• About
  • Archive
  • Privacy & Policy
  • Contact
Dana Blankenhorn
  • Home
  • About Dana
  • Posts
  • Contact Dana
  • Archive
  • A-clue.com
No Result
View All Result
  • Home
  • About Dana
  • Posts
  • Contact Dana
  • Archive
  • A-clue.com
No Result
View All Result
Dana Blankenhorn
No Result
View All Result
Home Current Affairs

Jim Cramer is Not an Economist

by Dana Blankenhorn
February 27, 2007
in Current Affairs, economics, economy, entertainment, journalism, regulation, Television
6
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

Mel_kiper
Asking Jim Cramer to play an economist on TV is journalistic malpractice.
(Picture from the Sportolysis blog.)

But there he was tonight, with Chris Matthews, pretending to not only understand the economy, but foreign policy and the Chinese economic-political system as well.

What Cramer was selling is the same thing he’s been pushing for a decade, happy talk.

This is not a slam on Cramer. He made his bones as a Wall Street trader. He was good at it. He understood stock trends, he knew how to play momentum. While everyone and his dog was making a killing during the dot-boom, Cramer did, too.

Jim_cramer
But he’s not a businessman. TheStreet.Com was crap for investors.  He didn’t see the dot-bust coming, either. He’s not an economist — he has no training in it. He’s not a foreign policy analyst, either. Yet there was Matthews tonight, pretending he is all these things.

The "interview" is a perfect illustration of the weaknesses inherent in our TV age, the medium on which today’s political thesis is based. Stardom and familiarity trump expertise, and thus happy spin trumps all. The idiot is Matthews, those who point a camera at him, and those who believe him.

Rachael_ray
What Cramer has done, in this decade, is become a salesman. He sells the idea of stock investing the way Mel Kiper Jr. (above) sells the NFL draft, the way Joan Rivers sells the glamor of the Oscars’ red carpet, the way Rachael Ray sells cooking. (That’s Rachael, to the left, from her syndicator Kingworld.)

Kiper can’t run a football team, Rivers can’t run a career, and Ray is not a restaurateur. They are TV personalities. So is Cramer.

Here’s Cramer’s trick. He touts companies that are sound but a little down, and in the short run they go up, because his viewers buy them. It’s a self-reinforcing cycle, and few bother checking to see whether those same stocks outperform the market in the long term. (They don’t — he always claims to have sold them before they fall.) This is no more dishonest than Dr. Phil’s playing a psychiatrist on TV. I’m just not going to be Phil’s  10 o’clock appointment. Making Cramer your investment advisor makes you a fool.

Some days, however, Cramer’s trick doesn’t work. Today was one such day. He touted 10 stocks on his February 26 show — all fell on February 27. McDonald’s was down  $1.34, TransOcean lost $2.92, Halliburton lost $1.10, Global SantaFe lost $2.27, Moody’s lost 49 cents, McGraw-Hill lost $1.56, Greif lost $9.54, China Mobile lost $5.12, Time Warner lost 89 cents, and Sociedad Quimica y Minera (a Chilean mining outfit) lost $10.45. Per share.

Events got in the way.

What Cramer told Matthews is that the Chinese will fix this, because they’re Communists, and they control the economy. This is absolutely, completely 100% false.

What’s the real story?

  1. Beijingforbiddencity_1
    Much of this was computer error. The U.S. market seemed to be down a little over 1% at around 3 PM when the NYSE computers sent through a ton of sell orders at once, pushing the Dow (which magnifies everything) down over 200 points at once. This panicked other computers, sell programs that sent the Dow down another 100.
  2. Absent the panic going back around the world today — from China and Japan across Europe and back to the U.S. — stocks should rise at tomorrow’s open. (That doesn’t mean they’ll stay up.)
     
  3. Panic is possible. China does not control its investors in the way Cramer thinks. In fact, the Chinese market is more like the pre-1929 U.S. market than like a modern, regulated stock market. (That’s why China Mobile, one of today’s big Cramer losers, is listed in the U.S.) The Chinese market lost 9% of its value yesterday, and could lose again tomorrow, thanks to the NYSE computer error. (This would be the equivalent of the Dow falling 1350 points in one day.)
  4. China’s leverage is to raise the value of its currency. American policymakers want this. But the effect of a quick rise would be to force interest rate rises here, pushing the housing market down further, and pushing the U.S into recession.
  5. Cramer is expecting China to show a long-term view the U.S. hasn’t shown and that he hasn’t encouraged. Any miscalculation could result in unrest, inflation, or a recession. China’s economic leaders are good, but they’re not supermen. 

