Earthside Comments: Well, that was fun, uh?
The Dow goes up almost 400 points in one day allegedly because the pencil-headed CEO of Citigroup'leaks' an internal memo asserting that the bank made some money before writedowns (losses) and after taking federal bailout money in January and February of this year. Yet more proof that the stock market is, well, stupid and irrelevant ... and no indication of reality. You don't want to be in the stock market unless you have no choice -- the twisted 401-K system we are saddled with makes a lot of people stay in ... in which case, there are gold stocks and funds like Prudent Bear (we own this) to help you try and stay level.
So, while the commissioned brokers and advisers, and the institutional investors (ie., gamblers) spun the roulette wheel yesterday (today?) to try and make a few bucks off each other, see below what is actually taking place in our economic reality.
Then an opinion piece about one of our 'favorite' television channels.
Does it sound like we are increasingly cynical about the 'markets' and what is going on in the economy? It's because we are!
United Tech Cuts 11,600 Jobs, No Longer Sees Recovery in 2009 | Wall Street Journal
National Semiconductor to Cut 1,725 Jobs | Associated Press
LA Unified Board OKs Layoff Notices to About 9000 Employees | Los Angeles Times
US Credit Card Delinquencies Rise in Sign of Stress | AFP
24 Million Go From 'Thriving' to 'Struggling' | USA Today
It's CNBC That Has Not Yet Hit Bottom | Dan Solin/HuffingtonPost.com
I am no fan of CNBC. It's not just the insufferable pomposity, smugness and arrogance of its anchors or the faux frenzied reporting from the floor of the NYSE that I find offensive. It's how it works to mislead investors by providing so much misinformation. Great credit to Jon Stewart for taking them on and exposing their most memorable screw-ups.The relentless self-promotion of talking heads posing as "financial experts" provides a steady stream of drivel that both confuses and alarms investors. CNBC understands that fear sells. It sells fear, masking as financial news.
The breaking point is its commercial for Jim Cramer, captioned "In Cramer We Trust." Over 600,000 viewers agree and they tune in to his inane show. Many of them rely on his advice.
NBC, CNBC's sister company, perpetuates the harm by having Cramer appear on otherwise serious news programs, like Nightly News with Brian Williams, a journalist I otherwise admire. For these appearances, Cramer appears to be on valium as he solemnly dispenses his version of financial wisdom, sans "boo-yas", references to "CramAmerica" and other nonsensical utterances which he rightly believes might not go down well with a more discerning audience.
Objective studies by Barron's and others conclusively demonstrate that Cramer's stock picks typically underperform the market. From May to December 2008, the market lost 30%. Investors who followed Cramer's advice would have lost 35%.
According to Barron's, there may be a way to profit from Cramer's recommendations: bet against them. One study demonstrated shorting his picks earned investors over 25% a month.
Here's the bottom line:
There is a reason for the self-confidence of CNBC's anchors and its Mad Money star: They are desperately hiding a secret. The network is premised on a fundamental lie. Watching CNBC is harmful to your financial health. No amount of information, however slickly packaged and promoted, will help you "beat the markets." If you figured that out, the money machine at CNBC would come to a grinding halt.
In stark contrast, CNN's Ali Velshi and Gerri Willis explain and educate, in a calm, reasoned and intelligent way. They make no pretense of providing "inside information" on stock picks and market timing. They elevate the discourse. CNBC lowers it.
Investors want to know if the market has bottomed out. The answer is: no one knows.
CNBC has not yet bottomed out, and that is contributing to the problem.
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