JIM CRAMER admits to hedge fund crimes, stock prices are "fictions"

[Herman Munster]

http://www.corporatecrimereporter.com/cramercomesclean032107.htm

Watch the video: http://youtube.com/watch?v=708wDFX28lc

Finally, Jim Cramer has come clean.

The market is fiction, upon fiction, upon fiction.

Stock fundamentals don’t matter.

It’s all about lying and manipulation.

Lie, spread rumors to reporters, including to the bozos at the Wall Street Journal.

Price fixing is needed in certain industries – and don’t worry, the shareholders will demand phony lawyers to cover up the crime.

No need to worry about the Securities and Exchange Commission (SEC) – they don’t have a clue.

No need to worry anymore about Cramer’s Harvard Law School buddy Eliot Spitzer – he’s in Albany now.

Cramer – the former hedge fund trader and current host of the popular CNBC show “Mad Money” – was interviewed in December 2006 by Aaron Task on TheStreet.com television.

Apparently, for three months, nobody paid attention.

[Skink]

1. He'll be a founder of Hedge Fund Anonymous.

[gaspee]

2. I traded for a hedge fund

on the floor of a big exchange for almost ten years. It's all true and he's right. I, for one, couldn't live with the knowledge and go in and do my job everyday. b I walked out a month before bonus time six years ago and never looked back.

I now make less than 20,000 a year and am happier than I was making 750,000 a year. Go figure.

It's all a lie. It's all fiction. The game is rigged. There is no question about it. And they are all crooks. The SEC is a joke. I traded most of my years in the microsoft pit. I blame bill gates for chimpy. Whatever happened to the break up of microsoft? The election of 2000 and the neutering of the already ineffectual SEC happened is what happened.

Business in the US is the ultimate organized crime. And it's in every industry. If you can live with it, good for you. I, for one, couldn't.

I do manual labor now (and I have three degrees) and quite enjoy my life.

[loudsue]

3. Whew! What a testimony! I think I'm going to call tomorrow & get

my $$ out of the market. You just scared the shit out of me!! That's my retirement in there!!

:kick:

[gaspee]

5. Because the game is rigged

Doesn't mean you can't make a little money by riding the coat tails.

They're going to make their money and if you're careful, you can skim a little off their big piece of the pie. Just play safe. The system has too much wrapped up in itself to ever do anything about it.

The emperor has no clothes and no one is interested in pointing it out.

[enough]

9. What would "just play safe" mean?

I'm asking because I find myself responsible for my very elderly parents' assets, and I know very little about it, never having had any money to worry about.

They are 86. Should I get them out of the stock market?

Interested in anyone's informed thoughts on this.

[Herman Munster]

10. play it safe

means invest in diversified index funds such as vanguard total market, vanguard total bond, vanguard total international.

[gaspee]

15. Sorry, went to bed

You nailed it exactly.

And never freak out over the short term. If you're in it for the long haul, when the market tanks (as it will every no and then) buy fundalmentally sound companies for better prices. Price-averaging is the name of the game if you're in it for the long haul.

[BlooInBloo]

16. lol! Anonymous internet stock advice! I have an email with HOT tips - Give me your SS# and I'll fwd!

:rofl:


NOTE: In case you're truly that credulous (which in any other situation would be an asinine hypothesis), DO NOT GIVE ME YOUR SS#.

[enough]

18. Glad to have brightened your morning.

If you think I would take action on ANY individual source of advice, even professional, the credulity is all yours. Now that I find myself unexpectedly in this position, I've been doing a lot of reading. The other thing I've been doing is asking EVERYONE I can think of what their opinion is, not about individual stocks, but about the entire situation.

The premise of the OP caught my attention, suggesting that there is a lot of "fiction" involved in the market. That rang a bell with me. To a novice, the whole thing looks pretty fictional.

[BlooInBloo]

19. It's not fiction. It might not be what you think, or what they advertise, but it's not fiction.

(I'm a mathematical modeler for mortgage backed securities at a financial institution.)

[gaspee]

30. Pshaw

It is too fiction. The *math* isn't fiction. Math, which is what you do, has NO BEARING on the underlying situation. The way floor traders make their money is by taking advantage of the math. Because at least math doesn't lie. Know what this formula is? C-P=S --- add in some gamma, vega, theta, and Rho and you know the secrets of the universe (of options trading anyway.) Math doesn't lie but variables matter.

Anyway, you're right. Never trust anyone on the internet.

I pit traded derivatives. Matrix theory is the basis for pit pit trading derivatives, but the underlying market is fiction. That doesn't matter to the floor trader because I will say it again. Math doesn't lie.

Have you ever read "Extraordinary Popular Delusions & the Madness of Crowds"

If not you really should.

The underlying value of stocks do not depend on fundamental values of the companies. If you want to argue that they do, have at it. You're still wrong.

Back in oh, 94 or so, CNBC started getting real popular. The supposedly "common man" could get into the market like never before. Day trading for people not on the floor. Well, as soon as that stupid idiot with his little show mentioned a stock, all the followers would pile on. Finally, the trading floors wised up and put TV sets in every pit.

