The Audit

In the Mad Money Swamp

What part of “Bear Stearns is fine” don’t you understand?

By Dean Starkman Mon 24 Mar 2008 02:12 PM 

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“Bear Stearns is fine,”—Jim Cramer, on CNBC’s Mad Money, March 11.

The Mad Money swamp beckons. The Audit cannot resist its murky waters.

It is warm and familiar, this swamp. I have been here before. I have spent time here, hours and hours of my life. So many hours.

I find it, if not entirely relaxing, very time-consuming, wading through Cramer’s calls—what is a “call,” anyway?— the cow moos, the bear roars, the gags. Ha ha. Bald man funny. But not! Bald man serious. Listen up, Kokomo! But don’t! Wait! No! Ha ha ha. HAHhahahahaha. (Sob. What is happening to me? ) In the Mad Money swamp, the footing is treacherous; its muddy bottom is pocked with slippery holes that will suck down any seeker of enlightenment. What did the man say? What did he mean? Who gives a *%$&? What is the meaning of the word “fine,” after all?

I mean, you’re fine. I’m fine. We’re all flipping “fine,” but are we really fine, in the Bear Stearns sense? What about our relationships? Are they really what they should be? We could be hit by a train or bought by the Fed, then how “fine” are we?

Whatever happened to that guy from Barron’s, by the way? He went deeper in the swamp than anyone should ever go. I hope he’s fine.

In the Mad Money swamp, icky things bob up and break the slimy surface. Eeek! I’m on the same side as Fox Business News! That’s disgusting!

Last week, stupid commentators from Portfolio to Jon Stewart mocked Cramer for the above remark, the “fine” one, which came as part of an answer that some people stupidly understood to be a recommendation to hold Bear Stearns common shares, a few days before they crashed from $35 to $2:

Peter writes: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? No, no, no. Bear Stearns is fine. Do not take your money…if there’s one take away other than (unintelligible) … Bear Stearns is not in trouble. It’s more likely to be taken over. Don’t move your money from Bear. That’s just being silly. Don’t be silly.”

Cramer rejoined, to the effect: You are wrong, Mr. Sophisticated Media Writer Man, Mr. Big Star Funny Comedy man. He said he was talking about brokerage accounts, or deposits, or some damn thing, just not the stock. Nyah, nyah.

Obviously, he meant “fine” in the sense of “insured by some fine federal brokerage insurance” or “will be saved by some fine miraculous Fed intervention that has never happened before.”

As a CNBC spokesman said: “He was 100 percent right.”

So, understandably, Cramer was in a position to, not gloat, but point out his critics’ errors on Mad Money on March 18, a week after the “no, no, no” call:

I have made many wrong calls in my life, but this is not one of them. The questioner was an e-mail, directly asked whether his money was safe at bear Stearns. He did not ask me about Bear Stearns stock. Given that everyone in the world was worried about their deposits at Bear, it was a gutsy call to say he could keep his money there. Turns out, the Federal Reserve made good, and you didn’t get hurt or frozen if you kept your money there, which by the way has always been the case in these deals.

Ha ha, you ignorant non-Cramers. He was totally right.

What’s more, he was right not once but twice. The Jon Smart-Alecs of the world hadn’t noticed that on Friday the14th, on another CNBC show, while Bear was still in the $30s, he had said Bear was “worthless.” Or that’s what he said he had said.

Meanwhile, on Friday, on our network, I said the common stock of Bear Stearns, then trading at $35, was worthless. Even as it would be safe to keep your money there. Jon Stewart didn’t get the memo [Audit translates: Ha ha, funny man. You suck]. Give him the worthless tape. People in the know in our business, this one’s flabbergasting me.

People in the know in our business, the hedge fund guys [Audit: non-comedians who know what the &%$* they’re *&%$$#$ talking about], are saying these were two of the most prescient calls I have ever made, that the common stock was worth zero but that you would not get hurt if you kept your money at Bear. It was good. People seriously dumped Bear Stearns common stock on my call, yet knew to keep their money there and their deposits would be bailed out. Memo to Jon Stewart and others [Audit: ya damned morons]. Here’s a riddle: Why would I recommend buying [Audit: Um, who said anything about buying? Sorry, my fault, I’m sure] the stock if I said it was going to zero? No, no, no. But who can resist taking Cramerica apart? [Audit: ha ha. Nobody can. But they should. Resist, I mean.]

And if you still didn’t believe him, here CNBC’s Web site breaks it down with a story under this headline: “Cramer Was Right About Bear Stearns.”

People who banked with Bear Stearns - hedge funds, prime brokerage clients - haven’t suffered despite the company’s need for a Federal Reserve bailout.

So CNBC stock guru Jim Cramer was right on the money.

Last week, the Mad Money host, responding to a viewer e-mail, emphatically told his viewers not to move their money from the bank, saying, “If anything, they’re more likely to be taken over.” Speaking to Erin Burnett during his regular Stop Trading! segment, he defended his call. Cramer wasn’t recommending the common stock, he said. He was only allaying concerns about Bear’s liquidity.

Got that, morons? So shut yer #@*$% yaps, ya ignorant #@*$% yappin’ bastards. On the #@*$% money.

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Comments

Tom_Tildrum

Tue 25 Mar 2008 07:05 AM

Dean, if your point is that people who don't understand the difference between stock, debt, and deposit accounts shouldn't listen to Cramer, you're correct.

Dean Starkman

Tue 25 Mar 2008 11:37 AM

Tom,

I appreciate your point, but mine is simply that words have meaning. A bankruptcy was real possibility. Even depositors would have faced having their money frozen.

To say Bear was fine was inaccurate, even for depositors.

Jim then pretends that this kind of extraordinary Fed intervention happens all the time. That's wrong:

"Turns out, the Federal Reserve made good, and you didn’t get hurt or frozen if you kept your money there, which by the way has always been the case in these deals."

Readers can decide for themselves what to make of what he said on Friday. To me, it was gobbledygook. He later said, though, that he had said the stock was "worthless." He didn't. And, by the way, it isn't. It's worth at least $10 a share.

I like Jim and enjoy his show. It's the hockum I don't like.

Thanks for writing.
Dean

Tom_Tildrum

Thu 27 Mar 2008 12:11 AM

Fair enough. I think the criticism of Cramer has been oversimplified, and I think he was more defensible than he's been made out to be, but I should commend you for discussing these distinctions. I agree with you about the hokum. Investment advice from the TV is like relationship advice from the TV; there may be broad principles worth gleaning, but specifics can be misleading.

Dean Starkman

Thu 27 Mar 2008 12:01 PM

That last point is pretty darned good and should probably run as a crawl beneath most investment shows. Thanks for the notes.

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