Why You Shouldn't Listen to Jim Cramer

Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now."
-- Jim Cramer, Oct. 6, 2008, S&P 500 at 1,056.89

With that statement, I now consider Jim Cramer a menace to investors.

He used to be a subject of cocktail-hour conversation -- "Did you hear what Cramer did on his show the other day?" -- but after his recent melodramatic meltdown on the Today show, he's the closest thing to a walking, talking hazard I can think of. Why? Let me count the ways.

Seriously?
I fully applaud Cramer's stated goal -- to help people make money by investing in the stock market. But I'm generally one of the people with a drink in my hand, shaking my head over stories of the latest episode.

You see, when someone issues panic-inducing market calls -- instead of long-term strategies to buy and hold good companies -- the average investor simply gets crushed.

Cramer's Today show plea was grounded in a sound reality -- Fools should never have money they need during the next five years in the market. But by advising people to indiscriminately sell, he's just helping to decimate their portfolios.

Chances are, most viewers were petrified before Cramer even spoke -- because the market's been up and down (and mostly down) more times than a yo-yo lately. Which means even a very small push was likely more than enough to help investors join the terrified herds pulling their money out of the market.

That's right -- at the end of last week, investors pulled a whopping $52.1 billion out of U.S. managed funds. Based on what these funds were holding, they were indirectly pulling out of mutual fund mainstays like ExxonMobil (NYSE: XOM  ) , Procter & Gamble (NYSE: PG  ) , Johnson & Johnson (NYSE: JNJ  ) , Microsoft (Nasdaq: MSFT  ) , and General Electric (NYSE: GE  ) -- many of which had already been hammered.

And so, instead of holding onto the steady blue-chip stocks that have historically provided investors with some of the strongest long-term returns, panicked investors are likely to sell low … thereby ignoring the sound and sage advice from names like Buffett, Lynch, Graham, Munger, and Bogle.

You don't need a weatherman …
No one can consistently forecast the direction of the market. I repeat: No one can consistently forecast the direction of the market.

It moves completely randomly and unpredictably over the short-term -- and therefore trying to make a "call" on the market won't do you much good. Pick a direction (up or down), and there's a 50% chance of being right -- even though the prediction would be meaningless.

Don't be like poor Puxatawney Phil. The furry little bugger climbs out and either sees his shadow or he doesn't, but the result has nothing to do with whether winter is over -- just like a stock market prediction has nothing to do with the market's movements. Because the short-term movement of the stock market is random.

Cramer, for his part, has flip-flopped more often than John Kerry, calling the bottom several times this year. Then there was his theory that 2008 would be the year of natural gas. Ouch.

The talking heads on TV get paid to attract viewers. Education is a secondary priority (or worse). As investors, we can't let their predictions catalyze us with fear -- as it probably has for less-sophisticated investors who don't have much money to play with in the first place.

And that's why I think the Today show gaffe is even worse than his usual performances. Regular CNBC viewers are used to wild, gaseous monologues. Last week's prediction was on network TV!

Whether Cramer turns out to be right or wrong in the end isn't the point. The point is, no one can claim to predict the markets -- no one. If you follow the advice of those that say they can, it's likely to cost you thousands (if not more) in costs, fees, and missed opportunity.

Here's the real problem
In the real world, there are commission costs, taxes, and opportunity costs -- and they have a pretty big effect on the real returns investors get.

The combined result of this, I suspect, is that the average investors playing along with Mad Money have been seriously burned multiple times. Worse yet, they're sends a whopping portion of their hard-earned money to the IRS and their brokers.

Take a hint from someone who actually understands these matters: John Bogle, the founder of Vanguard Investments. He writes: "No matter how efficient or inefficient markets may be, the returns earned by investors as a group must fall short of the market returns by precisely the amount of the aggregate costs they incur. It is the central fact of investing."

Think about that the next time you hear "Buy, Buy, Buy" or "Sell, Sell, Sell."

The Foolish bottom line
If you want to make money in the stock market, you need to tune out the panic -- or the euphoria. You need to remember that no one has any idea where the market is going in the near or medium term. You need to buy shares of great, built-to-last businesses. You need to hold for the long term. You need to keep as much money as you can from the tax man or your broker.

That's what we do at Motley Fool Stock Advisor, and it's paying off. Take two of our best stocks, Marvel Entertainment (NYSE: MVL  ) and Costco (Nasdaq: COST  ) . We recommended buying shares of these stocks more than six years ago. Both have outperformed the market by incredible margins. I bet we'll continue to hold these two for a long time to come.

The cost of doing all this? Probably $24 in broker fees and $0 in taxes. That's a perfect example of what I'm talking about. In fact, our whole scorecard is beating the S&P 500 by 29 percentage points.

As for Cramer … he's undoubtedly a smart stock guy, and he puts on a rambunctious and entertaining show. But what he sorely lacks -- and what you must never forget in your investing days -- is temperament. It was Warren Buffett who once said that "the most important quality for an investor is temperament, not intellect."

Want to see what else we've recommended and what we're recommending now? Click here to get a free, 30-day trial to Stock Advisor -- there's no obligation to subscribe.

Nick Kapur owns shares of Marvel Entertainment. Marvel and Costco are Motley Fool Stock Advisor selections. Johnson & Johnson is an Income Investor recommendation. Microsoft is an Inside Value pick. The Motley Fool's disclosure policy would never suggest it could predict or time the market.


Read/Post Comments (71) | Recommend This Article (90)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 23, 2008, at 1:22 PM, paultaut wrote:

    Cramer is the 21st century's Joe Granville, Did well for a while but couldn't continue to meet expectations.

    In the current environment, making guestimates on the fly is a crapshoot at best. It would behoove his watchers to ask for an accounting of the Performance of his "Charitable Trust", From the Inception of the show, year to date, month to date. The first 5 minutes of the show can be devoted to alone.

    Put simply, why isn't the Trust entirely in cash?

