I can't attend church these days, never mind be interviewed, without being
asked: When will the recession end? Where should I invest my money? What do you
think about Jon Stewart and Jim Cramer?
My answers: Really end? Not any time soon. Where I put my money, in an S&P
index fund. Charitably speaking, what theater. Honestly, what demagoguery!
Like virtually every other economist, I have counseled players, pundits and
parents for 30 years with the words "you can't beat the market".
God bestows that talent on a precious few - in this, Warren Buffet is like Babe
Ruth; one or two come around every generation. And
if those prophets tell us what they are doing, then the market discounts the
information so quickly it has little investing value.
That tells you what I think about the advice that CNBC business and finance
commentator Jim Cramer and many others offer. Each gives the studied insight of
a good observer.
Financial gurus are like sports writers. They can tell us why the Steelers won
last Sunday but they can't predict who will win next Sunday. At least not with
the certainty necessary to beat the odds in Vegas.
Americans watch Cramer's Mad Money show, subscribe to Morningstar and
read more staid columnists because investing is much more than putting up cash
for the future. For many, it is gaming, neither vice nor virtue. The casino of
the workplace, legitimatized by the need to save for retirement and kids'
education, and the unspoken desire for adventure and excitement.
Jim Cramer, theatrics notwithstanding, gives us his best shot - and sought to
do so again when he appeared last week on Jon Stewart's satirical The Daily Show,
in which he was roundly criticized for his forecasting in the run-up to and
during the financial crisis.
If Stewart were a serious guy - if he were more concerned about serving
investors than his ratings - he would track Cramer's prognostications and
compare those to other pundits and services. He would do a complete analysis
and tell us how Cramer stacks up.
Stewart, the opportunist, is not about to do that when national attention is to
be had so cheaply.
Adjusting for the amount of advice Cramer offers, which is determined by his
air time, I don't know whether he would come out better or worse than others.
Since Stewart doesn't know how Cramer stacks up across all his predictions, he
should not be hammering him.
Sadly, Stewart likes to make others the fool - the cruel comedy of the
adolescent mind.
Cramer foolishly agreed to debate him on Stewart's home turf, where Stewart
treated him badly.
As for all the CEOs and other corporate officials that appear on CNBC and other
networks, we should all know by now they are going to put their best spin on
their circumstances. I like that they have opportunities to do so.
It's a shame we don't have lamps in studios that turn yellow when speakers are
fibbing. Alas, we live in an imperfect world, but we have our own common sense.
I would hate to see the financial networks stifled [1] because comedian Stewart
is better at self-promotion than Cramer is in choosing his venue when
challenged to a duel by a bully.
1. Editor's note: The Associated Press reports on Tuesday, March
17: "Some liberal political activists and economists are seizing on comedian
Jon Stewart's attacks of CNBC to push an online petition drive urging the
network to be tougher on Wall Street leaders. Spearheaded by the new
Progressive Chance Campaign Committee and supported by the watchdog Media
Matters and others, the group is asking CNBC to hire economic voices with a
track record of being right on the current economic crisis, and do more to hold
business leaders accountable."
Peter Morici is a professor at the Smith School of Business, University
of Maryland School, and former Chief Economist at the US International Trade
Commission. (Copyright 2009 Peter Morici.)
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