For those of us in the trade, this isn’t news, but it’s pretty funny that it took so long for a competitor to call out Jim Cramer on his bs.
Cramer has been consistently wrong about so many things for so long, it’s just sad. Let’s see, he recommended the KBW regional banking ETF in August 2007, just as we started to head into Armageddon for banks.
- Cramer thinks the Fed’s rate cut will make the difference. These banks will “go from making no money” beyond ATM fees to “making a huge amount of money” on “what they take from you and loan out to others.”
In the same bit, Cramer recommended two specific regional banks: National City NCC and Comerica CMA. Let’s see now. National City is down 85% since he recommended it, and Comerica is down north of 42%. In tech, he selected Ebay EBAY (he called it a “buy” once it got below $34, which it did in short order). Ebay has since gotten cut in half. Nice going, Jim.
Perhaps we shouldn’t pick on Cramer for such short-term disasters. After all, even though he seems to view the stock market as a casino where money is to be made by flipping shares rapidly rather than investing in businesses, investing is and remains a long-term proposition. So, let’s turn back to the last big market inflection–the TMT meltdown.
TMT shares, represented by the Nasdaq 100, peaked on 10 March 2000. In the year leading up to the peak, Cramer was one of the biggest cheerleaders for the “new paradigm”, berating those oriented to long-term, fundamentals-based investing as “Wrong!”.That would be bad enough, but then there’s this: On 29 Feb 2000, 10 days before the meltdown began, Cramer wrote an article singing the praises of the new economy. In the article, entitled “The Winners of the New World,” Cramer went on to pick a bucket of some of the biggest flame-outs of the soon to come tech wreck:
- You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.
OK. Here goes. Write them down — no handouts here!: 724 Solutions, Ariba, Digital Island, Exodus, InfoSpace.com, Inktomi, Mercury Interactive, Sonera, VeriSign and Veritas Software.
Of the ones that didn’t die off, Verisign VRSN is down 85%, Ariba ARBA is down 98% and Infospace INSP is down 98% (is there a trend here?). Others were taken out, but not for good value: Veritas Software traded at 168.69 on 10 March 2000 (mind you, it lost more than $500 million in 1999), and was eventually bought by Symantec SYMC for a bit over $27 per share.
The message is clear. You can make lots of stupid mistakes, but we’ll put you on TV if you’re clownish enough.
