Monday, March 23, 2009

Is Our Financial and Economic System a Joke?

After the high-profile feud between Jim Cramer and Jon Stewart made the problems faced by our global economy “interesting” to primetime TV viewers, is our financial system nothing but a joke?

By: Ringo Bones

This probably all started when Jon Stewart of The Daily Show with Jon Stewart made a joke about Rick Santelli. A Wall Street pundit and staunchest critic of President Obama’s plan to bailout ailing American companies, calling the president’s action as socialism. The joke was even enhanced to us in the know by Rick Santelli’s inability to delineate a proper line across the sand between socialism and capitalism (or unbridled greed?). From this perspective, Jon Stewart’s indictment of CNBC’s Mad Money with Jim Cramer seems incidental. Until when the TV ratings between the two got affected.

Even though an overwhelming majority of people around the world would consider Jon Stewart in criticizing CNBC’s financial-themed programs like Jim Cramer’s Mad Money because they didn’t do their part of disclaiming the true extent of the risks involved in investing in the stock market. The feud between the two even ballooned to cartoonish proportions when Jon Stewart’s ratings shoot up while the ratings of CNBC’s financial-themed shows slightly slipped down. Even Jim Cramer resorted to appearing to the TV show of securities fraud ex-convict Martha Stewart – i.e. Better Living with Martha Stewart to plead his case - Irony of ironies indeed.

Even though the feud between Jim Cramer and Jon Stewart were now diffused after Jim Cramer appeared in Jon Stewart’s show. Looking beyond the debacle in terms of TV ratings cost and benefit, looks like the feud between the two finally brought into the spotlight the eternal struggle faced in maintaining the overly complex organism that we call the global economy.

When compared to other investment companies that provide service for the novice investor, the CNBC focus groups deciscion to chose to use “In Cramer We Trust” as the de facto legal and risk disclaimer for Mad Money with Jim Cramer. The show for all intents and purposes undoubtedly opens itself to all manner of ridicule. As a marketing and promotional ploy to make Mad Money with Jim Cramer appeal to middle-school aged demographic, the idea seems dubious to me.

When Jim Cramer first promoted Mad Money on The Tonight Show with Jay Leno a few years ago, the idea of persuading novice investors to invest in high-yield but riskier funds as a component to diversify their own portfolio is somewhat suspect. Given that majority of older viewers who have enough money to indulge in Jim Cramer’s financial adventurism are somewhat squeamish to invest in something riskier than bond funds and equity income funds, the showmanship behind Mad Money should concentrate more on investment risk disclaimers. Rather than the novelty bells and whistles that are de rigeur of the show. Remember when Jim Cramer told everyone to invest in Bear Stearns back in 2008, and a few months later the company had major financial troubles?

For those of us who had benefited from our money funds during the 1990’s and had now diversified our investment portfolios into something higher-yielding – but a little riskier – bond funds and equity income funds, Mad Money with Jim Cramer will always be viewed somewhat of a joke from our perspective. Prudence will always be a guiding force every time we invest our hard-earned money. It will surely take more than a TV showman armed with oversized novelty bells and whistles and other props that belong in Pee Wee’s Playhouse to convince us that investing in aggressive growth but high-risk derivative funds and specialist funds is the best thing for us since free money. Our investment portfolios probably can’t afford such jokes during these times of a worldwide economic downturn.

1 comment:

Hera said...

Mad Money with Jim Cramer and the rest of CNBC are partly responsible for hyperinflating the shaky Bush Administration era stock market by allowing novice investors to indulge their greedy nature by introducing them into risky investment ventures. Just because derivatives earn way faster than your good old cash deposits doesn't mean that they are completely risk-free.