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Musings on ‘Mad Money’
Author: Bob Lang (info)
Website: http://trade-mentor.com
Posted: May 26th, 2007 at 7:39 am EST
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I’m a pretty independent thinker when it comes down to trading decisions. I generally try to gather up as much information to make the best possible decisions, then let the chips fall where they may. But there is a wealth of information out there on the web, so that’s where my focus lies.
From time to time I find myself catching Cramer’s Mad Money program on CNBC, mostly for entertainment purposes (and that’s mostly what it’s for….getting ratings and entertaining). I get a kick out of the noisemakers and the rants and raves, watching Cramer do weird things on the program…pure fun. He knows a thing or two about the market and trading, though….and while his on the record trades may be marginal at best, it is the educational area of doing homework and being patient as where there is hidden value. Market calls are not to be considered ‘advice’ or ‘educational’.
Which brings us to last Friday’s show. I watched Cramer carving up bears in his meat slicer to start the program, and it occurred to me that it was possible he would carve up his finger from the giddiness…but probably not feel a thing. He complimented himself heavily for calling this recent rally, showered himself with praise for calling sector by sector like some seer with a crystal ball. He claims to have not been shaken by the Feb 27 drop, but rather reinforced the vigor of a permabull. Congrats to you, Cramer….what do you have for an encore?
This is where it gets disturbing and downright frightening. New highs for most indices, right? Strong volume, lower rates…all good stuff. Commodities, gold, up…not so good…dollar down, not good at all. So what does Cramer say? ‘Get in the market, NOW…for the best is yet to come’. Good timing, Cramer! Get everyone in at the top before the bears take another swipe. He was practically begging on his hands and knees to the viewers to buy buy buy. In fact, he mentioned this numerous times during the program and ended the lightening round promoting his giddiness.
In my opinion, such gibberish is not only fodder for criticism but downright irresponsible, as the last of the bulls will get sucked into an overbought market. What month are we in anyway? A seasonally WEAK market period is at hand…remember last May? Market near new all-time highs?
Statistics from brokers have shown recently a drop in retail trading. From E-trade to Ameritrade to Schwab, the small investor has mostly ’sat out’ this rally from early March….mostly too scared to jump in on any ‘fakeout’ move.
Well, in my experience…it’s when this crowd gets pushed into the market is when the market run is on its last legs. It is precisely THIS crowd that Cramer is talking to, isn’t it? Maybe he has no other agenda other than garnering high ratings for his program. Let’s face it, sensationalism and absolute denial makes for interesting TV…hence, more viewers. That’s what keeps Cramer on the air.
Let’s talk about predictions for a moment. I recall reading a street.com article by Cramer In early March screaming RATE CUTS BY MAY, that the Fed HAD TO DO THIS or face credibility issues.
Well, looking at futures, a cut in May seems virtually nil. (http://www.cbot.com/cbot/pub/page/0,3181,1525,00.html). In fact, the best possibility of a rate cut would be November at the EARLIEST. Besides, what would it say about the Fed if they cut rates with the markets at all-time highs? I can’t see it happening, can you?
The bottom line is to be cautious and skeptical when one side says to go ‘all in’….as once all the buyers are in place..who’s left to buy? NOBODY…who’s left to sell? EVERYBODY.
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Bob Lang, Stock Market, Trading
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