And don’t you forget it. In the first part of the linked article, he states something that economists know well: people don’t understand opportunity cost. But then he goes off the rails on a crazy train:
Cramer believes currently too many Americans are putting too much of their savings into bonds, CDs and bank accounts that offer little to no return.
The opportunity cost, he says, is the much larger returns you could get from putting that money in the stock market.
Yeah buddy. Higher returns from the stock market. But why are returns higher in the stock market?
Of course, Cramer realizes the stock market presents more risk…
In other words, when you
give Wall Street your money to play with invest in the stock market, you run a higher risk of losing your money than if you stick with ‘conservative’ investments like bonds, CDs, and bank accounts.
“I think stocks give you the best chance,” said Cramer
And if that money is sitting in a bond, CD or savings account, it’s safe but it’s not growing; therefore “you’re missing the opportunity to make much more money.”
That’s what Cramer means by opportunity cost, and as far as he’s concerned, it’s something that most Americans just can’t afford.
Remember this about Jim Cramer: he likes to buy stocks and then talk up these stocks on his shows. Once the stock’s price goes up, he sells the stocks and makes his profits.
In a soon to be released tell-all tale, former Cramer & Company employee Nicholas Maier Nicholas Maier accuses TheStreet.com ‘s co-founder of using CNBC anchors and his own television appearances to promote stocks that he would promptly sell, making a quick gain on the upswing.
Maier goes on to explain that after the stocks were touted on television, Cramer would promptly dump the firm’s position: “No sooner would Maria be thanking us for the help than we’d be getting a payback–a quick hit thanks to our friends at CNBC.”
Cramer’s own television appearances also were used to intentionally sway the markets in his favor, Maier writes. For example, while Cramer was on CNBC promoting “a great investment for the long term,” Maier writes that Cramer’s firm was making quick gains: “Our real strategy, however, was all about taking profits now. Back at the office, we were supposed to dump stocks after a quick half-point gain. On TV, Jim would tout a stock we owned, but if it moved up, we would sell.”
“Jim would do the opposite of what he was saying on television,” Maier told Forbes. Cramer did this behind the scenes too, says Maier. “He would hear rumors, pass them on and then do the opposite,” adds the author…
Never trust anything you hear on TV. Especially where your money is concerned.