Will This Video Turn Jim Cramer Into A Toxic Asset?
By Justin Gardner | Related entries in Economy, History, Law, Money, VideoWe all know Cramer has a big mouth, but back in 2006 he gets dangerously close to admitting that he has engaged in “fomenting” the market, which he calls “blatantly illegal.”
First, most of the quote:
You can’t foment. That’s a violation. [...]You can’t create an impression yourself that a stock’s down, but you do it anyway because the SEC doesn’t understand it. [...]
This is actually blatantly illegal, but when you have six days and your company may be in doubt because you are down, I think it is really important to foment if you’re one of these guys.
Now the video…
I like how he says at the very beginning that he’d never say anything like this on TV.
Well Jim…get ready.
But beyond Cramer’s boneheaded quasi-admission, here’s the one jewel in all of this that everybody should take away…
The great thing about the market is it has nothing to do with the actual stocks.
That’s right. It’s all about the manipulation, not the actual value. And guys like Cramer have made a living destroying people who naively believed that the stock market should work like it’s supposed to.
Now, people took note of this back in late 2006, early 2007 and Cramer responded by saying that he hadn’t broken any laws and that he created TheStreet.com to combat and highlight practices like these…
But others did not play fair, and that’s why I started TheStreet.com and have been writing about these abuses for nearly a decade — to explain to my readers how the markets really work. I wanted to give transparency to the market and tell people the good and the bad.
And so he got away with it back then, but do you see the logic gap there? On one hand he says he wants to “tell people the good and the bad” but in this video he says he would never say something like this on TV?
Obvious question: If he was so worried that this is standard operating procedure, wouldn’t he use any platform he could to tell people about it?
Long story short, it appears as if Cramer is a liar at best and a crook at worst.
I can’t wait for The Daily Show tonight.
This entry was posted on Thursday, March 12th, 2009 and is filed under Economy, History, Law, Money, Video. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 12th, 2009 at 8:01 am
I doubt it. Fact is, it’s a gray area.
This is the sort of area where its very difficult to draft effective regulations without being draconian and extremely restrictive.
When it comes to things like “fomenting,” whether we are talking about markets, revolutions, or anything else, the only useful inoculation is audience prudence and healthy skepticism.
Here’s a simple rule for everyone:
Remember it. Apply it. Be saved by it.
March 12th, 2009 at 8:13 am
One of the single most important skills adults need is the ability to quickly recognize a salesman and a hard sell, and to respond accordingly. Like Buffet says, over the short term, the market is a voting machine, and over the longer term it is a weighting machine.
If you don’t understand what the quote at the top speaks to, then you are, quite simply, a sucker. All of this may be manipulation, but what freely expressed opinions do not include a component of manipulation? Watch television for one night, and while doing so, try to identify a point when you are NOT being manipulated. Do not hold your breath while doing this.
Fact is, manipulation is a word we’d do much better understanding if we didn’t assume it was by itself intrinsically negative. The fact is, across any domain or endeavor where there is craftsmanship of any type, there is in fact manipulation. Because craftsmanship is synonymous with manipulation.
I manipulate a hammer to drive a nail into a board. If the nail is sentient, it ought to ask whether it really wants to go into the board. Not to mention whether it’s worth getting hammered in order to be in the board.
If I need to hold two boards together, I am unlikely to provide full and fair disclosure to the nail. Instead, I speak to the noble purpose of the nail and the civil virtues that spring from holding boards together. That’s life, baby.
March 12th, 2009 at 12:03 pm
*psssst* what the heck was that?!?
March 12th, 2009 at 7:26 pm
As one who has lost a mini-fortune (by my modest standards) following Cramer’s advice over a period of 4 months, I have no sympathy for the man.
But hey, taking anyone’s advice on stocks is a crapshoot at best.
March 13th, 2009 at 3:07 am
I’m reminded of a passage from the Bible – “A fool and his money are soon parted” – (or was that Shakespeare?). At any rate, one of the often over looked facts with Kramer is that he has been a market contrarian for over a year. If you had done the exact opposite of what he suggested you would have done pretty well. If you’re gullible enough to follow the advice of a TV stock model – I hate to say it, but you deserve what you get. Why would anyone think that there is anything other than greed going on at Wall street? It’s a virtual shrine to greed and gullibility. Anyone involved in day to day Wall street activities knows very well that no one is to be trusted down there, they are all out to get your money – remember that. If you have any money left put it in your mattress for another 6 months – then buy some real estate in Costa Rica.
March 13th, 2009 at 5:29 am
[...] As I predicted, that surprisingly frank but remarkably dumb interview Cramer gave in 2006 (where he basically admitted that the whole market was a big scam) was a centerpiece of Stewart’s assault. And Stewart could have shown A LOT more of that interview too, but he hit the high points and made Mr. Mad Money look like an absolute fool. Because Cramer would try to explain that he was fighting against a practice like “fomenting”, but then Stewart would play another clip where he said he recommended it because the SEC doesn’t know how to stop it. And then Cramer would sit there with a smile/grimace on his face, shrug his shoulders and wait for Stewart to begin talking again. [...]
March 13th, 2009 at 10:56 am
[...] available at http://www.thedailyshow.com.  In one of the highlights (lowlights) Stewart shows clips of Cramer in 2006 explaining how he would manipulate the price of Apple stock by “fomenting.̶… Fomenting, according to Cramer, is when a trader puts out false information or rumors about a [...]