“THE CONSERVATIVE INVESTOR”
“When Mad Money first appeared on CNBC I felt a headache coming on. The noise alone was enough to reach for pain relief. Every disciplined aspect of my three decades in the business cried out to make the ranting and raving stop. Now, BusinessWeek has placed his explosive persona on their front cover. They talk about their (cover story) personality as though he just might have redeeming qualities for legitimate investors. It is time for a rational look, and for tempered observations to be made.”
Christopher S. Channer, October 2005
Lets go back to the 80’s. That is the one period of time where Cramer and Channer might have appeared to have something in common, although that commonality had nothing to do with philosophy or personality. Actually the opposite was true, and remains true. Channer and Cramer are near diametrically opposed in their attitudes and sense of responsibility toward investors. But one thing they did have in common was a desire to have an effect on investors through the medium of financial programming. Cramer, according to BusinessWeek, initially became interested while living in his college dorm (in 1981) watching FNN (Financial News Network). Channer became interested in financial programming while watching FNN and The Stock Market Observer that aired on WCIU in Chicago.
Channer became a regular guest on The Stock Market Observer; he was featured regularly on a daily telecast show known as Ask An Expert. After a while, Channer, and another individual, who was a Chicago stockbroker, decided that better financial programming was needed, and they co-created, produced, and hosted a new show called The Conservative Investor. The show aired in Chicago initially, and then aired nationally on FNN. For several reasons, including time constraints, and then financial difficulties at FNN (which was the forerunner to CNBC), the show ended in the 1988-89 season, but not before educational publisher Scott Foresman made a book deal entitled Ask The Conservative Investor.
Channer’s best television days are likely behind him, as he is nearly a decade older than Cramer, but Channer suspects that Cramer’s best days may be behind him as well. Why? Because Channer believes that Cramer’s flamboyant personality is likely to hurt far more investors than will be helped.
Channer suspects there are reasons for naming Cramer’s show Mad Money. He thinks the regulatory authorities are less likely to harness or sanction the hype, if his producers can preclude the criticism with a self-proclaimed title that admits to madness.
But Mr. Conservative Investor (Channer) also thinks there is an exploitive theme that will eventually take its toll on investors, and then on Cramer himself.
There is a great deal of evidence in the investment community that temperament, a level head, and applied patience are the real variables that account for the successful management of financial assets. Warren Buffett and his partner Charlie Munger have argued for years that an unusually high IQ is not the critical characteristic. They maintain that if intelligence is at a reasonable level, then the maturity and emotional makeup of a given investor (or investment manager) become the primary determinates of success. Yet when one watches Cramer, it is clear that showmanship, entertainment, and outrageousness are the order of the day. Cramer loves to say, “Some people want to make friends, but I just want to make money.” But do not believe it. He wants the money all right, but he also wants a national audience that adores him, and who will award him stardom status. Such avarice is not uncommon in Hollywood, though it rarely leads to happiness. But it should be barred on Wall Street and in financial programming because those personality characteristics are harmful and inappropriate in the field of investment advice.
Anyone who has watched Mad Money may have experienced several emotional sensations that go well beyond the noise and hype. Sometimes the pitch seems intelligent, often it feels like insights from a true insider, and the stock picks are not only presented in a way that is humorous, if not absurd, but are presented with the authority that only Cramer delivers, and it stirs up a sense that easy money may be just around the corner. His allure is real, powerful, and could be the best catalyst for human greed that has ever been aired on television. Sadly, all this produces what the presenters’ want: viewers, and more viewers. Viewers make Cramer famous, and at the same time it rakes in the advertising dollars for CNBC – with little regard for the best interest of their audience.
Of substantial importance, none of this is remotely correlated to being a Conservative Investor. Channer’s passion is to dig deeply and to discover what really works for legitimate investors: To tell the truth about what works (and what does not) to those who rely on that advice, and to help each investor develop the most disciplined investment temperament possible. Can Cramer’s narcissism be helpful in this regard? No, it actually is more akin to pouring flammables on objects that are too hot to begin with.
What starts poorly, and is based upon incorrect fundamentals, rarely ends well. When judging whether something is good or bad, with respect to the impact it has on viewers, it is often helpful to look first at the stated or implied premise (of the practitioners). In that light, Cramer is doing exactly what BusinessWeek says. He is earning himself the title they offered: The Mad Man Of Wall Street. They are right because it is madness to pretend your purpose is to help the less experienced, when all the real experts – at advising the investing public – rank ‘emotional appeals’ as poisonous to the well of understanding. Peter Townsend, of the rock band The Who, became famous for smashing his guitar on stage to the adornment of 20,000 intoxicated teenagers. Cramer imitates that behavior by smashing furniture on the set of Mad Money. That in itself should tell most adults what they need to know when it comes to Cramer.
Next time Mad Money comes on, do yourself a favor that will honor the best interest of your portfolio. Grab the remote control. Then pick up a copy of John Train’s original book, The Money Masters. You will be better off.
Anti-Mad fundamentals to remember:
Trading is not investing – rather, trading is a ‘zero sum game’.
Short selling is very high-risk speculation.
Stock “tips” are designed for the inexperienced, who seek a free lunch.
A voice of reason does not yell at you.
Investing is not easy or entertaining; it is hard work.
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