Jim Cramer the Contrarian Indicator

I hate calling people out. It is not in my nature to do so. I have done so few times in my life of which I am not proud of. Jim Cramer is dangerous. He intends to "serve" the average Joe from making informed investment decisions. His show is intended to entertain and educate. Nobody, I mean no body can continuously pick stocks and make recommendations day in and day out without running out of ideas and ultimately be wrong. Jim Cramer has been wrong and has been dead wrong on many occasions. I have read all of his books and much of what you will read will be self promoting. But in "The Confessions of a Street Addict", he also recounts many a times when he was wrong and believed his ideas to be right that nearly cost him his Hedge fund. Examples would be his belief in what the Cendant insiders were telling him about the company which he rode down before realizing that he was taken for a fool. He later testified against some of those insiders during SEC trial that put these people in jail. Talk about vindictive. Yet, he portrays himself as a unerring guru on par with Jesse Livermore, William O'Neal, Peter Lynch, Warren Buffet, and sadly, he is not. He is a lucky man who had breaks that got him where he is today. He also got people out at the bottom of the bear market in 1998 when he told his news letter subscribers to, and I quote "Get Out!". Needless to say, he lost a lot of his "lemmings" a lot of money.

More recently, here is his Mad Money Recap from January 30, 2005:

Why shouldn't Silicon Graphics (SGI - commentary - Cramer's Take) be bought? The company's in a turnaround. Its customers, oil companies and the government via defense and NASA, are flush with cash. Management has extricated itself from a toxic convert, as Frank Husic, a terrific growth stock manager, pointed out last night on "Kudlow & Cramer."
And the darned stock's at 3 smackers! Three bucks!

When you consider that people jump up and down to own that piece of junk Sun Microsystems (SUNW - commentary - Cramer's Take), which was an overcharging bandit during the heyday, or when you consider the love affair people have with Ted Waitt at Gateway (GTW - commentary - Cramer's Take) despite his insistence on doing nothing right, including this morning's wacky purchase of eMachines, the Silly Graphics choice makes a lot of sense.

When you add in the bizarre fact that not a single major firm covers Silicon Graphics, I say the darned thing sounds like a screaming buy!

Should you wait until it cools off, given the goosing it received on television? I would.

But then again, I would put some on now, so as not to forget it when the hoopla dies down.

Random musings: No sooner had Disney (DIS - commentary - Cramer's Take) CEO Michael Eisner kiboshed the Pixar (PIXR - commentary - Cramer's Take) deal, the single most important part of the Disney turnaround, than his minions were all over the media with some cockamamie story about how this was good for Disney. Man, you gotta love Hollywood. It's got the Kremlin and old Mother Russia beat for spin control.

The Cramer article is in red. I want you to focus on Sun Microsystems(SUNW) and Silicon Graphics (SGI). In this article, he is trashing Sun Microsystems and recommending Silicon Graphics. Why is he so negative on Sun Microsystems? He had the CEO on the show few weeks before where he painted a glowing picture of Sun's turn around and because Cramer liked him, he said he would buy it. Of course, few weeks later, news came out that the CEO wasn't being forthright with him. He of course played the victim and said, and I quote "
Feeling Used by Sun Microsystems". Shortly after this article was published, he had the CEO of Silicon Graphics on the show for an "interview". He asked him soft ball questions and the CEO again painted a rosy picture on the turn around of the company. A few weeks later, when SGI shares fell, Cramer publicly condemned the company by saying "Feeling Used by Sillicon Graphics". Since then he trashed the company as much as he can.

The one constant about Cramer is that he is consistent. He is a perma-bull. He sometimes holds on to losing investments while getting others to go "down" with the boat with him. So now that I have filled you in on his history in brief, I would like to now focus on Countrywide Financial. He had Angelo Mozilo who appeared on today's Mad Money Show. How convenient! He couldn't make the Senate investigation, instead sending Sandor Samuels, the Chief Legal Officer to do the dirty work under oath (Read: My previous blog on this topic). Instead, he appears on Mad Money show and spews his propaganda and poor old gullible Cramer bought all of it. Cramer prides himself in doing more due diligence than anyone. Yet he seems to just buy into what Mozilo has to say based on the fact that in Cramer's opinion, Mozilo is a "good guy in the industry". Mozilo again told the audience that Countrywide will emerge strong from the subprime melt down and hinted that they have not made any subprime loans that Accredited (LEND) and New Century (NEWC.PK) have made. That is complete falsehood. The fact is, Countrywide has been making those loans and according to Sandor Samuels, he expects the foreclosures from Countrywide's subprime loans to increase. Additionally, clearly, Samuels also testified that 60% of loan applicants cannot qualify for the prime loans for Countrywide if legislative restrictions were put forth. I am just waiting for Cramer to play the poor victim in a few weeks just like with Sun Microsystems and Silicon Graphics.

I find this despicable. I find the actions of Angelo Mozilo sick. He will have much to explaining to do in the near future. Greed is a powerful agent of evil.