Jim Cramer’s ‘Home Gamers’, you should stop playing now

Author: John Gerard Lewis, Gerard Wealth

Covestor model: Stable High Yield

Are you a “Home Gamer”?

Jim Cramer says you are. That’s how the ubiquitous CNBC Pied Piper refers to his viewers. And it’s not an altogether faulty label – Cramer is indeed urging them to play a game.

Many of the Home Gamers probably don’t recognize it as playtime, because they think they’re getting astute investment advice. They’re spellbound by this whirling dervish who rattles off sophisticated jargon so fast that they can’t decipher what he’s saying even if they do understand the jargon (which many of the Home Gamers surely don’t). But that actually makes him even more impressive, because for that talent alone he is clearly a financial genius – never mind the articulatory blur.

Since so many people at home don’t know what to do with their money, and this captivating maestro is right there on TV every night, then of course it makes sense to just kick back in the recliner after dinner and do what he says. A free, daily financial adviser, all from the comfort of home!

Jim Cramer and CNBC have turned the time-honored concept of prudent investment advice on its head.  Cramer, as he is simply known (like Cher or Madonna – and you might as well get your advice from them), expresses almost no regard for the tried and true tenets of personal investing. He’s a former hedge fund manager, and he spews “advice” as if the Home Gamers are too.

Proper counsel for individual investors commonly includes consideration for diversification, low transaction and carrying costs, and suitability as to age – all of which Cramer’s guidance is bereft. His is irresponsible, agitated “McAdvice” and it’s exactly the wrong way to advise individuals about investing their money.

Bill from Wisconsin, obviously an older man, calls in to Cramer’s aptly titled “Mad Money” show and asks about Acco Brands (ABD). Mike in Utah, another older fellow, inquires about U.S. Silica Holdings  (SLCA). Debbie, a woman in Massachusetts, wants to know what he thinks about Mako Surgical (MAKO). Each gets a breathless answer best measured in nanoseconds.

I’m a financial adviser, and although I don’t claim to be familiar with every publicly-traded stock, I am aware of those that any competent professional would recommend to an individual client. But I must tell you, I’ve never heard of these three.

That Bill, Mike and Debbie are inquiring about such recondite names is unnerving enough, but let’s ask a question of our own: Who are these three innocent folks? What are their respective situations in life?  Are the two older gentlemen former blue-collar workers living on modest pensions? Is Debbie a middle-aged widow saving to put three kids through college?

Cramer doesn’t ask. Doesn’t care. No time for that. It’s a three-ring circus, complete with clownishness, flashing colors and ear-splitting sound effects. Next caller! The madness must go on!

Let’s turn down the volume for a minute and assume that Bill, Mike and Debbie might be in precisely the circumstances we proffered. And let’s say that they each own only five stocks. Why might only five? Because Cramer apparently suggests that five are enough. You see, he asks Home Gamers to call in to ask if five of their stocks provide sufficient diversification.

Five stocks! Good Heavens, you can only be diversified with five stocks if one of them is a broad-based index ETF constituting 84% of your portfolio. That’s because no single stock should comprise more than 4%, due to specific-company risk. If Acco, U.S. Silica or Mako Surgicals were to suddenly experience a crisis or big lawsuit or an unexpectedly bad quarter, their stock prices might well tank and so would the life savings of these three trusting and vulnerable Home Gamers.

Matt from Chicago wants to know about Kohl’s (KSS). Cramer raises his pant leg and blurts, “Kohl’s, man, they raised the dividend, okay? They do have great socks. Look at these Kohl’s socks, will ya? You tell me this isn’t spiffy, okay? This is what it’s about. That said (he pushes “Sell! Sell! Sell!” sound-effect button), sorry, don’t have any mojo there.”

No reason given. Just thumbs down. It took about 11 seconds, and it was all lame tripe. The lesson to Home Gamers is that the way to invest is frivolously, and investing in Kohl’s has something to do with Cramer’s socks. Investing is chaotic, serendipitous, thoughtless.

He’s featured in a morning segment on CNBC called “Cramer’s Mad Dash.”  Everything about Cramer is madness. He’s shouting things like, “You need to get into the game!” And everyone’s crying out meaningless greetings of “Booyah!” to each other.

Jacklyn from North Carolina asks about Sandridge Mississippian Trust (SDT).  “SDT!” Cramer howls. He pitches a stuffed animal across the studio for no apparent reason. “You know, that’s got a 10% yield and I like it a whole lot. I’m a buyer right here and right now!” End of guidance.

He then embarks on a short monologue in which he chides the Home Gamers for not having the prescience to buy the IPO of Annie’s, (BNNY).

Elaina is positively fawning. “I want to say thank you for sharing your knowledge with the Everyman.”

There it is. Now we know. The Home Gamers are the Everyman. They’re the commoner. They’re the financially unsophisticated. They’re Joe Lunch Bucket. They’re the widower. They’re collectively the investing neophyte. And every weeknight they’re being given the poorest of advice, on the premier financial channel of all places.

But no time for that. The madness never stops.

“My job is not just to entertain you, but also to educate you and teach you!”

“Mad Money – You can’t afford to miss it!”

“Stick with Cramer!”

And then there’s this gem: “What really gets under my skin is how everyone claims to be helping you!”