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Steve_A's avatar

How do you decide if your source is a "pumper"?

Asked by Steve_A (5120points) August 1st, 2010

I was talking to someone couple days ago about Jim Cramer, he has been going on about John Deere and ethanol. He even throws on a cap from them and had the show with hay stacks.Do you believe he was pumping them so to speak?

Do all magazines,new papers,internet sources,etc…Tend to lean toward certain stocks for the sake of “pumping” companies they own or do they truly believe they are giving information out?

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12 Answers

ItsAHabit's avatar

It’s called “pump and dump” and is especially common with small cap stocks. I read a book a year ago about Wall Street and you’d be surprised at some of the big names that do this. Cramer might be one of them but I can’t remember for certain.

I think it pays to do your own research. That way you’re more likely to come across good ideas before millions of people have heard about it from Cramer or others.

tablack01's avatar

It is illegal for him to do so. Also he has to disclose any stocks he owns that he talks about on the air. That is why you will hear him periodically say that he owns the stock for his charitable trust. If you watch CNBC enough you will periodically hear reporters say tell you they own a stock they are about to talk about or have just spoken about. With that being said, it doesn’t mean that someone they know holds these stocks they speak about, so I would agree with Steve_A, DO YOUR RESEARCH! As far as Cramer, I think I remember from his books that he does not own any individual stocks except in his charitable trust.

wundayatta's avatar

You do your own research into the company. Understand it’s business and it’s business plan and look at it’s history (if there is any), and make your own decision about whether you think it has potential or not.

What pumpers rely on is people being too lazy to do their own research, or too incompetent to understand corporate information. Then they get you to believe them by acting as if they think they are smart and trustworthy.

Snake oil salesmen. That’s what they are.

ItsAHabit's avatar

Warren Buffet says that stock analysts make fortune tellers look good. A good book to look at is A Random Walk down Wall Street.

Buttonstc's avatar

Cramer certainly doesn’t have the most sterling of reputations regarding ethics.

John Stewart proved that quote well after questioning some of his views on short selling. After letting Cramer ramble on pontificating, he then played clips from the past in which Cramer was describing the exact opposite.

Anything Cramer says I would take with a huge grain of salt and most likely do the opposite of whatever he’s pumping.

Caveat emptor.

Kraigmo's avatar

Jim Cramer? Is there any question at all about this?

Of course he pumps and dumps! He also said that “lying is the American way” and he wasn’t being facetious.

Buying stocks based on Jim Cramer’s words is far worse than just randomly picking crap.

I know this for sure about him specifically. And I assume generally everyone on Fox, CNN and MSNBC is either corrupt or doesn’t know what the hell they’re talking about, when it comes to stocks.

SmoothEmeraldOasis's avatar

Hi, I currently don’t follow Jim Cramer and am and always do my research about anything that is asking for my to invest my money. It doesn’t grow on trees like my mother always said to me, so I need to be extremely vigilant on the details. I want to thank @ItsAHabit for recommending A Random Walk Down Wall Street, but can you tell me whom the author is? Thanks to you for the information and thanks to @Kraigmo and @Buttonstc , @wundayatta , @tablack01 ,and @Steve_A for your advice.

ItsAHabit's avatar

A Random Walk Down Wall Street is by Burton Malkiel. A good book to read first because it’s so very practical is The Only Investment Guide You’ll Ever Need by Andrew Tobias, about which the New York Times wrote ” “So full of tips and angles that only a booby or a billionaire could not benefit.” It’s really true to its title.

SmoothEmeraldOasis's avatar

@ItsAHabit Nice! ;) Thanks so much, I am going to order them right away, looks like I have some good reading material for the next month ;)

Aster's avatar

I didn’t know Cramer pumps and dumps. Dreadful if true. Of course you must do your own research! He has been steady with his speaking of MO and that it will split but it hasn’t for years. I know he likes MO so I assume he likes PM. I love his show; we used to watch it each weekend. I have a certain amount of belief in what he says. Just follow the money and it’ll help you know who to believe. He’s not broke.

Kraigmo's avatar

@Aster , he’s not broke because he’s a crook. He always tells you when to get in a stock. Does he ever tell you to get out? No, that’s when he says “Do your own research”. How convenient.

He’s friends with a few market makers. They’re crooks, too. I’ve seen him telling people to Buy Tech!!!! on a Monday, then on Tuesday he says “Tech is the worse sector, you’re stupid if you go into it”.

Jim Cramer is to investing as Rush Limbaugh is to civics and statesmenship. They’re just showmen. They’re high-paid carnies.

It was easy for Jim Cramer to be right all the time in the late 90’s… because ALL stocks were going up then. He sure seemed like a genius at the time with all his homebuilding pumping…. but then he kept that pumping going on right until the economic explosion during Bush’s last term. And then after that, too!

The man is 100% fraud. There’s not an honest bone in his public body.

Buttonstc's avatar

If you doubt that just find the clip of the full interview John Stewart did with him complete with excerpts of past public statement of his. It’s very enlightening.

Yes, I know Stewart is a comedian. But he’s a very intelligent one and does his homework thoroughly.

He has a very subtle way of coaxing people to reveal themselves cuz they assume they’re just dealing with a dimwit lightweight. Boy are they in for a surprise.

Both he and Colbert are two of the most astute commentators out there. They just choose to cloak it in a comic disguise.

Cramer really underestimated his interviewer this time around. It is classic.

Probably can be found on YT or the Comedy Central site. I can’t do links from iPhone, so if you find it, please link.

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