“Now I have you with me under my power.
Our love grows stronger now with every hour.
Look into my eyes you will see who I am.
My name is Lucifer; please take my hand.”
A while back, on a live episode of “Mad Money,” a woman stood up and told Jim Cramer, “you’re not a rock star; you’re a stock star!” I have to agree with her. Only I’ll go a step further and proclaim Cramer the Ozzy Osbourne of finance.
For those unaware, “Mad Money” is the top-rated show on the top-rated finance-news channel on television, CNBC (for most people it’s the only finance-news channel on television). The show consists of Cramer maniacly touting his favorite stocks and literally spewing out speculative “buy” and “sell” recommendations to callers’ stock queries during a “lightning round.” This combination of wildly passionate “advising” has Cramer’s popularity seemingly hitting new highs with every episode and has inspired a growing mass of amateur speculators.
His popularity is most evident in his direct influence in the stock market. Stocks Cramer recommends routinely spike upwards in price immediately after his mention even after the major markets have closed. It is obvious now that a legion of traders, with fingers on the triggers, are poised to act on Cramer’s every word.
To call the show frenetic does not do it justice. It is literally, “Mad,” as in “Mad Hatter” and “Mad Magazine.” The word, however, that best describes the show is, “mania.” From the types of praise laid upon him by his mass of fans/callers, Cramer would probably take this as a compliment. The only problem is that, as we have learned since 2000, manias tend to end badly.
The stock market, near new highs since the bottom made in 2003, is confirming the manic sentiment seen nightly on “Mad Money” as evidenced by this chart, an update of the chart posted in “Epic Dichotomy”:
The chart depicts the ratio of the S&P 100 Index (the 100 largest stocks in the country) to it’s volatility index (a common measure of investor sentiment). This ratio recently surpassed the peak established in 2000. The notations on the chart ask “if this was a mania…,” next to the 2000 peak, “what’s this?,” next to the recent new high. Like the title of Cramer’s show, the chart speaks for itself (literally).
Although Cramer’s antics don’t directly compare to Ozzy’s, I would argue they are just as outrageous given their disparate industries. Cramer’s appeal, like Ozzy’s, is his lunatic enthusiasm. But as the saying goes, “it’s all fun and games until someone gets hurt.”
Ozzy’s popularity peaked around the time his “Suicide Solution” allegedly caused a rash of teen suicides. What I’m truly afraid of is that Cramer’s show may be the cause of future financial suicides. And I wouldn’t be surprised if the peak of his popularity coincided with a near-term peak in the stock market.