Cramer’s Mad Money Moves Markets
James J. Cramer has become a household name. I have been following Jim Cramer’s work for a long time. I was listening to his radio show on the internet when he reached a mere 300,000 people a week with his investment education a few years back. Now that he has gone nationwide and founded Cramerica with a million viewers a week, every one I talk to is mouthing stocks like iRobot (IRBT) and Rediff (REDF). I recently talked to someone who bought Rediff, but had no idea of what the company does other than “its an internet company”.
This is of some concern. I notice a distinct difference in the Jim Cramer of 2 years ago on radio, and the guy pushing Flir (FLIR), Nice (NICE) and Brocade (BRCD). Now, in order to push his ratings, he is just randomly pushing stocks that he once loathed, and he has the comfort of knowing that his viewership will push the stock up after hours, so no matter what, his picks will be up at least in the short-term. I have often wondered if one were to examine his stock picks the day after their favorable mention, how they would stack up against the S&P 500 index performance that day. I am pretty sure his picks have outperformed the market the day after being mentioned on his show and this is alarming. Instead of educating his viewers, I believe he is turning the general public into speculators.
Everytime he mentions a stock (Brocade today), the stock goes up after hours. Then opens higher the next day. I think this is something the SEC should look into. If it were up to me, I would move his show to 7p PST, after the after-hours market close. By doing so, the amount of speculation would be reduced considerably.
Faisal Laljee
I also have issues with Cramer pumping stocks like he does and I also think it would be a great idea to move the show back an hour. But if the SEC investigates him they need to investigate every Wall St. analyst and newsletter writer. Every day their are gapping stocks due to analyst calls or newsletter mentions. So Cramer’s not unique in that respect, just (in)famous
You are right that if he is investigated, every analyst would have to go through the same. But I am not suggesting he should be investigated. Simply that the SEC should investigate the after-hours reaction to his stock picks and convince CNBC to move the show to 7p. The magnitude of the moves resulting from his recommendations (specifically the fact that he is the only one who consistently moves small-caps to mid-cap stocks after hours) should be a good enough reason for them to do so. In fact, I am disappointed he hasn’t done it himself. But I guess ratings matter more sometimes.
I can’t agree with you more. This guy, in order to keep his show as hyped up as it is, needs to constantly find more and more obscure stocks to hype up and get the momentum investors rabid about.
Now, BRCD is a great company and a great investment, imo, but Cramer couldn’t care less…if BRCD can move up 20% in the next month, his legend continues to grow…if BRCD then blows up because it’s been overhyped, he again couldn’t care less! And, a solid company like BRCD will have it’s chart pattern forever damaged…
How often he switches his position on certain stocks or certain industries is mind-numbing and is creating a new breed of traders…
This will only end up blowing up in his face, but in the process, he will continue to destroy good companies.