  • Report this Comment On October 23, 2008, at 2:02 PM, DJP61 wrote:

    Thank you…this is a stunningly accurate article. As for me, I terminated my Cramer watching just after his late winter advice to buy Bear Sterns. Those shares were hovering around $90 at the time…I can still remember him whispering Bear Sterns over the left shoulder while walking off the Mad Money set during sign off. I can likewise remember his early spring advice to sell Budweiser stock at $47 per share because BUD puts him to sleep trading in a narrow range between $45-$52. Great call Cramer, particularly since BUD has typically hovered north of $60 since your sell advice. But the October 6th Today Show sell rant was nothing short of irresponsible…and indeed many have suggested akin to yelling fire in a crowded theater. So I’ve forever tuned Cramer off, just one among many I suspect.

  • Report this Comment On October 23, 2008, at 2:30 PM, Russell wrote:

    Nick, I don't understand the point you are trying to make. If the Fool and Cramer both believe that investors should not have money in stocks that they will need for the next 5 years then what is the issue. You stated that "No one can consistently forecast the direction of the market" so therefore, the best time to pull money out of the market that should not be there is now. Cramer's statement was good advice not a menace unless you think people should try timing the market to sell their stocks. Cramer never said to pull long-term / retirement money out of the market. However, I am beginning to agree with him that buy and hold is a poor investment strategy as the market is now flat for the last 10 years.

    Also I do not know why you think investors would blindly follow what Cramer recommends any more that readers of this web site would. You are implying that anyone who listens to Cramer or watches the Today show is stupid?

  • Report this Comment On October 23, 2008, at 3:41 PM, Awebb30 wrote:

    Good article, Nick. It's noteworthy that the entire media, not just Cramer, is guilty of perpetuating fear and hysteria in an effort to boost ratings, website hits, etc., but the Cramer stunt was bad. I found it humorous that NBC considered Cramer a "guru" and decided to put him on the air to advise already terrified investors. It was less humorous when I arrived at my office with worried co-workers talking about pulling out their kids college savings based on Cramer's call. Yikes! There's no question that the credit mess is bad news, but I own stocks that are creaming Wall Street estimates and getting 10% haircuts for their efforts. I'm firmly convinced that the market is so oversold as a result of the media's relentless dramatization of market dynamics.

  • Report this Comment On October 23, 2008, at 3:48 PM, TrailerParkJawa wrote:

    Hi Russell,

    If you look at what Cramer said, his wording indicates people should take money OUT fo the market not to avoid investing if you need it within 5 years. So it was in essence a recommendation to SELL. That is where the fool disagrees with Cramer. I think thats where Nick is coming from.

    TPJ

  • Report this Comment On October 23, 2008, at 4:22 PM, seablue918 wrote:

    I have long been concerned with the feverish anxiety Cramer lends to stock picking. He's so quick on the draw and covers so many stocks and companies in a day that you get the sense he doesn't recall half of what he dishes out. It's a carnival act but those risking injury the most sit in the audience.

    I haven't watched him for awhile but did, out of curiousity, look at his video follow-up to his recent panic sell suggestion. Sure enough, he took the whole event as another building block to his ego.

    People just need to turn him off. Only then will he simply go away.

  • Report this Comment On October 23, 2008, at 4:58 PM, patient4ever wrote:

    As I've accumulated extra money, I've been buying ge on the way down. my last was 18.5 and I expect it may go lower. Not having the nerve and enjoy sleeping nights, so I'm not about to go short, but will continue on buying. GE wont be down forever.

  • Report this Comment On October 23, 2008, at 6:27 PM, zeppelin1704 wrote:

    During his show after the sell rant, Cramer advised a caller to pull money out of his 14-year-old son's 529 account and put it into FDIC-insured savings. I think this gets you a 10% tax penalty on top of paying taxes on whatever money he pulls out at his rate, so he is probably down 35% before the money gets to the insured account. That struck me as the worst advice of all.

  • Report this Comment On October 23, 2008, at 6:41 PM, MooBaby17 wrote:

    When I heard that Cramer pulled that melodramatic stunt on national TV, I knew in an instant that it would have the same effect of yelling "Fire!" in a crowded theater...and be just as dangerous. The guy is a ego-driven clown.

  • Report this Comment On October 23, 2008, at 6:46 PM, knighttof3 wrote:

    I heard somewhere that Cramer is right 48% while the average investor is right 46%. So he is a 2%-guru :-)

    Having said that, he has an encyclopedic knowledge of stocks, not that his decisions based on this knowledge are any good.

    I do find him the most entertaining talking head and you too should treat his show as (somewhat wonky) entertainment, much like 99.99% of the Fool site!

  • Report this Comment On October 23, 2008, at 7:49 PM, 181736065 wrote:

    Fact is he said "get out" when the S&P was 1050... it's now 900.

    When he said "get out" my diversified Hidden Gems portfolio was about 20% higher than it is now. Ouch!

    No matter what you think of his theatrics, looks like he was right.

  • Report this Comment On October 23, 2008, at 8:31 PM, Awebb30 wrote:

    "No matter what you think of his theatrics, looks like he was right."

    If there were no penalties, taxes or commissions to pay for making short-term, knee-jerk movements, I'd say your post is correct. Unfortunately, all of those things are realities for the folks who sold low and locked in losses. We could (and eventually will) have a massive upside correction anytime. Most people interpret his words to mean you should stay out of the market for the next 5 years. I'm confident my holdings will be just fine in 5 years.

  • Report this Comment On October 24, 2008, at 12:23 AM, ScottDAndersen wrote:

    Nick is trying too hard here to earn his Cramer-bashing badge and the article wanders as a result.

    Even Nick says: "Fools should never have money they need during the next five years in the market." And so did Cramer. If someone had not followed that Foolish advice, Cramer was telling them to get on the ball: that's good.

    Cramer also said that if you don't need the money in the next five years to leave it alone and he never said to sell "indiscrimately" as Nick implies. And if you will need the cash, how do you get it without selling and incurring the fees? You have to do what you have to do.

    And stop trying to put a panic onto Cramer. Deleveraging, hedge fund redemptions, etc. have caused this market, not some folks pulling out the cash they will need in the next five years.

