Booyah Barron’s! - Part 1

This week's Barron's issue is full of tasty financial morsels, not least of which is the cover story on Booyah's Jim Cramer, wondering why his trademark cry, "Booyah!" rhymes with "fooled ya!" as they report on the media hound's less than stellar performance. It took awhile, but the elves at YourMoneyWatch.com finally listened to what Cramer said on-air, followed up on whether the advice was profitable or hip deep in booyah, and found that Cramer's picks have generally underperformed the market.

The Cult of Cramer has quite a following, but long-time observers see a media megalomaniac who will say and do just about anything to make a buck, for himself. At his hedge fund, he took advantage of the razor thin journalistic integrity of the CNBC talking heads in order to pump up stocks in which his day trading desk had long positions, and passed along negative rumors in positions he was short. A madman in his own company, much like the persona he displays on television, he was a difficult person to work for and I still marvel at the decision he made to walk away from a successful hedge fund in order to become a TV celebrity.

If he really loved the markets and was truly a successful hedge fund manager, I don’t see how he came to that decision. As an insufferable megalomaniac with a less than incredible hedge fund track record, however, it’s a bit easier to understand the trade-off he made. That he did so while feasting off of the internet bubble, trying to get his share of the booty while there was easy money to be made, might just be a coincidence.

If, for some strange reason, you still want to follow Cramer’s Mad Money picks, rather than listen to the daily filter free self aggrandizement which he parades in the somewhat faded threads of financial journalism, just log onto http:MadMoney.theStreet.com and follow the facts without the booyah. Be sure to keep a record, and you might want to stash your money in an index fund and just keep a paper portfolio for awhile. When the market was making new highs in July, Cramer was talking about how much higher each of the Dow components would be at year-end.

After the market turned down and broke through 13,000 on the downside, he spoke as an experienced bear, about how he has loaded up with cash because it will be cash-rich vultures like him who will take advantage of others by buying assets at (precisely, no doubt) the bottom. Cramer’s 20/20 hindsight is as good as it gets. On the other hand, most investors’ hindsight is 20/20. But Cramer’s advice usually parallels the tape. He is as manic as the internet in rising markets, and as skeptical as a banker (oops, bad analogy) when the tape is running red. He’s a vulture, alright, preying on a media-mad culture which seems incapable of doing the math that’s required to separate the successful investors from the crowd that peddles nothing but booyah.

A few weeks back, Cramer showed yet again that his moral compass drifts off course by about 180 degrees from the direction of true north when he advised New Yorkers who bought a home in 2006 to walk away from it and let the bank (or sub-prime mortgage holder, probably a hedge fund managing money for a pension fund) take a bath on the property. Can you imagine Warren Buffett giving anyone that advice? Only in New York would that be considered financial wisdom.

To members of the Cult of Cramer, caveat emptor. Buyer beware! With P.T. Barnum ethics (there’s a sucker born every minute) and an obviously selective recollection of his own track record, doesn’t it make sense for investors to ask themselves the most basic investing question there is, which is “would I trust this person with my money?” Cramer is more than just annoying. He’s a personification of most of what is wrong with Wall Street today. All brand name, and no substance. Thanks, Barron’s, for putting him on the front cover.

- Go to Booyah Barron's, Part 2 -

Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies.

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