If you are a fan of late night television you will have no doubt seen the countless video replays of Jim Cramer (of Mad Money fame) pounding the table that “Bear Stearns is fine” just days before Bear Stearns collapsed. I don’t know the actual figures, but I’m sure there are just as many people who watch Cramer for stock picking advice as there are those who watch him for pure entertainment purposes.
Before I get to the controversy, I will point you to a post by Michael James On Money that discusses analyzing Jim Cramer’s picks as an investment strategy.
But now on to the controversy. You have probably heard that the U.S. investment bank Bear Stearns was acquired for a measly $2/share after recently trading in the $160/share range only 1 year prior. The collapse of this bank has made the headlines round the world in a very public way. What was also public was Jim Cramer’s answer to a question from a viewer about Bear Stearns days before this downfall occurred, which you can view here:
Of course, this is a bit embarrassing for Cramer, but apparently everyone misunderstood him. According to Cramer, he was addressing whether someone should take money out of their “accounts” at Bear Stearns, not whether they should sell their stock in Bear Stearns… Hmmm… Take a look at this clip:
Something doesn’t seem right here. A little more digging was done by Don Harrold which indicates that on the show’s website on March 11th, 2008 there was indeed a buy recommendation made by Cramer on that very day for Bear Stearns common stock:
The fact that he made a wrong call would be a drop in the bucket versus this type of back-peddling and attempt at cover-up if it is indeed true, but I will leave you to be your own judge. Have a wonderful Easter Weekend everyone!