    If Fools want to bash Cramer, or anyone else, that's fine; but surely if you're right the simple truth will be all that is needed to do so.

  • Report this Comment On October 24, 2008, at 1:56 AM, mikhailo43 wrote:

    Cramer was right to tell his audience to get out. This will be the biggest devleveraging since the great depression, and hedge funds are unwinding quickly to prepare for massive redemptions.

    He did say to get out only if you needed the money within 5 years.

    He also said to sell 20% of your portfolio to have dry powder when the martket returns.

    Only the FDIC ,the Treasury, and the central banks are preventing another great depresion.

  • Report this Comment On October 24, 2008, at 3:39 AM, BoTom wrote:

    Didn cramer also, in mid july, say thats the bottom, time to buy? I keep reading that reference on various sites debating over cramer and wonder if its true. I wouldnt be surprised, to say the least...

  • Report this Comment On October 24, 2008, at 6:20 AM, Dakota1955 wrote:

    Anyone that ends their bio with "Now let us go in peace to love and serve the Lord," adds an immediate weakness to their psychological make-up. Nick's character is questionable as a result.

  • Report this Comment On October 24, 2008, at 7:21 AM, HackMage wrote:

    Not to mention Cramer merits that you should wait at least 5 days on any pick that he does so you can research it yourself.

    Seeing a once in a lifet... centur.... CIVILIZATION event should warrant a little more caution on the investor's side. And my commission costs are 7$, that's pretty easy to ignore, who are you trading with? Obviously not the Fool's sponsors.

  • Report this Comment On October 24, 2008, at 8:31 AM, pondee619 wrote:

    What is wrong with this statement:

    Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now."?

    Money you may need within five years should not be in the market. Right? If, however, you do have five year needed money in the market, it should be taken out. Do five year needed assets belong in the market?

    The call was NOT to take everything out. Just take out what should not have been in in the first place.

    What is wrong with the statement? Funds needed within five years should not be in the stock market. If you have some there, go get them.

  • Report this Comment On October 24, 2008, at 8:50 AM, grabonj wrote:

    Cramer called the bottom on 7/31/2008. Why should we trust him now? I have stopped watching.

    http://www.huffingtonpost.com/2008/07/31/jim-cramer-yes-the-...

  • Report this Comment On October 24, 2008, at 9:24 AM, fallguy2008 wrote:

    I have stopped listening to Cramer, and I recommend EVERY average investor STOP listening to Jim Cramer and STOP listening to CNBC. I have lost money with Cramer on Natural Gas. I lost money with Cramer when he recommended FCX as a defensive stock on the Regis show. Doesn't matter if I need the money this year or 5 years from now - money is money and I lost it from listening to Jim Cramer! Cramer is just a hedge-fund guy and I see him and ALL hedge funds as dishonest scheister guys making a quick buck off of honest peoples' investments. People like these have turned the market into a crap game putting at risk the investments of the working person. Niether Cramer, nor does anyone else (sorry Motley Fool) know what your investments will do in the future. That is why the disclaimer exists "Past performance is no guarantee of future results". Do your own due dilligence and have patience to be successful.

  • Report this Comment On October 24, 2008, at 9:41 AM, fallguy2008 wrote:

    1 more thing: Cramer and the hedge funds are rich - the working class are still working to get rich like a squirrel getting a nut! Do you think you will get rich listening to his advice?!

  • Report this Comment On October 24, 2008, at 11:29 AM, fallguy2008 wrote:

    Dakota1955: You may have just insulted over a billion people - "Now let us go in peace to love and serve the Lord," is what the Catholic priest says to signify the mass has ended. Catholics know what this means and does not reflect a psychological defect.

  • Report this Comment On October 24, 2008, at 12:23 PM, Slipswitch wrote:

    Cramer may have "yelled fire in a crowded theatre," inciting panic, but if the theatre is on fire maybe that is the right thing to do. I'm not sure we can criticize Cramer for telling the little guy to do what the big guys are doing. He does not advocate buy and hold.

  • Report this Comment On October 24, 2008, at 1:56 PM, kumicho wrote:

    Oh give me a FREAKIN' break. Cramer was acting irresponsibly for telling people that the market was going to collapse? He was responsible for the entire $52b being extracted from mutual funds during this time? If anything it's refreshing to hear someone say something other than the buybuybuybuybuy drumbeat that you hear the other 23h a day on CNBC. Every pundit, every talking head has been going on and on for the last 12 months about how this is such a great time to buy, and that stocks are cheap, and yet for some reason Cramer gets singled out for telling people what you admit is sound advice? How about that "expert" Larry Kudlow, how often has he said that this is such a great economy and that stocks are cheap, and that everyone should buy?

    I'm glad to hear someone say something other than just being a cheerleader for the market right now. Do I follow his advice, no. Do I take it with a grain of salt, do my own research and try to learn as much as possible? Yup.

  • Report this Comment On October 24, 2008, at 4:01 PM, TimothyVR wrote:

    This is an interesting article. I'm new to the Motley Fool and have been reading as much as possible to keep up. I have a retirement fund and I'm about twenty years from retirement, so I do have more than five years, so Cramer's words don't apply directly.

    He makes a fair point about keeping necessary cash out of the markets, but his "alarm bell" attitude and his all-or-nothing strategy are not helpful right now.

    Most people outside the financial-news-watchers had no idea who Cramer was before this; he has become a celebrity because he combines expertise with eccentricity and hysteria. That is entertaining on his show, but he is taking himself a lot more seriously now - and so is his audience.

    That is a dangerous combination. Some calm and moderation are needed when making a decision like this. He is making the rounds of the talk shows and people are listening. Some of them may regret taking his advice when the inevitable turnaroud takes place.

