OT: Jim Cramer "butchered" by Jon Stewart face to face last night

[Bosco685]

Well, maybe I should start a poll of who didn't take a bath in this market.

 

Financially speaking, because I already know most of you don't bathe.

 

 

[delekkerste]

Enlighten me, because it should be.

 

 

No, it shouldn't be. I think a real estate example is easier to understand. Let's say a neighborhood has 100 houses that are worth $1 million apiece. The total value of the housing stock is thus $100 million. Now let's say this economic tsunami hits and the next couple of houses sell for $750,000 each which is where the new market is. Now the total value of the housing stock is only worth $75 million. That $25 million just evaporated. You can't point to a transfer of wealth of $25 million, because there hasn't been one.

 

Same goes for stocks. Let's make some simplifying assumptions just for clarity. You have a company that has 1 million shares outstanding and a stock price of $100. The total market capitalization is thus $100 million. Now let's say bad news comes out - the market tanks and the new trading level is $75/share. Thus, the new market cap is $75 million and $25 million of value has evaporated. Now, to the extent there are short sellers on the other side, value is transfered to them. But, that's generally a very small portion of shares outstanding. Let's assume it's 10% (a very LARGE short interest) just to make the math simple. 100,000 shares sold short gains $2.5 million in value as the stock tanks. So, the net loss that has evaporated into thin air is $25 million - $2.5 million = $22.5 million.

 

Options and futures are examples of zero-sum games. For every options or futures buyer, there is a seller. That is NOT the case in real estate and stocks where there is not a short for every long and where prices are generally set by the last trade on the marginal transaction.

[JohnT]

Another example is the comic book market. Today I think it has X value, but if people decide they don't want to pay that much for it the value drops accordingly. That value just vanishes.

 

Stewart was saying that CNBC and others were responsible for driving up the apparent value of the stock market--including his mom's savings--when they knew it wasn't that valuable.

 

I read in the paper today that some economists are estimating that 27 trillion dollars have simply vanished in this crisis. And as we've seen, this causes all kinds of problems for the economy--and for people's livelihoods.

[dekeuk]

 

 

 

 

best animated gif I've seen this month

 

 

[tth2]

2. CNBC is not a financial advisor nor a financial regulator. Could they have done a better job of investigative reporting and journalism? Sure. But, there were severe lapses of judgment and oversight everywhere, from the highest levels of government in Washington, D.C. to within the industry itself. Through the magic of compiling 10 minutes of videoclips out of the past 18 months of coverage, it's easy to scapegoat CNBC and make them look like total buffoons.

This is true, and I'm definitely no fan of Cramer. CNBC (and really, almost all TV news) is really about real time news, not investigative journalism. There's a reason that CBS set up 60 Minutes as a completely separate news show dedicated to investigative journalism, because their regular nightly news staff really had no capacity to do it.

 

If you want investigative journalism, you should be looking to the print media such as the WSJ and FT, which I should note missed everything as much as CNBC did.

[BaltimoreLauren]

I just saw the clips online, and oh my God. I'm not a fan of Cramer (I do like Stewart) but this was so awkward and hard to watch. But really good, all the same.