Jim Cramer Shoots Himself in the Foot With Another Wacky Interview

It seems as if everyone now knows who Jim Cramer is; host of CNBC's cult-like show, "Mad Money", co-founder of TheStreet.com and a former well-known hedge fund manager. If you haven't noticed, he is extremely adamant about letting the smaller investor play with the big boys. But if you haven't seen this clip of Cramer on the show, "Wall Street Confidential", then you have missed out on his hypocritical comments (click here to see the 10 min clip).

I am miffed about how this guy could go on TV and actually say some of the stuff that he says. First of all, any person could go out and pick a portfolio of stocks and do as well as many money managers in the investment wolrd that get paid to do it. I'm not saying that the average person is as good as the professionals, but financial markets are fickle and can make a genius look average and an average person look like a genius. It's the nature of the game.

However, Cramer takes it several steps further. In fact he gets on a TV show, Wall Street Confidential, and essentially pleads guilty to stock manipulation.

"You know, a lot of times when I was short at my hedge fund—when I was
positioned short, meaning I needed it down—I would create a level of activity
beforehand that could drive the futures. It doesn't take much money. Similarly,
if I were long, and I wanted to make things a little bit rosy, I would go in and
take a bunch of stocks and make sure that they're higher. Maybe commit $5
million in capital, and I could affect it. What you're seeing now is maybe it's
probably a bigger market. Maybe you need $10 million in capital to knock the
stuff down.

But it's a fun game, and it's a lucrative game. You can move it up and then
fade it—that often creates a very negative feel. So let's say you take a longer
term view intraday, and you say, 'Listen, I'm going to boost the futures, and
the when the real sellers come in—the real market comes in—they're going to
knock it down and that's going to create a negative view.' That's a strategy
very worth doing when you're valuing on a day-to-day basis. I would encourage
anyone who's in the hedge fund game to do it. Because it's legal. And it is a
very quick way to make money. And very satisfying.

By the way, no one else in the world would ever admit that. But I don't
care. And I'm not going to"

Jim Cramer said it's illegal, but in fact this is ludicrous. Yes, it's legal
in the sense that anyone can go in and short a stock or bid a stock up, but then
he continues to say something that is in fact, illegal:

"Now, you can't "foment." That's a violation. You can't create yourself an
impression that a stock's down. But you do it anyway, because the SEC doesn't
understand it. That's the only sense that I would say this is illegal. But a
hedge fund that's not up a lot really has to do a lot now to save itself.

What I used to do was called— If I wanted it to go higher, I would take and
bid, take and bid, take and bid, and if I wanted it to go lower, I'd hit and
offer, hit and offer, hit and offer. And I could get a stock like RIM for
maybe—that might cost me $15 to $20 million to knock RIM down—but it would be
fabulous, because it would beleaguer all the moron longs who are also keying on
Research in Motion.

So we're seeing that. Again, when your company is in survival mode, it's
really important to defeat Research in Motion, and get the Pisanis of the world
and people talking about it as if there's something wrong with RIM. Then you
would call the Journal and you would get the bozo reporter on Research in
Motion, and you would feed that Palm's got a killer that it's going to give
away. These are all the things you must do on a day like today, and if you're
not doing it, maybe you shouldn't be in the game."

Now why would you say such a thing? Why would Jim Cramer, who has a cult-like following from his tv show, say that he attempts to manipulate a stock price because he needed to make money. Yes, Wall Street is a cut-throat game, but to admit this on TV could be a bad move. Actually, he admitted that this was a bad move. From his website, he issued an explantion (click here) that "when I was a hedge fund trader in the 1990s, I played fair, and I did nothing that violated those laws." Yet if you scroll back to the beginning of this article, you notice that he in fact admitted to doing such things as "You know, a lot of times when I was short at my hedge fund—when I was positioned short, meaning I needed it down—I would create a level of activity beforehand that could drive the futures. It doesn't take much money. Similarly, if I were long, and I wanted to make things a little bit rosy, I would go in and take a bunch of stocks and make sure that they're higher."

I have a lot of respect for Jim Cramer as a trader, but I have no respect for him as a TV figure and the manipulation that he has on everyday investors. It's almost a sick game to him. "Hmmm...how many people can I manipulate in this world without it affecting my everyday life. That sounds like fun today." Instead, listen to your guts and not some guru who has admitted to and denied manipulating stock prices in the same week.

Until next time, Enjoy the show!