  • Report this Comment On October 24, 2008, at 7:07 PM, MooBaby17 wrote:

    Very well said, TimothyVR, and very astute, IMHO. This is the fundamental problem. Someone in Cramer's position should realize that many people only heard him say "take your money out of the market now!" because we are a sound-bite society. No, he can't be blamed directly for the fact that people tend to be poor listeners BUT these words spoken in conjunction with his dubious "celebrity" and "alarm bell" attitude, as you so aptly characterized it, do not promote a rational, calm thought process but rather incite a knee-jerk, hysterical reaction. How can it ever be "right" to throw more gasoline on a fire when people are in "danger?" To play fast and loose with people's fears and emotions during times of overwhelming emotional volatility and then act as though it's their fault for not clearly hearing what was said is reckless and unprincipled! I have no respect for someone who puts ratings above the realities of their audience, and would never consider yelling "fire" in a crowded theater the "right thing to do."

  • Report this Comment On October 25, 2008, at 11:16 AM, JSinvestmentguru wrote:

    Also we need to get rid of the Jubak guy who also seems doom and gloom and also the writer that said the ipod was doomed because people will get music from some cloud. Where I live people want to own their tunes and don't want a subscription or ads in a cloud. Buy now and if you're scared sell some covered calls...Dropping gas is already putting money in my pocket. Also what does the value of cash do with the next round of goverment printing? (answer-it goes down). Like Buffett said cash is no longer king. (recently it was king, but now you must be invested or be devalued)..JS

  • Report this Comment On October 25, 2008, at 2:06 PM, JHutch99 wrote:

    There is no doubt that Cramer has been quite wrong (and right in all fairness) many times but his latest sell "alarm" was by no means irresponsible, bad advice. He simply told everyone what he is doing (he did supposedly cash out his oldest daughters college fund) and what he believes they should do. Well, I took his advice and sold two stocks (which subsequently plummeted) to form a 20% cash position in my portfolio. With that cash I have traded GS on a number of occasions successfully. Those trades are the only green in what is otherwise a red "buy and hold" portfolio. In short I avoided loses while at the same time realizing some gains. I think Buffett, Lynch, Graham, Munger, and Bogle would all appreciate that strategy. Thanks Jim.

  • Report this Comment On October 25, 2008, at 2:37 PM, Alford1 wrote:

    MooBaby17 - the last thing I want to hear from Cramer is positive 'spin' because voicing his honest opinion might be harmful to your holdings. I relaize that 'Greenspan-speak' is popular in financial circles, but in this too long election cycle I've had my belly-full of media lies 'in my best interest'.

    I had already bit the bullet and moved my funds from equities to fixed assets before Cramer's warning. I trust his advice no more than any other source, but was glad to hear his confirmation of my difficult decision. As a result I protected my funds from an additional 33% loss to date. I intend to maximize that savings by buying cheaply back into the market, when it finally recovers. Meanwhile my family's financial future is as secure as I can make it until things stabilize, and I sleep peacefully at night. If all of your holdings are still in harms way, I wonder what your dreams are like?

  • Report this Comment On October 25, 2008, at 3:34 PM, goatsnuff wrote:

    I could care less what mistakes Cramer has made or what he has done right or wrong for the last X number of years. The same could be said of 99% of the wall street investing "experts". When you deal with the market you need luck and/or a control of your greed to get out when you are ahead. For me the luck was to shift from 100% stock to 100% cash during the 3 years leading up to my retirement last year. Fact is for many years you could have thrown a dart at the stock listings and made money. I'll be shifting 25% back into stocks over the next 1-2 years. He has it right now for the little guy. Buy high div good companies with little debt and enough cash flow to maintain the div. Buy on dips at pre-set levels incrementally lower over the next 1-2 years and you'll be there when it turns ready to make good money. Great job with some sound investing advice in a troubled time, Mr. Cramer. The so called experts saying stay out or go all in are going to get you in to quick or make you miss the buying opportunity of a life time.

    BOO-YAH

  • Report this Comment On October 26, 2008, at 11:39 AM, bullpuckey wrote:

    Nate, I think your article was spot-on. I do think you could have left off the cheap shot about John Kerry though. He's yesterday's news and this makes your reference stale. The flip-flopper perception was created by equally flip-flopping enemies. There's some irony in that your article's theme was about doing a reality check on someone else's (Cramer's) perception.

    Free speech allows any American to say what they want, and to gain or suffer the consequences. When Rush Limbaugh started doing TV commercials for Pizza Hut, I stopped going to Pizza Hut. When the Dixie Chicks dis'd W, the backlash had a nasty effect on their tour schedule and annual income.

    OK, I know it was just a joke, but from that, I have some idea of your ideology and your willingness to share it. For some people, maybe 50% of them, this can be an alienating distraction from your message.

  • Report this Comment On October 27, 2008, at 4:27 AM, astaple wrote:

    You could go back and question the choices of most gurus. Very few predicted what has happened. Look at Jubak, Fisher, and yes even the Fools. It is too easy and unbecoming to data mine.

    Face it...He was correct! I don't buy the fees argument. If you are paying more than $9.99 per trade, I believe you are crazy.

    If you buy or sell an investment just because Cramer or Fool or anyone else says to do so with out doing your own due diligence, you deserve what you get.

    You could just as easily have come up with calls that anyone here has made that were wrong. In this case you are bashing someone for being correct.

    But, hey congrats for getting your article published!

  • Report this Comment On October 27, 2008, at 3:20 PM, WMesser58 wrote:

    I am surprised it is an issue. Everyone's opinion is either well researched and studied or someone just following a hunch.

    The one guy that said it was a non-issue has it right. Do your own research. Stick with companys you know will survive because the market is not base on fact it is preception.

    But, I want the Fool to discuss issues not who they do not like so let's talk about them.

    Sounds a lot like politicians since, they can not talk about the issues lets browe beat someone.

  • Report this Comment On October 27, 2008, at 4:32 PM, markdanger wrote:

    Well.....Cramer's comment worked for me. I took it a bit further though, and liquidated 50% of my portfolio, with minimal losses. That maneuver gave me a sizable lump of cash which I have now reinvested in stocks which I consider to be discounted around 60% (either that or "where they should be"). Im gonna sit on it for a couple of years and might come out ahead. I dont think it will take 5 years to profit from this manuever. Of course, I am a small fry investor.....so I figure you cant squeeze blood from a stone. If I lose on the deal then that is the way it goes. Not a huge problem since I believe one should consider the money invested in stocks like investing money on the roulette wheel.

