I know, I know…Cramer‘s picks underperform the market and Cramer’s hedge fund performance performance was all from IPO’s and Cramer makes out with Lenny Dykstra and blah blah blah.
I don’t have time to do a whole Defending Cramer piece right now and I’m not interested in having this post turned into a warzone for the debate.
My quick and dirty thing on James Cramer is that he single-handedly invented financial blogging (I’ve been reading his stuff online since 1997 and still do) but I absolutely detest his TV show Mad Money (which is obviously not geared toward me anyway).
And sure, we can go back and dredge up all his wrong calls, but to do that is to miss the point. Anyone who buys or sells stuff just because of his opinion of the stock at that moment during a television taping is an idiot. Understanding his rationale for his stock idea and then deciding whether or not you agree with it is infinitely more valuable than just blindly “investing” in the ideas themselves.
But there is one idea I think Cramer should receive credit for today and I’m willing to endure the rotten tomatoes you’ll throw at me in order to give him that credit…
On August 6th, in the 7th inning of the recent market rally, Cramer came out strong on Citigroup (C), a stock that, up until then, had not really participated to the upside along with everything else. Sure, it bounced off it’s bankruptcy pricing of 1 to 2 bucks a share, but compared to Bank of America, Morgan Stanley, Goldman Sachs etc, it was still trading dramatically lower than it’s 52 week high…and with good reason. You see, Citi was (is) pretty much the worst of the survivors.
For this reason, I believe that Cramer should get his due for penning the piece “A Citi Divided Against Itself Can Prosper“, in which he systematically went through the litany of negatives on the company and exposed you to the possibility that these negatives could work out to be positives for the stock price. He concluded the piece leaving the reader with no doubt as to his conviction on the thesis:
“Again, I am going to hit Citigroup hard over and over.
It’s the call on the next leg of this market.”
After blessing Citi tepidly on Mad Money on August 5th, he spent the next two days mentioning the stock as a strong buy on every forum he had access to. Citi was absolutely not a no-brainer then and for a guy who was just publicly castrated by Jon Stewart on The Daily Show, you have to admit that it took guts to be so positive on a stock that still had the reek of possible receivership all over it (Yes, Sheila Bair of the FDIC was still bitchslapping Pandit as recently as the middle of this month).
For sure, there were a handful of entities who were positive on Citi this summer (Barron’s comes to mind) but you could probably count them on one hand.
This call also must have taken guts in light of the fact that Citigroup has been an albatross for Cramer for years, a name whose fortunes and direction he had been consistently wrong on before and during the crisis.
The bottom line is, he may get more wrong than he gets right and he may be the CNBC Antichrist or just fill in your own Cramer diss, but he got a very big call right on Citigroup this month, even the US government (taxpayers) just made back $15 billion on their 34% stake (I know, scary how much of this we own).
Nice call, Jimmy. If only more people were reading your stuff versus watching the carnival barking you do on TV.
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