Jon Stewart vs. Jim Cramer: really missing the point
Written by Michael Vass
So Jon Stewart took on Jim Cramer tonight. It was a beat down. It was vicious. It was obvious that Stewart had an ax to grind. And it was wrong on many points, yet true to the feelings of many.
As a former stockbroker I have had many discussions with people about the markets. I’ve written many things about the economy. And from time to time I have noted points in agreement and disagreement with Jim Cramer. But to attack him, and/or CNBC, as if they were the cause of the current economic crisis is both a fallacy and an attempt to find a scapegoat.
To be fair CNBC and Cramer failed in their mission to inform the public. Then again, neither ever truly were supposed to do that. Anyone thinking that either was more than an educated high-brow entertainment probably was sniffing glue (or some other like substance) and likely thought they would be made a millionaire by buying internet stocks they never heard of, or knew what they did, during the late 1990’s.
Is the market a fixed game? No. Is there an unfair advantage for large corporations and wealthy individuals? Absolutely. And are the major brokerage firms the biggest crooks in the industry? I’ve always believed so. Yet not one part of this, or what Stewart was railing about, is any different than it was 50 years ago for the most part.
What has changed is the greed and work done by small investors. If there is anyone to be upset with, it has to be that.
Jon Stewart will without doubt gain huge ratings. Jim Cramer may be looked at with harsh eyes in the near future. And CNBC will get the branding of slipshod reporting that they deserve. But it really doesn’t matter.
I don’t care how many regulations are created to prevent another Bernie Maddoff, or Enron, or Tyco, or AIG, and on an on. Given time there will be another scandal. And another ridiculous bubble in some sector of investing, with a crash that has to happen as well. Because the greed of everyone, at each level of the game, necessitates it.
I listened tonight as Stewart and Cramer went back and forth saying ‘You seemed to know’, ‘Did you know’, ‘Why weren’t we told’, ‘I was lied to’, and so on. Its wonderful posturing, but you don’t need to be an economist to have seen what was happening. Without following more than the politics of the day, occasional glances at the Dow Jones Index, and reading bits of news over the internet I foresaw the problems of the mortgage crisis. It was blatant, and there was plenty of time to act before the hammers started falling. And while I’m smart, I’m not so smart as to have been the only one to recognize what was going to happen.
Don’t believe me? Check out what I wrote back in October 2006
Just keep this stuff in mind as you watch the talking heads spout how great things are in the market. Or you see that ad saying that you should invest on your own.”
or on December 2007
or even January 2008
I say all this for one reason. So that you my readers can be prepared. If I am correct even in part, then this nation will encounter times we have not seen for quite a while. I doubt that we will see the inflation and unemployment that existed in the 1970’s (when I was a child) but I am sure that we will see levels that those under 30 have never experienced.”
My point is that the current crisis was very visible, if anyone was not bothering to be distracted by hype from the likes of Representative Barney Frank and other Government “watchdogs”, or being entertained by CNBC. All you had to do was read and do the math. Investments are no different than your home, if you don’t keep up with it then don’t be surprised if it falls apart one day.
But there has to be a bad guy. In America we are conditioned to look out for someone in a black hat if something goes wrong. And today that guy gets to be Jim Cramer with Jon Stewart as our hero. Bull.
The bad guy is in equal parts the Government, for creating an environment over a decade ago that was little better than a Ponzi scheme. Then there are the corporations, that jumped in on the game looking to ride the wave for as much short-term profit as possible. Add to this mix speculators who looked for ever faster gains with commensurate risk. Throw in cable networks whose goal is ratings above reporting, and then put in a public that didn’t care as long as the paper investments looked better than the Jones’ 15 minutes ago.
And this complete recipe is virtually exactly what happened with the internet bubble, except this one was bigger and not quite as exhuberant. No one learned then, because no one cared. All that mattered was the immediate gratification being reported on our instantaneous communication devices. But the risk of instant gain is the environment we find ourselves in today.
It will happen again. No matter the regulations – because most of the factors that caused this meltdown were all legal if not bad business decisions which can’t be regulated. No matter the protests of Government – because their lack of understanding (or overall disdain) feeds these kinds of bubbles and crashes. Without regard to who reports what facts in whatever manner – because most don’t care or bother to pay attention to the details anyway. No matter the pain for the public – because everyone wants to be a millionaire tomorrow without doing the work required, and many believe they deserve such rewards just because they breathe air in America.
So the indignation of Jon Stewart amuses me. Yes, Cramer and CNBC could have done a better job of reporting. Yes, Congress could have done a far better job of enacting realistic regulations and understanding how those regulations are affecting the market. And a big YES, the public could have paid attention to the facts at hand and did some math. But none of them did these things. Nor do I believe they ever will, to any large or useful degree.
So I won’t score the big points with the blogosphere with this post. My past comments about the economy and markets went without much fanfare as well. Such is the fate of being right consistently. But let me ask you this…
Do you really want to feel smug and righteous because some comedian beat up on a quasi-entertainer/commentator, while politicians throw your future earnings down a drain and your retirement funds evaporate?
Do you know what the Government is doing with trillions of dollars, and how that will affect investments today and in 5 years – with even a slight bit of educated estimates?
