Cramer's 'sell' call still gets trashed, 1,500 Dow points later

CNBC's Jim Cramer is used to taking heat for wrong stock market calls.

This time, he turned out to be right. But he's still getting skewered.

Cramer last Monday (Oct. 6) went on NBC's "Today" show and gave this advice to viewers:

"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."

He warned that the market could tumble an additional 20% because of fallout from the credit crunch.

The Dow Jones industrials fell as much as 800 points later that day, and closed with a loss of 369.88 points, or 3.6%, at 9,955.50.

The sell-off continued the rest of the week, leaving the Dow at 8,451 on Friday.

After Cramer's sell signal, I and others raised the question of whether his call would be remembered as the moment of final capitulation in this bear market -- i.e., the bottom.

But as the math shows, Cramer actually saved investors some money if they sold on Monday as opposed to Friday. Using the Dow as a proxy, the market lost 15% from Monday's close to Friday's close.

That hasn't stopped Fox Business News from mounting a vicious advertising campaign against Cramer -- naturally, hoping to steal viewer eyeballs from CNBC.

"The last thing you need is bad advice. The last thing you need is CNBC's Jim Cramer," Fox warned in TV and print ads late last week.

On the financial blog SeekingAlpha, Jason Schwarz of Lone Peak Asset Management asserted on Friday that "financial advisors across the nation have been trying to clean up the mess that Jim Cramer made. We had clients crying because of the panic he created."

Cramer created the panic last week? Please. I have no doubt that he helped trigger more selling, but there was a tidal wave of it coming from cash-desperate hedge funds, mutual funds and margin-account investors with or without Cramer's two cents.

Anyway, all Cramer did was state the obvious: Money that you're going to need in the next five years probably doesn't belong in stocks. We're living through the worst financial-system bust since the Depression. Maybe the stock market overall will recover within five years, but if you really will need to tap your portfolio for expenses in that period, you'll sleep better if the money is in a safer place. (And I realize that "safe" is a relative term these days.)

Now, whether people who dumped stocks this week will bless or curse Cramer in the longer run, we'll have to see. If the market is substantially higher in a few months, he'll look like a goat for his call. If we're going down 40% more, investors who pulled the plug based on his advice will probably forget every bum recommendation he has ever made.

Photo: Jim Cramer. Credit: Al Seib / Los Angeles Times

Comments

[mbob]

Cassandra didn't have many fans either. But she was right.

[Jim]

Cramer is an entertainer. His best strength is as a teacher. His worst is his predictions. In October of 2007 when the market peaked he recommended everyone continue to buy strong ignoring all signs of a turn around. He recommended WMB, RIMM, GOOG, CHK, GE, WB, KO, WMT, T, GS, KMB and many others. Then they tanked big time.

If we ever get a chance to make money from the market, a lot can be learned from Cramer as a teacher. He tells us to do our homework. However, when he decided to tell everyone to get out and sell 20% of their portfolios everything was already well tanked. He told people to sell on any strength, which there has not been. There has been some small rallies that have not gone high enough to put any prior buys that he recommended into positive territory. Granted, you would have done well to have sold them when he said, but, who could do that when they were waiting for a stronger rallie?

He continued to tell people to hold on to stocks like RIMM when they were 10% down, then 20% down, then 30%. They continued their decline more than 50% from when he first recommended to buy them. So far, he has been right about USB, BBT, but they are about to take a dive as well. He also recommended GS, WB, GE, T and many others which have lost a considerable amount of equity as well. My guess is that if you talk about enough stocks you are bound to get some right and a lot wrong when the market is going down. You are bound to get more right if you tell them to buy when it is moving up. Since it usually moves up, your chances would be pretty good most of the time to get a few of the big names right. Right now, it would be great if everyone took everyone elses advice and just not say anything. Cramer, Bush, Paulson, Bernanke, the speaker of the house would do best to let the panic play out. Yes, the hedge fund guys took a lot out too, but, they did it just after Cramer recommended it. TV is a powerful source of media. But, lets not blame Cramer, this has all been planned to happen by forces much higher than Cramer.

[stan derrin]

This after cramer recommendations lost 90-100% in garbage like wachovia,downey,bankamerica,chesapeake,crox,cisco,underarmor,thornburg just to name a few.Or cramer calling market bottom and new bull market in late july!
Cramer is the WORST stock picker/advisor i have ever seen.While cramer has great insight and knowledge of markets his stock picking advice is extremely poor.He confuses investing and trading from minute to minute.