  • Report this Comment On October 27, 2008, at 9:45 PM, cxcelica wrote:

    I am not setting out to defend Cramer, but the author doesn't really seem to be in the position to attack Cramer. Cramer has his serious flaws but he was making big money with his hedgefund when our Author Nick Kapur was thanking the Lord and writing stories about his high school football team.

    Secondly, no one should trade based on Cramer's suggestions. He is someone who has been able to reinvent himself as a niche celebrity with his unique style of discussing stocks on cable television. He is not a personal financial advisor and people should not use him as such.

    But is what Cramer does that much different than the Fool, hawking subscriptions to their monthly newsletters? Probably Not.

  • Report this Comment On October 28, 2008, at 12:36 AM, GunLock123 wrote:

    Remember when Cramer called the bottom after the Fannie Mae nationalization? lol!

  • Report this Comment On October 28, 2008, at 2:31 AM, btideroll wrote:

    Hardly entertaining article. Seems to be another Cramer rant that is fundamentally flawed. I could dice the entire article appart pulling out quotes to prove a point similar to how you pull apart various parts of Cramer's past recommendations, but I won't. Instead, I will just use one quote from this article to show why everyone is entitled to an opinion and that everyone should do their own research before investing in anything.

    In your article you stated, "If you want to make money in the stock market, you need to tune out the panic -- or the euphoria. You need to remember that no one has any idea where the market is going in the near or medium term. You need to buy shares of great, built-to-last businesses. You need to hold for the long term. You need to keep as much money as you can from the tax man or your broker."

    Cramer himself states almost verbatim nightly exactly what you said here. The major difference is your investing style. You obviously are pro buy-and-hold. Cramer is more of a trader. So don't build up an article on hype, by creating some flashy title to attract readers using the same methods that you accuse Cramer of doing and then try to tell everyone holding for the long-term is what they should do. Some folks may not have as long of a term as you imply. Others may simply want to trade. People who buy a stock based on one person's advice without doing research to fully understand their investments are likely to get burned. Then we get the pleasure of hearing their complaints in posts like yours, and the comments that it attracts.

    Look, he makes calls. That's what he's paid to do and what people watch him to do. I find it funny that he draws so much criticism for being a straight shooter. I actually admire him for trying to make calls and help out the investor whereas most other people are just lulled into high-priced broker advice that is usually more worthless. Ultimately you can't blame Cramer for the "panic" you say he induced when the entire media has blown the whole thing up and is freaking people out.

  • Report this Comment On October 28, 2008, at 4:09 AM, autoprt wrote:

    its funny to read the comments saying when the inevitable turnaround comes.

    we are in a place no one has been before so what he is saying is true, its better to get people out now who can't afford to be in the market especially if they are going to need the money.

    there are no promises that this thing will turnaround, there is a possibility the whole system could collapse and then we will have to start from scratch with a whole new world based single currency.

  • Report this Comment On October 28, 2008, at 11:00 AM, stockjock43 wrote:

    Cramer is NOT perfect BUT he sure has saved me thousands and thousands beyond the $15-16k I already lost in the criminal SEC unregulated market

    don't hate the messenger..hate the game

  • Report this Comment On October 29, 2008, at 6:18 PM, multi007 wrote:

    I think short term you should not be a Crammer watcher. Crammer has performed well long term. He is not a day trader investor. He is long term all the way. No problems with him here.

  • Report this Comment On October 29, 2008, at 9:19 PM, collegefinance wrote:

    Wow....we wrote almost the exact same article on the exact same day (http://www.collegefinance101.com/2008/10/306/)

    Was it hate Jim Cramer day?

  • Report this Comment On October 30, 2008, at 12:31 AM, awallejr wrote:

    Jim Cramer is hurting people. Plain and simple. While CNBC may love him for his ratings, there is no way his average viewer has made money off him long run. No way. And the reason is simple. He is a TRADER and his viewers are not hedge fund operators but average joes who simply don't have the ability to be one (meaning watching trhe market dailey and buying in and out of stocks on a dime).

    while he is certainly knowledgeable, he violates his OWN avise. One of his main mandates kis that people spend at least one hour per week of homeowkr on each stocvk they own. there kis simplhy NO WAY he does that on all the buy and sells he makes per week. They are not based on any in depth analysis but on arrogant "gut" feelings.

    He will even Shill companies shamelesly. Two examples were the CEO of Toll brothers and the CEO of WB.. I wathced both shows. Apparently Cramer loves them. The CEO of Toll was actually being somewhat honest and warning people of future expectations yet Cramer was somehow poo pooing him and spinning it off postively. As for the CEO of WB he really should be charged with criminal fraud for his last appearance on Mad Money. He had the gall to make it sound like all was fine and dandy with the company, then a week later he is desperately trying to find a buyer.

    Sorry, while Cramer's intentions may be noble and he may let a few of his callers say how wonderful he is, he really is a menace. Churn and burn that is what he was and will always be.

  • Report this Comment On October 30, 2008, at 12:32 AM, awallejr wrote:

    Damn no spell check and can't edit, sorry for the typos ;p

  • Report this Comment On October 30, 2008, at 10:17 AM, parkplazamom wrote:

    Yeah, my sister called the day after the broadcast. I had to talk her down. We kids all inherited last year (alas) and our stuff has "lost" a third of its value. But we're all ten to fifteen years from retirement. DON'T SELL!!!!! I told her. Now it's who has more clout, big sis or Jim...

