A Modest Proposal for Jim Cramer

With the kind of media attention TheStreet.com's (Nasdaq: TSCM) Jim Cramer has faced lately, I'm not surprised he carries around a baseball bat. The dynamic host of CNBC's Mad Money is drawing more "boos" than "yahs" for his questionable endorsements of doomed bank Bear Stearns in the months leading up to its collapse last year. Mr. Cramer, I'd like to suggest an easy way to clear your name: Put your mad money where your madder mouth is.

Don't mess with Jon Stewart
Cramer's current troubles began March 4, when The Daily Show host Jon Stewart mercilessly ribbed Cramer's confidence in Bear Stearns mere days before the bank went under. Stewart was actually poking fun at CNBC as a whole, contrasting Rick Santelli's infamous on-air rant about short-sighted homeowners with the network's own record of questionable advice and insight. But when Cramer took public offense, Stewart and his writers moved in for the kill. On March 9, Stewart ran another segment tracking Cramer's endorsements of Bear in the months leading up to its collapse. The feud has only escalated since, with Cramer taking further umbrage on NBC's Today show and MSNBC's Morning Joe, and Stewart somewhat genially firing back.

Cramer's set to face his new nemesis on tonight's Daily Show, and I think there's an easy way for Cramer to make that encounter a win for himself, Stewart, and Mad Money's viewers. Mr. Cramer, why not index your salary to your own record of stock-picking accuracy?

Everybody wins with accountability
Cramer's spoken in favor of accountability in the past, according to TheCramerReport.com's online recaps. He called for it last September, following the first round of federal bailouts of Wall Street. Last May, he ran his own Accountability Week, reviewing the stocks he wished he had or hadn't recommended. And recently, in criticizing the new president's handling of the economy, he's created an Obama Accountability Index, which he says measures the president's responsibility for the steadily plunging stock market.

It's not hard to track Cramer's own record; we do it automatically on our free Motley Fool CAPS investing community. TrackJimCramer is actually one of our top-rated All-Stars, beating more than 81% of his fellow players as I write this. He's even earned the best scores in CAPS on numerous stocks, including AeroVironment (Nasdaq: AVAV  ) , Wynn Resorts (Nasdaq: WYNN  ) , and Blockbuster (NYSE: BBI  ) . But he only gets 46.6% of his calls right, according to our CAPS records -- less accurate than your basic coin toss.

If Cramer believes so strongly in accountability, why not add a clause that pegs his Mad Money salary to the performance of the picks he makes? Even a genuinely brilliant financial mind like Cramer can't be completely right all the time, so why not say that 60% accuracy in his picks earns Cramer his full salary? Anything less, and his paycheck drops, with the difference going into his charitable trust.

By making himself even more responsible for his spur-of-the-moment picks, Cramer will rob critics like Stewart of their best source of ammunition. And since what comes out of his mouth would affect what goes into his pocket, Cramer might put even more thought into his calls on Mad Money, giving his viewers better advice. Even if he goofs up, he'll still be giving money to charity.

Cramer and his money may be mad, but taking a little more responsibility for his own picks strikes me as an eminently sane thing to do.

More Mad Foolishness:

Fool online editor Nathan Alderman currently has a CAPS rating of 96.5, and 65.2% accuracy. He's just sayin'. He holds no financial position in any of the stocks mentioned here, but you're welcome to examine his holdings or his CAPS page. AeroVironment is a Rule Breakers pick. The Fool's disclosure policy is hard-pressed to condemn any TV show that involves random wacky sound effects.


Read/Post Comments (9) | Recommend This Article (31)

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 March 12, 2009, at 3:52 PM, pondee619 wrote:

    Cramer has said time and again that his lightning round "picks" are not reccomendations to buy. They are his off the cuff/top of his head feelings on any issue raised. This information should be the begining of your research, not the end. He keeps his official picks, those that he has fully considered, in the main portion of his show.

    WHERE HAVE WE HEARD THIS BEFORE?

    "These stock ideas are only a starting point, of course" 5-Star Stocks on the Upswing By Motley Fool Staff

    March 12, 2009

    "These stock ideas are only a starting point, of course." 4-Star Stocks on the Upswing By Motley Fool Staff

    March 12, 2009

    "While these are not formal recommendations, they could be a great place to kick off some further research." 7 Highly Rated Stocks on Sale By Matt Koppenheffer (TMF Kopp) March 11, 2009

    "Naturally, we want you to look a bit closer at these stocks before buying" 5 Top Stocks at Half Price By Rich Duprey March 10, 2009

    Cramer makes picks that he has carefully thought out and explained. He opines about issues callers ask about. He has said that the lightning round should not be given the same weight ass his formal picks. Let's have a little fairness.

  • Report this Comment On March 12, 2009, at 5:39 PM, gloombergnews wrote:

    THE ORIGINAL UFC FIGHT NIGHT!

    Cramer vs. Stewart Promo Poster!

    http://gloombergnews.com/?p=470

  • Report this Comment On March 12, 2009, at 5:44 PM, hajcolorado wrote:

    I agree with the comment of pondee619

    But Cramer puts his money where his mouth is by running Action Alerts Plus, a subscriber service. His return has beaten the S&P quite handily. Since inception his portfolio is down <23.51%> and for 2009 the overall portfolio is down <11.53%>. Compare the S&P 500 for the same periods down<34.98%> and for 2009 down <20.14>.

    Seems to me his results are beating many high powered investment managers. Also, weren't we all supposed to just invest in index funds like the S&P500 and sit back and smile.

    I would rather have Cramer giving his advice, and let me do some further research. His advice is a better start than many other sources

  • Report this Comment On March 12, 2009, at 6:10 PM, DougH11 wrote:

    Interesting comment coming from MF...which, when viewed from 50,000 feet doesn't seem all that much different than Cramer. Promotion (including self promotion) is an integral part of these businesses. Both operations have master this...and both are huge money machines. Subscribers (I'm one) should realize the only sure bet in the market (up or down) is a successful newsletter.

  • Report this Comment On March 12, 2009, at 6:54 PM, BulldawgBob wrote:

    Pot calling the kettle names I say. I doubt that MF gets 60% of their calls right. Buy and hold is died and gone.

  • Report this Comment On March 13, 2009, at 7:23 AM, ByeByeHOG wrote:

    How can Cramer or anyone else pick a stock when management can flat out lie about what is in the "cooked books", and there is no liability for their actions! Unfortunately I was born and raised with morals!

  • Report this Comment On March 13, 2009, at 3:42 PM, Gravytrain2020 wrote:

    So Nathan

    What charity do you give your salary to when you make a bad call on this site????

    seems pretty hypocritical to me. You guys at Motley Fool clearly have a case of Cramer envy. Everyday I come on here to see another article about Jim.

    Maybe stick to stock and market analysis and let Metacritic.com work on the television reviews

  • Report this Comment On March 14, 2009, at 11:20 AM, modeltim wrote:

    Kramer's dead meat. He won't be on CNBC much longer. J. Stewart destroyed this unethical, not so brilliant jerk!

  • Report this Comment On March 14, 2009, at 11:49 PM, nerd1951 wrote:

    Every one forgets that Jim Cramer, like J. Stewart, is just an entertainer.

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