The Penny Stock Church of What's Working Now

[Stock]

Beware the blasphemers!

Rick Santelli Takes Down Jim Cramer
by: Todd Kenyon posted on: January 25, 2008

This video is too good to pass up, even if it is a bit over-produced. It is based on the amazingly rare event of someone on CNBC calling out Cramer. In this case it was Rick Santelli, probably the most rational and experienced regular commentator on CNBC.

Although it clearly points out what many already know; that Cramer is mostly a trend follower/extrapolator with very little accountability, it also points out something with bigger implications: nobody but nobody knows what the market is going to do.

The last two days are a prime example of this. Nobody but nobody would have predicted this week's market action after the disasters in overseas markets Monday. Invest based on Cramer's, or anyone else's short-term predictions at your own peril. Sure, Cramer does say some intelligent things, and does have some good educational pieces on his show (I have admittedly only seen it a few times, unable to avert my eyes from the bizarre spectacle). But then he follows it up with market timing, speculative garbage with no regard for valuation (at least he admits his disregard for valuation).

Back in his hedge fund days, Cramer was known as "Cramer from the Church of what's working now". Nothing has changed. "What's working now" is great until it isn't, and even the high priest doesn't know when that'll be - even if he says he does. Even valuation has little bearing on short-term price movements. Long-term though, it is the only thing that matters. Without valuation as a guide, you might as well take your IRA to Vegas. The odds of making money are probably better.

(Thanks to Whitney Tilson for the video link)

http://seekingalpha.com/article/61662-rick-santelli-takes-down-jim-cramer