Do you get to save your house, or retire, or pay for whatever any easier because a liberal leaning comdey show host got serious for a minute while you still don’t know how to read a corporate 10Q, understand why a second stimulus plan is already being worked out and how badly that will affect your savings and jobs, and re-elect Congressional leaders that can’t figure out their responsibilities even after 20+ years on the job?
I’m sure that many of my long-time readers do get all these things. Perhaps even more than a few of my first-time readers will. But for those that don’t, ignore the hype this one program will raise and start paying attention. Your money will depend on it.
I will now go back to the entertainment news Black Entertainment USA is normally dedicated to.
March 13th, 2009 at 2:30 am
Absolutely, the government and us investors have culpability in this mess also. While that is true, I think you are massively missing the point here.
You write:
“To be fair CNBC and Cramer failed in their mission to inform the public. Then again, neither ever truly were supposed to do that.”
What?!
Maybe informing the public is not what you think CNBC was supposed to be doing. But it is exactly what CNBC themselves said they were doing! And they acted like that’s what they were doing.(On his show Stewart showed one of CNBC’s ads touting their network as an objective, reasoned source of reliable information in turbulent times).
It’s like . . . Imagine if I claimed to be a surgeon even though I’ve never been to medical school. I talked like I was a surgeon. I ran ads on TV saying I was a surgeon. And so a patient comes to me for an operation and, of course, not actually being a surgeon I botch the procedure. If that happened would you ever dream of writing a blog post saying “Well, I admit Wes failed in his mission to perform the surgery. Then again, he was never really supposed to be a doctor.”
If I falsely claim to be a doctor and then cause another person harm I should be taken to task for my deception. And this is the point you are missing:
CNBC and Cramer said they were informing the public. They passed their network off as much much more than “educated high-brow entertainment.” They should be taken to task for lying as well. I’m thankful we have some one like Stewart willing to do that.
March 20th, 2009 at 3:38 pm
Wes,
First I am glad to note that you read the post. I hope you follow more of my writing in the future. Now to your comment.
Yes, CNBC and Cramer are both entertainment. Yes they promote themselves as a news source, which is what they do – inform. Information is neither positive nor negative, accurate or false on its own. The nature of how they present the information is the real question.
Anyone that presents information on an investment, to a mass of people all at once is an entertainer in my book. There is no way that real credible advice can be given to a mass and still be positive, other than random chance. Too many criteria are involved to make such statements worthwhile. Thus even when I have mentioned stocks or investments I stipulate that an investment advisor should be consulted.
The fact is that as I stated
“… to attack him, and/or CNBC, as if they were the cause of the current economic crisis is both a fallacy and an attempt to find a scapegoat.”
Both did report facts as they were available. The fact they could have done better is arbitrary. The New York Times could do far better reporting on the Obama Administration, but they don’t. Yet the masses are not upset with the New York Times for the failures and inaction the Administration is responsible for.
And your example is inaccurate. Far more accurate is the following:
If I have a big smile on my face and I tell you that the Dow is soaring, that you should go out and by stocks, and you do so without checking the facts or verifying that this matches your investment goals, who is at fault?
Well I am for giving you false information – whether I knew that was false or not is another question. But my fault is limited to the information being given. Then again I am only one source, no matter how credible I may seem.
But the majority of the fault lies with anyone that acts on that information without sound reason. There are brokers, newspapers, radio, television, and the internet all available to provide counter information that is more accurate. All you needed to do was act. But instead you chose to react. Not my fault.
Thus CNBC can be objective, sound, reasonable, and informative while being completely wrong. News agencies get the story wrong often. Especially since the advent of cable 24-hour broadcasting.
Investing has always been a battle of information, interpretation, and timing. The nature of the industry is such that everyone loses at least some of the time. The only consistent fact is that the market goes up and down. But Cramer and CNBC are supposed to be clairvoyant, even while the rest of the market and news agencies are unaware of any reason to doubt anything a CEO is saying?
Look, I’m not saying that they are guilt-free in this mess. But the fact is that those that rely on only one source, and have no understanding of their investments and goals, hurt themselves. Cramer didn’t take their money and invest it. CNBC did not get into their bank accounts.
But Stewart, who is emotionally involved in this as I have heard through the losses his parents took (not unlike millions of others that have never seen CNBC, nor heard of Cramer’s name), made them the bad guys. It’s their fault. They did it. Along with the Wall Street Journal, the New York Times, Congress, the President, every cable news channel, every commentator that is on television, and every economist able to reach the internet.
Surely they all could have been on television warning the public. Surely they all have a responsibility to protect investors. Yet the majority of all those I just named, for the majority of the time, failed to say the sky was falling. So why isolate the blame on just 1 network and 1 man? Because then it’s easy to blame them instead of the majority that did the same things. Or more importantly from blaming the investors that blindly ignored what facts and information was available to them.
Suffice to say, if you want to be a successful investor you do your homework to improve your odds and take losses like everyone else; including Warren Buffett who is the very best at this. If you don’t then you can look for someone to feel bad about, instead of looking in a mirror. And anything that lets you not look in that mirror is entertainment.