Cramer= The Ultimate Contrary Indicator!
Lest we forget, most of his "must own" stocks are now defunct or off by 90%+.
thestreet.com
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Oh, I remember. More than four years ago, Cramer wrote an article that still ping-pongs around the Internet titled "The Winners of the New World" in which he listed out 10 companies that his hedge fund was buying. "We buy them every day, particularly if they are down," Cramer noted, and said that they would do so "until this period is over -- and it is very far from ending."
That was February 29, 2000. As it turns out, "very far" turned out to be less than two weeks, and if Cramer was true to his word, his hedge fund got slaughtered on each of them. The best performing of the 10, Mercury Interactive (Nasdaq: MERQ), is down more than 70% over the last four years -- and this after its stock has nearly tripled. Of the others, 24/7 Solutions (Nasdaq: SVNX) declined from $1,882 to $3.33 (where the stock price is absurdly high, you may assume that it has been adjusted for splits). Ariba (Nasdaq: ARBAD) declined from $793 to $8.40. Digital Island lost 98% before being acquired, Inktomi lost 99%, Sonera lst 90%, and Exodus shares lost 100% before reaching the same fate. InfoSpace (Nasdaq: INSP) went from $217 to $28, Verisign (Nasdaq: VRSN) went from $253 to $16.50, and Veritas (Nasdaq: VRTS) dropped from $131 to $18 today.
In 2000, the anointed companies didn't "have earnings per share, so we won't have to be constrained by that methodology for quarters to come," while today's list has the benefit of having earnings, but they still don't matter because these stocks have come unhinged anyway. Wow. I'm sure a note about this list of companies and the fact that their earnings in total are drastically overstated due to their rich unexpensed stock options programs would therefore simply be seen as extraneous. We're unhinged from earnings, the earnings overstate economic returns, but why bring something as arcane as economic returns into the discussion at all?
The thing about Cramer, though, is that he has no such thing as a firmly held belief -- he is a trader, pure and simple, and his opinion changes often. But I don't recall any redaction of the February 2000 column after those companies got slaughtered. To my knowledge, the 15% drop thus far with BERQY has gone unnoted as well. Following a trader for investment advice is sort of like counting on a dog in a park for directions -- you might get where you're going, but not without wandering around while the dog sniffs and pees on everything in sight. You're more likely to end up where you began, and exhausted. Really, the only reason I'd call Cramer a "bull" are statements like the ones on BERQY and the fact that he jumps around on CNBC, screaming about the economic rebound like what's left of his hair is on fire.
fool.com |
