Jim Cramer, the Financial Guru that hosts CNBC's "Mad Money" program has issued a statement that investments could lose 20 percent of their value, and thus, he said that anyone who has money that is needed within 5 years should close their positions and GET OUT. This video is per MSNBC article updated at 9.16am ET, 6 October 2008.
http://www.msnbc.msn.com/id/27045699/
Jim Cramer has always been one of the top stock market optimists, and to see him change his mind tells me two things. Today, most fund managers and analysts (except the most hard core optimists, e.g. CNBC's Larry Kudlow) acknowledge that the investment situation is an Asset Deflation environment that I have already mentioned. Second, I respect Jim Cramer for his courage to come out and tell investors the correct thing they should do, despite his earlier optimism a year ago.
Ann Curry, the interviewer told Jim that his statement to "Get Out" of the stock market was "dramatic", to which he replied, "I thought about this all weekend. I do not want to say these things on TV", but he felt that the situation was too risky not to say it.
Whether Jim Cramer is proven right with his advice is irrelevant. His sincerity to try to advice investors to do what he thinks is right, despite having to eat his earlier words, win my confidence in listening to his advice in future. Of course, no one is correct ALL the while. What is important is that we listen to smart people who give us alternative views, and then make our own decisions, and enjoy or suffer the consequences of our decisions and actions, or lack of, for better or for worse.
Over the weekend, I saw Larry Kudlow interviewing two fund managers, and he was still trying to be optimistic about the economy and the stock market. Larry Kudlow's views are important, but we must understand that he always takes an optimistic view of the situation.
Different people take different views depending on their personal bias. Some people like Larry Kudlow are the ultimate optimists. On the other hand, Professor Roubini, whose economic crisis scenarios have been proven accurate thus far (he did predict a Doomsday Scenario, although he did mention that this is not THE LIKELY Scenario) is considered generally to be of the Pessimist paradigm.
Jim Cramer is generally an optimist, which means he generally views the cup as half full instead of half empty, but not as extreme as Larry Kudlow.
The most important thing is sincerity. There are many people saying things on TV because they want you to act in a certain manner, i.e. they have a personal agenda. Very few say things because they want to protect you or because they want to help you make money.
All billionaire traders / market wizards are neither optimists nor pessimists. They are objectivists. By that, it means that they try to be really objective, i.e. unbiased in their view of the market. This is easier said than done because ALL of us are biased. This is human character. However, the Market Wizards try to listen to different viewpoints and then have a stringent method to form and assess their inferences and conclusions, so that they know the truth, and nothing but the truth.
And if you don't know how to form your own truth, and nothing but the truth, in an objectivist manner, listen to the billionaire traders who have made billions and are making millions even today. In this case, even if you lose money, you can take comfort that so did George Soros. Hahahaha.
Best wishes,
Ooi
P.S. The stock markets around the world has gone down significantly yesterday. Congratulations! You have become a lot richer today than you were yesterday because wealth is relative to others, and thus, when others lose money and you don't, you are relatively richer today than yesterday, compared to them, simply because you did not own any assets that depreciated in value.
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4 comments:
Hi,
You wrote:
"a stringent method to form and assess their inferences and conclusions"
This means that they NEVER change their methodologies. They pick one and they stick to it.
As Warren Buffett (to paraphrase) only invests within his circle of knowledge (and methodology) and hence is always correct.
They may miss opportunities, but they almost never lose money.
His latest quote: ""Beware of geeks bearing formulas!"
LOL.
Vic
posted my comment on the wrong topic- ooi, go to carolan.org & view what some think of cramer- he picked the low in 1998 & made the very same call as he did today- some view him as a great contrarian indicadotor
Dear Jothi,
Thank you for visiting my blog. Also, thank you for taking the trouble to comment. You and Victor Liew are my first two visitors, so I am extra appreciative.
I have visited Carolan.Org as recommended, and found the comments pretty amusing. :)
I guess that's the life of an analyst. Get a major call wrong once, and be remembered for life.
At the end of the day, if we lose money, it doesn't do much good to blame others. Thus, it is important to develop the necessary skills to make money. Easier said than done though.
If it's any consolation, the DJIA went down a couple hundred points more after Jim Cramer's call. So, I guess it depends on what kind of a timeframe and which trend wave we are talking about.
Best wishes,
Ooi
Dear Victor,
Thank you for all the help and advice you have given me regarding the setting up of my blog. I really appreciate it.
Thanks also for being the very FIRST to comment on my blog.
As for your comments, what I actually meant by "a stringent method to form and assess their inferences and conclusions" is that these people have a process of making quality decisions.
In quality management, the process is more important than the specific content.
If we manage the process well, i.e. the methods to come to an inference or a conclusion, what it means is that we will come to the same conclusion based on the same facts, but we may come to an opposite conclusion given new facts.
What we don't want is to come to two opposite conclusions based on the same facts at two different times.
If we don't manage the process well, this is what happens, and thus, at the end of the day, it was not the facts but the process that was wrong.
Best wishes,
Ooi
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