March 13, 2009
Stewart Squares Off On Cramer
Like a sucker I stayed up to watch the Jon Stewart/Jim Cramer smack down on the Comedy Channel. Steward, angry at the refusal of Santelli to come to his show after Santelli's outburst against Obama's mortgage bailout, had run clips of CNBC stock analysts before Sept. 2008 that had predicted incorrectly the subsequent swoon in the stock market. Cramer's show Mad Money was featured in one of the many clips; he said positive things about Bear Stearns that, one week later, was essentially insolvent in a forced sale to JP Morgan. Cramer responded that Stewart was just a comedian that that his clip was out of context. Stewart, his back up, told Cramer "F..k You" and played more Cramer clips on Bear Stearns that showed Cramer had, seven weeks before the collapse, told folks to buy the stock. The gleeful press reported the dust-up and Cramer offered to come on Steward's show. Comedy Central played up the interview as a rumble and it turned out to be a smack-down. Cramer had no clips of Stewart, or himself for that matter, and Stewart came loaded with more clips. Stewart had found a 2006 interview of Cramer, well known to those who follow Cramer, in which he had bragged about beating the system as a stock picker when he had run a hedge fund in the 90s. Stewart had two effective attacks: 1) CNBC's financial pundits called the crisis incorrectly and, therefore, aided the fraudsters by giving them a forum for lying to the public; and 2) Cramer was a clown (throwing chairs, books and plastic bulls and bears and punching sound effect buttons) participating in a swindle -- good people were losing their life savings in their pension plans (told to invest and hold) so that the fraudsters could loot and get away with millions in questionable trades (in other words, it was "not a game"). Cramer's three responses were lost in the on-onslaught: 1) They lied to me too; 2) Reporters do not call CEO and CFO guests liars without very good evidence; and 3) I made some good calls too (his call on the Today Show to get five years of cash out of the markets in Oct. 08). Stewart chastised him for knowingly playing gullible and for not protecting his viewers -- "Whose side are you on?" It was no contest and Cramer left with a meek offer to do better. [Note that the great Warren Buffett's company has lost a boatload of investor money after Sept 2008 and suffered recently a downgrade in its credit rating by Fitch and Buffett has the ear of the President and most of the press. Why is he ethically better than Cramer?]
I have a like-dislike relationship with Cramer. I like his candor on the air: 1) He has courage and takes personal positions (not "others say") on complex questions and risks making mistakes. Periodically this show recalls his winning and losing calls from the past several weeks (what other show does that??). 2) He knows insider trading strategies that you may hear only from him in a timely fashion ("hedge funds are dumping good stocks today, driving down their prices, not because the stocks are bad but because the funds need to raise cash"). 3) He does have a "wall of shame" for poor CE Os that other pundits would not touch. And, most importantly 4) he does educate folks about the folly of chasing the markets, the number one problem for amateur investors (selling in down markets and buying in up markets) and he offers another strategy (buy in layers on the way down and sell in layers on the way up). When to pull the trigger??? he tries to you what he is doing and would do if he still ran a hedge fund. If he did nothing else, 4) would justify his show. On the other hand, I do not like: 1)His long only strategy (when to buy and when to sell what you hold). Short selling, although risky, is, as we now know, a very, very important part of the trading game. He attacks shorts, although he was one (and Stewart skewered him personally for this). 2) His uneven attack on regulators (he went after Lockhart, the Fannie and Freddie regulator for not loosening the market further; he went after Bernanke for not lowering interest rates faster) and looks to be too supportive of only the fixed income (bond) market traders. And 3) his support for day trading, an inherently losing strategy for the majority of his viewers.
In other words, Stewart has made a mistake -- he has gone after one of the more candid guys for not being candid enough. I worry about whether Cramer will pull back and be less cutting edge, not push forward. Stewart should pick better targets; those who really are shills for the markets. And, by the way, had Cramer had his staff edit clips of Stewart's poor political calls (Stewart is a political junky) -- I do not watch Stewart often yet can reminder several gaffes easily --Stewart's political calls can be made to look questionable as well. But Cramer is not a political hack and did not pull the knee jerk political hack counter-attack of a Matthews that answers a social question by pushing back with personal attack (On whether single motherhood is a social problem: "but Palin's child has an out of wedlock baby...").
March 13, 2009 | Permalink
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i was waiting for this
Posted by: hotmoney | Mar 13, 2009 10:44:00 AM
On one level, Cramer is an unfortunate target, because there are numerous others on CNBC who are far worse. However, they wouldn't come on the air with Stewart (BTW, not "Steward").
I disagree with your statement that "Reporters do not call CEO and CFO guests liars without very good evidence." Yes, that's true. However, before CNBC brings these guys on to tout their products (i.e., their companies and the stock of their companies), it should have its staff vet the companies and prepare the on-air commentators to ask tough questions. As it now stands, most of the CNBC shows are little more than infomercials for the guests. In other words, the problem is not that CNBC doesn't call these people liars, but it's that CNBC's commentators are not in any position to challenge the rose-colored statements of the corporate execs because CNBC's staff hasn't done its basic homework. In other words, get the evidence and, if the evidence warrants it, call these guys liars. There's a word for that process. It's called "journalism."
Posted by: Stuart Levine | Mar 14, 2009 9:23:29 PM
I think CNBC is like the White House Press Corps...they relay the soundbites the White House gives to the general public. CNBC largely does this on behalf of corporations. Would like to see Stewart equally lambaste a White House reporter---do not think he has (in person) even though they appear on the show.
Posted by: Anonymous | Mar 17, 2009 12:13:38 PM
We applaud both - Cramer and Stewart for taking a stand. As doth the Prof here (often)
Though Cramer has a loyal history with Goldman Sachs, he did step up to the plate and made some remarks about the eToys pump n dump saga
Posted by: Laser Haas | Mar 20, 2009 1:05:33 AM