When a two dollar broker walks into a crowd with 10,000 contracts to trade in a stock that trades 10,000 contracts in a month, then 20 minutes later one of the big houses upgrades or downgrades a stock... now watch that happen over and over again. Or watch a huge chunk of the underlying trade over/under the trading price of a stock, then you find out a BD/BD trade went up, matched before it even came to the floor.

Open your eyes. It's rigged. Always has been, always will be. Still doesn't mean you can't get your piece. You just have to be careful about it.

[truedelphi]

23. Keeping track and keeping safe your parents' money will be

Easier if you remember these four:

First: Buy low - sell high.

Second: Don't count your eggs before they are hatched.

Third: Diversify - don't have your all your eggs in one basket.

Fourth: Remember - what goes up will indeed come down. The dot com crowd claimed that this
fact did not apply to them. The "buy real" estate crowd claimed this didn't apply to them (like last year)

Think of people you know who have had money for awhile (maybe one or two of your parents' friends?) Then inquire if they use a financial advisor. The older fiscally conservative crowd often know of good advisors.

But remember - if the advisor you choose starts spouting off and disobeying the four laws above - get someone else to advise you.

Hope this helps.

[w4rma]

21. How do you "ride the coat tails"? Where do you find them?

I've been thinking that there was a way to do this for quite some time. A way to follow the tradings of insiders and just do what they do, right after they do it - thereby taking advantage of their insider knowledge. How, though?

[MattSh]

29. What are you going to do with your $$ then??

Put it in a bank at 5% ? With inflation running (unofficially) higher than that, you're losing money. You really don't believe inflation is only 3-4%, do you? Not advocating leaving it in the usual market investments, though, because they are going down, soon. But there are ways to make money when the market goes down, though your broker likely doesn't know about them either.....

[Skink]

4. Good but.....

would you give up your investments and still live on 20 a year?

[gaspee]

6. I have very few investments...

I started trading at 20 years old. I spent 75% of what I made, I paid off my huge education debts, paid a huge tax rate, paid for younger siblings to go to school, paid off my parents' house and when I sold my houses in CA, I paid my taxes and bought a house.

I have some money, but not that much. It's not like I can live the lifestyle I used to. And I wouldn't want to even if I could. Like I said, I wlaked out before my bonus the last year because I couldn't take even one more day in that pit. I would have killed someone. Or more than one someone.

I'm happy now and that counts for more than money.

[Skink]

8. Happiness is all that matters.

What was it like? Cramers hard to digest.

[Morgana LaFey]

11. I salute you

In a way, your story reminds me of an old Johnny Carson joke that I've always giggled over. Seems an old couple in their 90s had been married for 70 years were finally getting a divorce. Everyone wanted to know WHY? Why on earth, after all these years? One of them answered: "Enough is enough." LOL.

Again. I salute you.

[alcibiades_mystery]

7. Stock prices are 'fiction' - so is currency value

:shrug:

[sicksicksick_N_tired]

12. Corporate mafiaso!!! Say it ain't so!!! On the other hand,...

,...numero uno priority post-9/11 ---> get Wall Street up and running, prompto, and you 'consumers' (previously called American citizens) go out and spend, spend, spend!!!

[Carni]

13. Look at what this piece of shit has to say

This is from that blog where the video is:

"EmergentBehavior (3 hours ago)
There is nothing more amusing to me than poor people with morals and values. You can complain, or play the game. If you don't have the time, money, or brains to trade, then don't. Go buy some boring dividend stock. The fundamentals rule in the long term, but technicals, and manipulation rule the short term."

Nice...NOT

[htuttle]

14. "Everybody knows that the dice are loaded..."

"Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
Thats how it goes
Everybody knows."
-- Leonard Cohen

[Karenina]

17. Global finance is nothing more

than a giant casino.

[Swede]

26. A casino built with cards.

nt

[npincus]

20. Wow- thanks for posting

He was talking about it on Imus today... I didn't know what happened.

[w4rma]

22. Updated link to video

http://www.thestreet.com/_dm/newsanalysis/general/10345939.html
http://videoplayer.thestreet.com/?clipId=1373_10329438&channel=Cramer+On+Demand&puc=&ts=1174594078875&bt=NS&bp=WIN&bst=FF&biec=true&format=flash&bitrate=300

[CGowen]

24. of course n/t

[mhatrw]

25. Wow. That didn't last long.

It's been removed by youtube at the request of "TheStreet."

[LSK]

27. his words on this:

"You may have seen some articles the past several days attacking me about an interview I gave recently where I discussed the kinds of manipulative trading practices that go on every day in the investing community. Let me say this: No one knows and respects the securities laws more than I do. (I didn't go to Harvard Law School for nothing!)

When I was a hedge fund trader in the 1990s, I played fair, and I did nothing that violated those laws. But others did not play fair, and that's why I started TheStreet.com and have been writing about these abuses for nearly a decade -- to explain to my readers how the markets really work. I wanted to give transparency to the market and tell people the good and the bad.

Some professional traders don't like it when I expose how their game is played, and some of the TheStreet.com's competitors don't like it when people are interested in what I have to say. But I am going to continue to write and talk about how the markets really work -- in my own sometimes hyperbolic and tongue-in-cheek style -- and call them as I see them. That's the least I owe you. "

http://www.thestreet.com/_dm/newsanalysis/general/10345939.html

[The Backlash Cometh]

28. Someone finally telling the truth.