  • Report this Comment On October 30, 2008, at 2:17 PM, Akboogie wrote:

    Interesting article! I think Cramer is a wonderful entertainer and that's what he gets paid to entertain. For the "Average Joe" investor he is cancerous. We live in a nation of instant gratification, so having Jim Cramer yelling and screaming on T.V. appeals to a lot of people. Unfortunately, over the long run his approach will and does lose money. I also think he's just like all the others who turn the stock market into Las Vegas gambling casino speculating and trying to get rich quick. I prefer staying in the game for the long term. This short term noise really doesn't bother me, I do hate to see people lose money listening to knuckleheads like Cramer for financial advice...he's not the only one in the media selling snake oil, there are others too. The only silver lining I can find in this whole mess is that when Cramer tells people to pull out of stocks if they need the money in the next years 5years, I think some people are going to pull ALL of it out to be safe. BAD MOVE! For long term investor like myself, if you have cash buy good solid companies that have a strong balance sheet and cash on hand that are well diversified. Proceed with caution as always, but the it is a lot easier to find deals since everyone else is on the side lines scared and panicked. Not a lot of people are buying stocks because of wide spread panic lead to irrational responses by people. So, now the chance to buy you will be competing with less people like insiders, MBA student, day traders, and the so called experts and so forth ,there all gone into hiding, so real long term investors time to buy before people come there senses. By long term I'm talking 10-20 year or more that in my book are real long term investors!

  • Report this Comment On October 31, 2008, at 12:46 PM, Cramerican5000 wrote:

    Funny, every call of Cramer's that I've listened to has been a good move. He got me out of AIG at 60 and Garmin at 123. His call in September to get 20% into cash was also a great one - we haven't revisited the highs at the time of that call yet. I used to belong to some of the Motley Fool clubs and every stock I bought based on those services lost me money. So I think I'll stick with Cramer.

  • Report this Comment On October 31, 2008, at 1:42 PM, ReillyDiefenbach wrote:

    As Nick tries to sell us a monthly investing service, he neglects to mention that the safest place to be right now is on the sidelines, in cash, making your four percent and happy to be so doing.. All of these investment services (including Cramer) with the exception of one, which out of respect to the Motley Fool ownership I shall not name, have been mostly or fully invested all the way down. Apparently they've never heard of the concept of capital preservation. Thanks for nothing, guys .Thank Jebus I listened to the one service back in November of 2007.

    When real estate starts rising again, when companies are hiring, when some shred of sanity returns to the financial sector, when we have a president who believes in modest regulation as opposed to the fiscal Afghanistan now in effect, that's when you should jump back in. Until then, you're playing with dynamite.

  • Report this Comment On October 31, 2008, at 1:50 PM, pwhitten wrote:

    I'm one of Cramer's fans, and usually watch at least the first segment of his show, when he discusses what is happening in the market. Once you get past his antics, he really does a good job of explaining what changed the direction of the market, and why it rose or fell that day.

    I know a lot of Fools don't like him, because a lot of what he says relates to traders, not investors, and because sometimes he really does act like an idiot. If you believe in long-term buy and hold, it doesn't matter that the market tanked recently because of hedge fund selloffs, shorts, and mutual fund trading before the end of their fiscal year. But he also teaches to people who are in the market for the long haul. If the past few weeks he has talked a lot about buying defensive stocks, which tend to hold their value when the economy is bad, and about dividend-paying stocks, especially now when some have a great yield.

    Cramer's mission is much like that of The Motley Fool, to educate and amuse, and to make you money. Two things that I've noticed lately is that 1) he has talked a lot about capital preservation, and 2) even though stocks in general have been hard hit lately, there are still bargains to be had.

    I think that a lot of people panicked after his appearance on the Today show, not because of what he said, but because of what they heard. I did not see the show, but my brother told me that Cramer had said 'sell everything for the next five years'.

    I'll continue to watch Cramer, and continue to visit TMF. I have learned a lot about investing from both sources.

  • Report this Comment On October 31, 2008, at 2:07 PM, Seattleguy527 wrote:

    'Cramer, for his part, has flip-flopped more often than John Kerry.' Great line. I love that I can count on TMF for unsolicited political opinions. Silly me, I always make the mistake of thinking their writers will actually stay on topic and not make petty jabs at politicians who aren't 'on their side.'

    Even better, I can count on TMF to repeatedly stuff my inbox with unsolicited advertising for yet another newsletter, or six, that I have no interest in subscribing to.

    Not only has this site gone downhill, it's gone downhill shockingly fast.

  • Report this Comment On October 31, 2008, at 2:39 PM, rlramirez wrote:

    Anyone who follows Cramer's advice really is a fool!

    About 10 years ago I asked him a legitimate question about the Specialist system. In his reply he went off on a tirade about conspiracy theories and how noone could possibly cheat on Wall Street.

    What goes around, comes around Jimbo.

  • Report this Comment On October 31, 2008, at 3:21 PM, ReillyDiefenbach wrote:

    I love Cramer's enthusiasm, but....

    Here he is cheerleading on November 8th of last year. Sound like someone you would like to entrust with your life savings? Yikes!

    Cramer's 10 Reasons to Be Bullish

    11/08/07 - 12:37 PM EST

    Jim Cramer

    Is the bright side the right side?

    When I read Doug Kass's excellent about-face case for a year-end rally, I believe I have to address the possibility that we could go higher from here, perhaps dramatically, because of some things that could happen and some things that have already happened. Here's a list of 10 things that have been and could go right that would propel us up 1,000 points -- to my Dow target -- by year-end.

    1. The stock market is cheap. Most of the stocks I follow are in low or mid-teen multiples or at a price-to-earnings ratio vs. high growth rate that I regard as being just flat-out cheap, particularly when you consider a 4% 10-year Treasury. Retail at 10 times earnings? Lots of high-growth tech stocks at mid-teen multiples? It makes no sense to me.

    2. Takeovers and going-privates could come back. On a large scale we saw BHP Billiton(BHP Quote - Cramer on BHP - Stock Picks) make a move today for Rio Tinto(RTP Quote - Cramer on RTP - Stock Picks). On a smaller scale there's money to go private, witness Restoration Hardware(RSTO Quote - Cramer on RSTO - Stock Picks).

    3. There are some very strong bull markets out there. Health care cost containment, agriculture, oil and oil services, infrastructure, tech and aerospace defense. There are a lot of sectors that work.

    4. Interest rates. The financials are so dire that the Fed will have to cut twice by year-end or give us another half-point cut, which will flush a huge amount of money from the sidelines and embolden banks to start lending again.

