The Cable Gamer should have added Jim Cramer to her CNBC dishonor roll from yesterday. But actually, Cramer is worse: He's not just sticking up for Wall Street at the expense of Main Street, he is actually using his show to lead investors down the garden path.
Cramer, the host of "Mad Money," is surely the faux-est of the faux populists--a millionaire who pretends to be looking out for the small investor. For two weeks now, he has been a leading advocate of the Wall Street bailout. And yet in the meantime, he finds time to make hideously incorrect recommendations to the goats out there.
It seems that Cramer hosted Wachovia Bank CEO Robert Steel, who told Cramer and the suckers in his audience that everything was just fine with his company--never mind the fact that the stock had fallen from just above 50 to just above 10 in the year previous.
But here, let TV Newser, which deserves credit for catching Cramer, tell the story:
On Sept. 15, the day Steel appeared on the Mad Money, Wachovia stock closed at $10.71/share. Yesterday it closed at $1.84/share. Below is the clip from Sept. 15. And after the jump, Cramer's apology: "I let you down, because I wasn't skeptical enough."
Uh, sure, Jim you weren't skeptical enough. And now you're sorry.
Two points need to be made:
First, every cable news host is potentially vulnerable to the moral hazard of treating guests too nicely. That is, if the host gets a good "get," then there's a natural tendency to reward that guest with nice coverage. One wants to be civil and fair, of course, but civility and fairness should not tip over into misleading viewers with their money. Got that, Jim?
Second, Cramer is an active investor, as well as a TV talking head. On Wall Street, there's a phrase: "Talking your book." That is, if you hold a stock, you talk it up. Or if you short a stock (that is, you stand to make money if it goes down), you talk it down.
Now TCG is just asking, as to what games Cramer might be playing. I am not accusing Cramer of anything. But of course, that's easy for me to say, since I didn't lose 80% of my Wachovia money in just two weeks. But maybe the Securities and Exchange Commission, or some plaintiff's lawyer, ought to take a close look at Cramer & Co.
This whole sordid business of TV-touting stocks while holding stocks has been a scandal in the past, and it will be a scandal in the future. And maybe, in fact, it's a scandal right now.
