Financial Advisor Jim Cramer on This Day in History

 

Jim Cramer: "Bear Stearns is Fine"

This day in history: CNBC's Jim Cramer was born on this day in 1955. Cramer is easily one of the most well-known financial forecasters out there, and he has a net worth of around $100 million. With that sort of wealth you would think that he was great at picking stocks. However, according to the Guru Grades at CXO Advisory Group, Cramer has an accuracy of 46.8% on his picks...a little worse than a coin toss. By contrast, David Nassar has a 68.2 accuracy for his picks. 

Not only did Cramer fail to foretell the 2008 crash, he famously (or infamously) recommended investing in Bear Stearns, Merrill Lynch, Morgan Stanley, and Lehman Brothers before the stocks fell in value significantly. On August 8, 2008, before the climax of the financial crisis of 2007-2008, Cramer recommended investing in bank stocks. On the March 11, 2008, episode of Cramer's show Mad Money, a viewer named Peter submitted the question "Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?" Cramer responded "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear." On March 14, 2008, the stock lost more than half of its value on news of a Fed bailout and $2/share takeover by JPMorgan Chase.

An article at The Motley Fool called Cramer "the closest thing to a walking, talking hazard for the individual investor there is." ~Why You Shouldn't Listen to Jim Cramer

"If there was ever a financial show which should have the words, 'For entertainment uses only' that would be Mad Money with Jim Cramer. It is no secret that Cramer's stock picks have done worse than the market averages. However, the other day, Cramer went off the deep end with a 14-minute rant of hyper-Keynesianism, historical revisionism of Herbert Hoover and blaming the Irish Potato famine of 1847 on laissez-faire.

Cramer says that the government cannot 'print money fast enough' to save us from the mess the Federal Reserve got us into. Next Cramer launches into a tirade on how Herbert Hoover was a do-nothing president who didn't try to end the Great Depression, which of course was total nonsense. Anybody familiar with the work of Murray Rothbard or British historian Paul Johnson knows that Herbert Hoover was hardly an advocate of laissez-faire. Largest peacetime increase in USA history (up to 1931) in domestic spending occurred under Hoover. Likewise, Hoover fathered the Agricultural Marketing Act, the Reconstruction Finance Corporation, the Emergency Relief and Construction Act." Source

Of course, many economists have failed dramatically in the past. Thomas Malthus was wrong about his predictions on Population...as was Paul Ehrlich.

Economist Ravi Batra reached the number one spot on The New York Times Best Seller List in 1987 thanks to his book The Great Depression of 1990. That depression never happened. 

Irving Fisher was one of the great economists of the first half of the 20th century. However, he predicted a stock markey boom right before the 1929 stock market crash.