I just errantly watched about 5 minutes of Mad Money with Jim Cramer, and anyone who follows his advice deserves their investments to go the way of Enron.
At least whatshisname was doing boatloads of cocaine and has that as an excuse.
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Marcus Wellby
Ha ha ha! Got to love the disclaimer on that page:
Mr. Cramer’s opinions are based upon information that Mr. Cramer considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and
.
stickler
Yeah, that Cramer brings back some golden memories. I actually owned a few thousand dollars’ worth of Enron stock back in 1999-2001. Well, they were worth a few thousand dollars when I bought them. Though I sold them at $17/share, which is better than where they traded not long after. My losses were only in the low thousands. Could have been worse, and for a few people I know, the losses were a lot worse: like their entire retirement nest-eggs.
Heh, heh, heh, oh the folly of bubbles, oh how we lived during the Clinton circus. Heh. Hm.
Speaking of golden memories, does anybody know what “Kenny Boy” Lay is up to nowadays? Probably he’s in prison by now. Right? Right?
No? Hm. The guy must have donated campaign money to some pretty powerful people.
KC
Off topic a little, but this sounds really bad. Hopefully the new troops can help.
DougJ
I get a little tired of the Enron pot shots. That company gets a bad rap. The media smelled bood there and all but drove the company down — the bad news coverage led to poor bond ratings, which led to more financial problems, a vicious cycle. I can’t help but think it’s got something to do with Ken Lay’s friendship with George W. Bush.
The sad things is that thousands of workers lost their pensions — another example of how the media has hurt regular americans with its strange agenda.
Mithrandir
That just makes ZERO sense.
JWeidner
Doug, you’re like Old Faithful. Completely reliable to spout nonsense on a regular basis. You certainly make life around here interesting.
C’mon. It’s the media’s fault that Enron tanked? I’m sure it had nothing to do with massive executive fraud, price gouging, book cooking, etcetera, etcetera, etcetera…
SeesThroughIt
Yes, that is sad. And it happened because of what Lay and Fastow did–the media reporting it had nothing to do with them actually doing it. But you’re kinda nutty, so I doubt you understand that.
DougJ
Look, what they were doing was not exactly kosher accounting. But it’s not that different than from what lots of other companies were doing before Sarbanes-Oxley. The difference is the media got hold of it and made a big deal of it. That drove prices and bond ratings down and the way some of their debt was structured (admittedly, again, not kosher from an accouting perspective), that had disastrous effects on their finances. If the media hadn’t gone after them, they might have weathered the storm. Plenty of compaines have done the same. But plenty of companies aren’t seen as tied to George W Bush by the librul media.
SeesThroughIt
So it’s your contention, then, that the collapse of Enron was not so much due to the shady business dealings of men who laughed about bilking “grandma in California” out of all her money, but moreso due to the media reporting said shady business.
Uh-huh. And another piece of the puzzle falls into place.
Also, it’s worth pointing out that the link between Bush and Lay isn’t just some “librul media” concoction; Lay and Bush are good friends. It’s a well-known fact.
DougJ
Actually, it had NOTHING to do with that. That guy is a scumbag, no doubt, but he was MAKING Enron money. Their bankruptcy had nothing to do with their operations trading power in California. That was profitable. They lost money because of some poor investments elsewhere. You’re confusing two different areas of their operations here.
Brian
I knew the librul media was all powerful but I didn’t know it could single-handedly make a huge corporation go bankrupt using the sheer power of Bush Hatred alone. Companies crash and burn because there’s a good reason for doing so. Not because the media reports some bad news. (Why am I thinking of Iraq right now?)
It really is amazing to watch Cramer pump some two-bit stock and his lemmings go out and bid it up $2 after hours. Some of his picks have absolutely cratered. There really are people out there putting $1000s at risk based on his rantings.
Can I go on a tangent about Kudlow too? That guy claims to believe in markets. Except when markets tell him something he doesn’t like. He has to spin *everything* to make republicans look good. (Like his famous call that $30 was the top in oil). Totally unreliable, like Cramer, if easier on the ears.
I realize CNBC is just stock marked based infotainment but jeez.
Mr.Ortiz
You’re wrong, Doug. Companies can operate for years with negative profits (see TiVo, Amazon, etc). The difference is that those companies are up front about it, and have clear business plans to lead them to profitability. As long as investors believe in the business plan, the company can stay afloat.
