. When he made this recommendation, the stock was selling for $40.82. It was last traded at $32.05. Mr. Katz may turn out to be right, but investors would have been better off waiting for the drop before buying this stock.
I don't mean to pick on Mr. Katz. He is no better or worse than his colleagues who flood the airwaves making predictions about the unknowable and the unpredictable.
Here's the takeaway: It doesn't matter if the stock pickers and market timers are packaged as human cartoon characters like Cramer or reputable fund managers like Mr. Katz. Their musings are not a reliable basis for making investing decisions.
CNBC does a great disservice to investors by peddling this information as valuable, when it really is misleading.
The only thing "absurd" about this scenario is the sad fact that so many investors buy into the hype.
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