Amusing? Sometimes.
Funny? Sure.
Knowledgable? Nope.
Honest & Trustworthy? Negative.
For those of you who watch CNBC then you all know of Mad Money host, Jim Cramer.
His antics are funny, his sound whistles are amusing, and his special effects keep us entertained but when it comes to his knowledge and investment advice he is not the person you should be listening to.
Just recently Jim Cramer was caught in another stock flip flop, hyping Facebook (FB) before the IPO and then changing his tune following the chaos that ensued on the first day the stock went public. This is just another case exposing Cramer, showing his inability to pick great investments and it’s scary because so many people watch his show and take his advice for all their investment needs. Mad Money is an entertaining show but it’s investment advice is clouded and very questionable so we urge our readers and everyone else to always use their own judegement when it comes to making any investment decisions and especially don’t rely on the sole advice of Jim Cramer.
We all remember his Bear Sterns calls – and his more recent Chesapeake Energy hype…and now Facebook. If you took his advice on the Facebook IPO and got “in on the deal” and tried “to get your hands on as many shares as possible” – you’d be out a pretty penny right now. Jim Cramer couldn’t annoy his viewers enough pushing them to invest in Facebook claiming it was going to offer great returns.
Quoting Cramer right from his show, “If you can get in on the actual IPO, then I think Facebook is a no brainer,” Cramer said confidently. “We all know this one’s going to pop like crazy on its first day of trading, so if you can get in on the deal, I think you should try to get your hands on as many shares as possible. Facebook will almost certainly come public to a huge spike when it starts trading on Friday!”
We all know how that turned out as Facebook steadily fell 25% over the course of the first ten days. Just look at the graph below to see the trajectory of FB’s chart: 
To everyone’s opinion there’s always a counter for those who think differently and Jim Cramer’s not shy to this as he has plenty of naysayers:
“…With all the hoopla over Facebook, maybe it’s time for a reality check. Is the recent wave of social media IPOs merely a repeat of the hideous, horrible, money losing dot-com bubble? Are we making the same mistakes all over again? Is the tremendous amount of excitement over Facebook simply irrational exuberance? …Maybe you shouldn’t buy it at all. No, no, no, and no! When you look at the facts, the bubble talk seems foolish. Facebook isn’t the epitome of a dot-com era mindset that lost people fortunes. It’s a tremendous company that made people tremendous growth. Eyeballs, the old stupid metric that got people in so much trouble the last time around. You could analyze the stock by the numbers. You don’t have to be an ophthalmologist to count how real the eyeballs are.”
Cramer confidently responded saying “anti-Facebook bubble heads” would be wrong. He went on further stating “What’s happening now is nothing like the insanity that gripped the market in 1999,” noting that there were 289 Internet-related IPOs that year, which is much more than today. “Facebook is a fabulous company, one that’s much better than any social media IPO we’ve seen so far,” Cramer said. “I think the stock will succeed, like LinkedIn, not flunk like Groupon or Pandora.”
The graph is all you need to see to know how Facebook’s IPO turned out. And while Facebook’s stock started to tank, Cramer’s opinion and advice shifted.
“Look, it’s all in the wrong hands,” Cramer said on Tuesday morning’s Squawk on the Street. “It’s a hot potato. The company didn’t do a good road show. Suddenly, you go back and realize, wait a second, maybe this was like all the other social media companies that became public. Which were, by the way, disastrous…All of the deals that have come have lost a lot of money for people. And this now seems like still one more of them.”
This coming from the guy who adamantly told us Facebook wasn’t like those other failed social media companies? Cramer thought he could just let this one slide, thinking everyone would forgot all about it but his luck came to the same tune as Facebook’s. Forbes writer Todd Ganos called Cramer out on his backtracking, calling his comments ridiculous:
“A mere two trading days after Facebook shares went IPO, they had fallen from the $38 offer price to below $31 intraday. When this happened, market mad man Jim Cramer ridiculously commented on CNBC that the underwriting brokers should have known that the shares weren’t worth $38. What were they thinking? These comments are in direct contrast to comments prior to the IPO that Facebook shares were something that everyone needed to have.”
We commend Todd Ganos for exposing Jim Cramer when many wouldn’t. Just watch it for yourself, the two clips below show exactly what we were talking about with Jim Cramer flip flopping on his opinion of Facebook.