[Judge Crater]

Cramer's advice to bail out of the stock market came six months too late. Investors whose money was tied up in auction rate securities already knew the stock market was now a money pit. What is bizarre is that the Fox Business Network would criticize Cramer after FBN's record of disastrously wrong advice on where the market is heading. The Happy Talk crowd at FBN has orders from Murdoch to always look at a bad situation as the glass being half full, even if the glass lies shattered on the floor. What this crash shows is that all the so-called experts on the financial news shows were good at stating the obvious as the markets went up, but total incompetents as the markets cratered. These experts are no better than shills at the race track who give you tips on the winning horse, shills who vanish if their pick loses but who will be right there to claim credit if they get lucky.
There is a saying about investors in the 1920s Stock Market, "Where are the customers' t yachts."

[swannee]

Foregt Cramer - listen to me! Last August, I did not like what I was seeing/hearing. When Bernanke said "sub-prime was self-contained", I knew he was wrong. When Lawrence Yun, head of Realtors said in 07 - market will begin to build up in late 07, then, mid-08, ... I knew he was wrong. Why? Because if we accept that the boom over last 6-8 years has been based on housing, with everybody getting work, sales, ...then, if we pull out the rug from under housing, everybody deflates.
Simple logic, people.
So, last Sep. I pulled my mom's entire portfolio, yes, every last dime, even though her idiot financial advisor was saying "there's never been a money market to break the buck" in response to my telling him we were going to move it into something insured. She had bond funds, individual stocks, you name it. He said "well, we will wait until next year to move it, we would anyway in an election year" - what a putz. I decided I know more than the "pros" & "experts". So, I preserved her entire nest egg!

[messiah]

Yeah like he called dow at 15k in Jan '08.....he's an idiot and just wants his ugly face on tv......

[john]

People who base their financial strategy on some ratings savvy television entertainer are in for a rude awakening. That said, unfortunately many do these days. He may be correct once in a while but God help you when he isn't.

[rsquared]

Cramer is the worst. If he and CNBC had any decency, his show should cease to exist. He is a sycophant who packages his reckless entertainment as education. Remember his relentless cries that 2008 is the year of natural gas that included his relentless pushing of Chesapeake with various guest spots by its CEO Aubrey McClendon?

Oct. 10 (Bloomberg) -- Chesapeake Energy Corp. said its chief executive officer, Aubrey McClendon, involuntarily sold ``substantially all'' of his common shares of the company's stock over the past three days to meet margin loan calls.

``These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis,'' McClendon said in today's statement. ``In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential.''

McClendon, 49, owned 33.5 million shares, or 5.8 percent of the company's common stock, according to a Sept. 30 filing with the U.S. Securities and Exchange Commission. He was the company's third-largest shareholder.

Chesapeake, this year's worst-performing petroleum producer in the Standard & Poor's 500, fell 6.7 percent in New York trading today amid concern hedging contracts won't protect the company against a plunge in natural-gas prices. McClendon's divestiture was announced after the close of regular trading on U.S. stock markets.

[swannee]

Here's part 2 of my previous comment. So in Feb., I still didn't like the market mojo so I pulled MY entire portfolio and just put it on lockdown, all insured. I posted onto a money board, and people were scoffing at me. Well, yes, I locked in a 8% loss from Oct high. However, last time I checked my holdings, if I had held them, I would have been down 37%. I don't see the point in riding a nest egg down, maybe with new money going in to buy, but why ride the whole thing down? So, here's my question - why do I, a middle aged woman who never took a business class in college, have the foresight, a year out, to pull 2 portfolios, and all the "experts" are shocked, and "can't believe it". Because they are idiots & I can think for myself. I'll run the Treasury.

[Ron%20Holland]

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[Happy4LA]

It looks like the readers know Cramer. While mentioning Cramer may gain this LA Times article some publicity, it's clear Cramer is a fraud. He's a good talker that sounds intelligent, but as many people have already pointed out he has ZERO credibility. How many times does the guy have to be wrong before NBC gives him the axe or lazy columnists who obviously haven't been to his RealMoney.com site stop referencing him as some sort of stock market guru? He's cried, "wolf" so many times he's bound to get something right because he'll do a 180 on his positions so he can fool some guy into thinking he knows what he's talking about. It's a common con game... play both sides of the fence and then charge people for your advice. You'll have a 50% dissatisfaction rate, but the Internet is filled with the reasons why Cramer is a fraud. Thank you Don Harrold on Youtube.

[Angus Muttsnutts]

This man is an absolute fool to the point of being almost criminal - he was touting Countrwide around $45 a share because his good bud Angelo Mozilla was a big time advertiser on the street dot com .....cramer even said to ignore mozillas massive insider selling of his own shares in the company......just stupid or also criminal ....hmm I wonder!!