    5. The market still loves high growth. Witness Google(GOOG Quote - Cramer on GOOG - Stock Picks), Research In Motion(RIMM Quote - Cramer on RIMM - Stock Picks), First Solar(FSLR Quote - Cramer on FSLR - Stock Picks), Apple(AAPL Quote - Cramer on AAPL - Stock Picks) and Intuitive Surgical(ISRG Quote - Cramer on ISRG - Stock Picks). Believe me, if this market were really bad, you wouldn't get those to go up, either.

    6. The cheap dollar. The dollar, which everyone frets about, is just too darned cheap and the moment it bottoms you will see a wave of acquisitions from overseas that could blow your mind.

    7. Oil. Oil could find a level where it just gives us some breathing room and allows the world to adjust to higher prices.

    8. The government. The federal government or the Fed actually steps up and buys AAA and AA tranche CDOs to get things moving again. This is simply not that hard a task, but

    9. The negativity and the shorting are so intense that they simply can't be right. There are too many against the market -- the sentiment issue Kass talks to eloquently about.

    Related Articles Dykstra: Count on Hercules and Hershey $1,000 Google? Sure, but Why Bother? Kass: Bearus Interruptus -- 10

    . Global growth. Our companies just aren't as reliant on the U.S. anymore but "market" thinks they are. That's just not the case.

    Am I buying this stuff? I think they are certainly a possibility, or else I would revise my Dow price target. My real issue is that the Federal Reserve holds the key, and I have to trust the Fed, which has been, historically, a right move, but it sure doesn't seem right. Then again, in October of 1998, the Fed came in with a hankering to tighten and ended up calling an emergency meeting to loosen. That alone reminds me not to get too negative when we could very well be near a bottom.

  • Report this Comment On October 31, 2008, at 3:21 PM, fatheras wrote:

    Folks com down now,

    I watch Cramer every night and take in his suggestions but I do what he says to do and that's, do your home work. He tells you that so you invest at your own risk. I certainly don't do as he says but I do check it out. I have seen when he's been wrong but the fools and it's creators have no excuse either. Sounds like sour grapes to me. I'd listen to Cramer before the fools anytime . Jeliously anyone.

  • Report this Comment On October 31, 2008, at 3:47 PM, Omadolly wrote:

    I like to read the Motely Fool articles. HOWEVER, I don't thilnk it is proper for you to be so critical of Kramer. After all, there are many financial "GURUS" and it is good to listen to and read their thoughts. That's what makes our country great!

  • Report this Comment On October 31, 2008, at 3:55 PM, Nottosmart wrote:

    No one in the World, or out of the World, can predict the Stock Market. Cramer thinks he is the exception and that cost me a bundle of money. I think he is neat to watch but I will never follow his recommendations as long as I live again.

  • Report this Comment On October 31, 2008, at 5:18 PM, Bildad22 wrote:

    Cramer is entertainment and a little bit of instruction. I enjoy him, and he's likely the first one to not take himself seriously a lot of the time.

    I am in Action Alerts and he's down like everybody else but not too bad. Their he trades too often and too little for my tastes, but over time you can see his sector rotation. You do get good analysis of his moves as well and you can follow or not.

    Anyone that takes anyone as gospel and follows their advise deserves to lose all. Cramer never says do anything without doing your own homework.

    Finally, in the current environment 'buy and hold' isn't all that prudent. I'm trading around good fundamentally sound stocks and making money. Given current levels of volatility way too much movement in even the blue chips to think you can time an entry for long term.

  • Report this Comment On October 31, 2008, at 6:25 PM, UTMadman wrote:

    Wow, everyone is an expert, or so it would seem. Why not just listen to all the (decent) advice out there, weigh it out for yourself, and do what is best for you, in your current situation. Even if it means applying a hybrid of all that advice. Why is it that everyone sees these things as black and white? Cramer is wrong and he is right. But it really depends on who is listening, and when. Just like picking a presidential candidate based on one popular policy, while ignoring other traits, flaws, or policies you may not agree with, don't you think?

  • Report this Comment On October 31, 2008, at 8:14 PM, cutepseudonym wrote:

    I was very disappointed in the article, for several reasons. We are getting more than enough trash and bash in the presidential election. Give it a rest! Given the difference in investing philosophies, it would be amazing if you agreed with him on much of anything. Not every Motley Fool call is good. I lost a lot of money on First Marblehead. ( a Hidden Gems selection). Cramer wasn't the only one who failed to see the CDO train coming and failed to tell his audience to get out of the way.

    Both Jim Cramer and the Motley Fool are a source for investment ideas. TMF's orientation is long term. Cramer's, more trading oriented and opportunistic. There is money to be made either way but timing/trading plays are harder and require more time and attention.

    By the way - a lot of people work out of IRA's and rollovers from 401 K's. Taxes are not an issue and discount brokerage fees minimal. The research that concluded "buy and hold" beats trading only reached that conclusion because of the impact of trading costs and taxes. It is the ultimate conceit to believe that your approach is the only correct approach.

    What I found more interesting and encouraging here were the comments, the large number of commenters that pointed out that a recommendation, Cramer or Foolish, is only the starting point for research. I couldn't agree more.

    There is a large body of literature that says that a well informed amateur can frequently beat experts. Too often, the experts have baggage, an embedded, long held position to defend, and their loss of objectivety leads them to make a bad call. They miss the evidence that contradicts their hypothesis.

    Do your homework and it won't matter if you watch Cramer or follow the Fool.

  • Report this Comment On November 01, 2008, at 12:37 PM, thorgamma wrote:

    Stating the obvious three weeks after Cramer's melt-down shouldn't be heralded as a recommended read.

  • Report this Comment On November 01, 2008, at 1:18 PM, eliscoming wrote:

    I watch Cramer. I find that he makes as many good calls as bad when you factor in Lightning Round stock picks. However, his call to get out of the market was based on money that should never have been there (needed in the next 5 years). I find Cramer is like anybody else who talks a lot - there will be some contradictions and mistakes. Overall, I find that if you follow where he is consistent, you will do alright with his advice. I had money on Merril Lynch last year when he rang the bell on getting out of financial stocks entirely. That saved me a boat load. I think he's pretty decent at market trends and sector trends. The stocks that he features and repeats over time will do ok - I wouldn't buy anything based on a lightning round recommendation unless it confirms research you were already doing. Also, he recommends buying as a stock trends downward, because the market bottom cannot be predicted. If you would have followed his recent picks with big dividends, you would have been sitting on MRK, KMP, MO, and DUK, that seem to be doing ok in this environment.