Enron lied to its investors. They lied big. The investors found out and abandoned ship. Whose fault was that? Wall street doesn’t care about ethics, they care about profits. If anything you said was true, Enron would still be around.
Your rants used to be funny, but this was just stupid. I hope for your sake you’re being spoofed again.
stickler
Yeah, somewhere in here is the reason why Econ 101 courses used to spend a little time on the thing known as the “natural monopoly” which ought to be, by all observed human behavior, “regulated monopolies.” Remember the Enron trader(s) caught on tape guffawing about bilking Grandma in California?
Actually, it had NOTHING to do with that. That guy is a scumbag, no doubt, but he was MAKING Enron money. Their bankruptcy had nothing to do with their operations trading power in California. That was profitable.
Yeah, he was MAKING Enron money all right. By gaming the system in a commodity where real competition did not exist.
Which leads to the next point. Why did real competition not exist? Because the political system was gamed — just like the market for electricity. How? Who was Enron’s biggest set of friends? Who helped bilk the entire West Coast out of tens of billions of dollars? Who did Ken Lay lend his corporate jet to during political campaigns? Who got Enron dollars in donations?
Hm.
vinc
Doug’s right that California didn’t cause Enron’s bankruptcy. The Enron trading unit largely kept the rest of Enron afloat, for a while, anyway.
But Enron’s profits *all along* were largely imaginary. Enron used “mark to market” accounting, which meant that they booked the whole expected value of a long-term deal as profit immediately. So say in 1995 they landed a deal to build a power plant, that would then make them $10 million/year for the next thirty years–the whole thirty year revenue stream got marked as profit for 1995, and none of it counted toward future years. And since no one knows what happens ten years from now, they could–and did–put the mostly wildly inflated optimistic numbers as the “expected” profit.
And while Enron was really good at making deals, it was *terrible* at execution. Because it was so focused on short-term profit, they’d make these long-term deals and no one high up at the company really had an incentive to make them work. So the deals would turn out rather badly.
Of course, when a deal didn’t work out quite as well as expected, the company had, under accounting rules, to count that as a loss. But it found all kinds of ways to pretend the “losses” weren’t actually losses, by pushing the loss into future quarters. But they couldn’t keep pushing the losses into the future indefinitely, and eventually it caught up with them.
Wantin' Some Bling Bling Too
Doesn’t Kramer have a good track record??? He’s on the radio touting that he’s not allowed to buy or sell within a certain time frame if he recommends a stock so I’m not sure your criticisms of his purchasing practices are accurate. What is your beef with him. I enjoy his madness, he has a passion for what he does. Methinks I sense a little jealousy on your parts about all of the money he has made.
Brian
Like most gurus, he has a mediocre track record. Few good picks, some dogs. He’s also a trader and most of his viewers aren’t really set up to daytrade. I suppose I’m elitist or something but listening to a lot of his callers, they really ought to be in mutual funds rather than individual stocks.
Darrell
I’m a fan of Cramer’s and a subscriber to his Realmoney.com service. A lot of people get turned off by his hyper-caffeinated antics, but the guy is Harvard educated (I believe he graduated from Harvard law), a top broker for Goldman Sachs who later founded a successful hedge fund then sold out to spend more time with his kids. I’d guess his net worth is in the hundreds of millions. By and large, he has a pretty damn good track record from what I’ve seen. Sure, he’s recommended some dogs, Charter cable comes to mind, but he admits when he makes mistakes, tells you to sell when he thinks he was wrong, explains his thinking and regroups. He also has hit some huge home runs like with his early Kmart recommendations and his early recommendations to get in oil stocks back a year or two ago before they became a hot momentum play.
Do this.. chart and follow his recommendations as best you can and see how they pan out. Of course, the time frame could make all the difference so “panning out” is a bit subjective, but still.. after that, then decide how smart or stupid it is to follow Cramer. I don’t follow everything Cramer says, but he’s made me some money, and had I followed his recommendations more closely, he would have made me a lot more money.
Darrell
Another reason I respect Cramer. He was a big Dem fundraiser for decades.. but he’s the kind of Dem I’ll listen to, and not just his financial advice