Television
The most important point is that this doesn’t really matter. The Dow’s gains of the last several years mask major structural weakness in the U.S. economy. The expansion of poverty, the weakening of the middle class, the government-financed housing bubble, and the general looting of America by corporate CEOs (like those at Halliburton) are hollowing us out. The market’s gains are all the result of corporate profits taking an unsustainable portion of the economy.

Unwinding all this, along with the gigantic government debts created by the War in Iraq, will require enormous inflation that will leave most of us with savings worth a fraction of present value. Not such a big deal since most of us don’t have savings, so put it another way.

You’re broke. And we as a country are broke.

Largely because, I think, people who should know better treat people like Jim Cramer as experts on things they know nothing about. Because they’re on TV.

Tags: celebrityChinaChina stocksChinese stock marketChris MatthewsDow JonesinvestmentsJim Cramerstock marketTV
Previous Post

Lethargy Breeds Competition

Next Post

Accepting failure leads to success

Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn began his career as a financial journalist in 1978, began covering technology in 1982, and the Internet in 1985. He started one of the first Internet daily newsletters, the Interactive Age Daily, in 1994. He recently retired from InvestorPlace and lives in Atlanta, GA, preparing for his next great adventure. He's a graduate of Rice University (1977) and Northwestern's Medill School of Journalism (MSJ 1978). He's a native of Massapequa, NY.

Next Post
Accepting failure leads to success

Accepting failure leads to success

Comments 6

  1. stockTagger says:
    18 years ago

    Coincidentally not a very good takeover speculator either http://www.stocktagger.com/2007/05/jim-cramer-takeover-targets-performance.html

    Reply
  2. stockTagger says:
    18 years ago

    Coincidentally not a very good takeover speculator either http://www.stocktagger.com/2007/05/jim-cramer-takeover-targets-performance.html

    Reply
  3. mlgreen8753 says:
    16 years ago

    I’ve never heard of Jim Cramer, but my mentor is Robert Kiyosaki, who not only peaked my interest in stocks, but investing in general. That’s why I have online businesses, real estate, and I am now looking into my first stock investment in a company called Mentor Capital which has a 20% interest in a privately held biotech company in the midst of clinical trials for a brilliant new breast cancer treatment which is explained in more detail at http://www.breastcancerinvesting.com

    Reply
  4. mlgreen8753 says:
    16 years ago

    I’ve never heard of Jim Cramer, but my mentor is Robert Kiyosaki, who not only peaked my interest in stocks, but investing in general. That’s why I have online businesses, real estate, and I am now looking into my first stock investment in a company called Mentor Capital which has a 20% interest in a privately held biotech company in the midst of clinical trials for a brilliant new breast cancer treatment which is explained in more detail at http://www.breastcancerinvesting.com

    Reply
  5. Dana Blankenhorn says:
    16 years ago

    Jon Stewart’s problem with Cramer is that the difference between him and your guy aren’t that stark. “I want you to protect me from guys like you,” he said, and if you’re going to be given the credibility of an hour-long TV show that’s what you should be doing.
    Selling specific stocks and calling yourself an economist? Real economists know not to do that.

    Reply
  6. Dana Blankenhorn says:
    16 years ago

    Jon Stewart’s problem with Cramer is that the difference between him and your guy aren’t that stark. “I want you to protect me from guys like you,” he said, and if you’re going to be given the credibility of an hour-long TV show that’s what you should be doing.
    Selling specific stocks and calling yourself an economist? Real economists know not to do that.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Post

The E-Transport Revolution Rolls On

Change the Subject, Atlanta

May 14, 2025
The Coming Labor War

The Insanity of Wealth

May 7, 2025
Tachtig Jaar Van Vrede en Vrijheid

Tachtig Jaar Van Vrede en Vrijheid

May 5, 2025
Make America Dutch Again

Make America Dutch Again

April 30, 2025
Subscribe to our mailing list to receives daily updates direct to your inbox!


Archives

Categories

Recent Comments

  • Dana Blankenhorn on The Death of Video
  • danablank on The Problem of the Moment (Is Not the Problem of the Moment)
  • cipit88 on The Problem of the Moment (Is Not the Problem of the Moment)
  • danablank on What I Learned on my European Vacation
  • danablank on Boomer Roomers

I'm Dana Blankenhorn. I have covered the Internet as a reporter since 1983. I've been a professional business reporter since 1978, and a writer all my life.

  • Italian Trulli

Browse by Category

Newsletter


Powered by FeedBlitz
  • About
  • Archive
  • Privacy & Policy
  • Contact

© 2023 Dana Blankenhorn - All Rights Reserved

No Result
View All Result
  • Home
  • About Dana
  • Posts
  • Contact Dana
  • Archive
  • A-clue.com

© 2023 Dana Blankenhorn - All Rights Reserved