  • Report this Comment On November 01, 2008, at 5:59 PM, MrPapageorgio wrote:

    R A T I N G S & W E B T R A F F I C - When I see an ad for FOX's Investment show during a commercial break during Cramer's show, amongst other things like this article griping about Cramer, you know the ONLY reason all these guys are talking about Cramer is because their ratings, web traffic, and subscriptions numbers DROPPED and Cramers JUMPED. ALL THIS IS, IS A MARKETING STRATEGY TO REGAIN SOME MARKET POINTS & INCREASE THEIR BOTTOM LINES. IGNORE the desire to be drawn over to their articles and websites. Of course I'm adding to their numbers but it’s in hopes to get other people not to fall for the age old gimmick.

    WHY YOU SHOULDN'T LISTEN TO NICK!

  • Report this Comment On November 03, 2008, at 12:09 AM, kider54 wrote:

    Cramer is an idiot. Plane and simple. He discusses nothing about hedging on his show. Never once talked about placing shorts selling calls or buying puts. This guy and the people that follow him have thuroughly exacerabted these problems. He is good for one thing. If he recomended a stock in the last year. wait 2 days and then short it. Works almost every time. Anybody that is buybuybuy at dow 14000 and sellsellsell at 8000 is retarded. Just cause the american way of life and our economy are being destroyed doesn't mean you shouldn't be making bank in the markets. Buy some books, so some DD, and watch fast money instead of cramer. Do the world a favor.

  • Report this Comment On November 04, 2008, at 10:03 PM, N7JGJ0N2000 wrote:

    WHAT HAPPINED TO D W S N THE NEXT MILLIONAIRE HIDDEN GEM STOCK? DOWN 76 % GLAD I SOLD.

  • Report this Comment On November 18, 2008, at 9:55 PM, Trofy wrote:

    Why is The Fool so anti-technical and pro buy and hold?

    No one can claim to know the market bottom or top but we all would agree that it goes up and patters exist.

    There are even seasons which are better than others.

    Why not take some profits from time to time and rebuy when the price drops?

    That's what the pros and insiders do, no?

  • Report this Comment On November 18, 2008, at 10:39 PM, Slipswitch wrote:

    True. If MF had a profit taking sell rule I would be a lot richer.

  • Report this Comment On November 18, 2008, at 11:03 PM, danmangrove wrote:

    My feeling is that Cramer wrote an excellent set of rules in his book "Sane Investing in an Insane world". My criticism is that too often he fails to follow his own rules. Example: he has ridden GS all the way down from >200 to <70. Why? Because his friends still work there. He says "It's not about making friends", but he can't seem to tear himself away from his alma mater. Cramer, please remember your own rules, and it's just a piece of paper.

  • Report this Comment On November 19, 2008, at 12:13 AM, Trofy wrote:

    Slipswitch, check out Sy Harding's "Riding the Bear" or his website on getting in and out of the market.

  • Report this Comment On November 25, 2008, at 2:53 PM, acecannon wrote:

    Wait. You should NEVER have money you'll need in the next FIVE years in the market? So what happens if you want to buy a house in 5.5 years? Own stocks for exactly six months? Then you have to sell immediately, because the money is now needed within five years. Also, by this standard, you must be completely out of the market within 5 years of retirement. In fact, by this standard, no money would ever be put into the market. Because there will always be some expense worth saving (or investing for), within a five year time horizon.

  • Report this Comment On March 07, 2009, at 7:54 AM, mwjaxis wrote:

    Fast forward 4 months, Jim Cramer's call for selling was based on market conditions and a rapidly deteriorating economy. He is entirely correct, the DOW has plummeted from 10,000 to 6500 in four months, financial armageddon to any buy-and-hold-investors. In fact, Nick Kapur's recommendation of 'buy-and-hold' is just STUPID, plain IDIOTIC. Buy-and-hold strategies were for the early 1900s, only an imbecile does that these days.

    Score is: Jim Cramer 100, Nick Kapur ZERO

    Jim Cramer isn't too good at picking stocks, but very adept at scenting the overall direction of a market and that's what I get from Mad Money. His possible call of DOW 5320 is very likely, even 4000 is do-able as the United States plunges into the abyss of a third world economy and enters the Great Depression II !!

    Bonds, oil, precious metals are the way to go. Everything else will be worthless. Massive social unrest will cause nuclear armageddon!!

    MWJ

  • Report this Comment On March 07, 2009, at 8:02 AM, mwjaxis wrote:

    One should also add shorts, SKFs and any other derivative to play the markets on massive downsides.

    I am a happily retired multi-millionaire in my 30s, big BOO-YAH to a legend, Jim Cramer, with my deepest thanx!!

    MWJ

  • Report this Comment On January 13, 2010, at 10:22 PM, Fool wrote:

    Sy

  • Report this Comment On January 13, 2010, at 10:32 PM, Fool wrote:

    Sy Harding and his staff are idiots. I subscribed to his newsletter in May 2009 and lost tens of thousands of dollars by following his stupid and idiotic advice. He called a "Big Corection for the market in November 2009 only to have it turn into a bigger rally. What a bozo. I emailed their office to express my concerns about all of my losses and was told not to bother them and to "Take My business someplace else. Not only are they idiots at market timing, the are JERKS. I wouldn't believe a thing this idiot says. He's full of himself and thinks he;s some sort of market GURU. He's a myopic self centered fool with no clue about the stock market. All he can do now is make excuses for his 2009 performance. The biggest bull market in history in the most critical part of the market history and this BOZO get's it 100% WRONG! He's ruined many of his subscribers financially. They trusted the STUPID IDIOT and all of his B.S. His books are a joke and fantasy land BS.

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