Retail Investors are Idiots And the Pros Bank On It
It'd be an exaggeration to say that I'm a fan of Jim Cramer. I do enjoy watching his show while at the gym as it makes the 30 minutes on the stationary bicycle go by quicker. I've always considered the show to be entertainment though. Sure there's investment advice, but it's always seemed useless to me what with each episode including a hundred buy and sell recommendations.
And now Jim Cramer has revealed a truth that many, including me, have suspected for years. That truth is that professional investors are quite likely to dupe the media and individual investors in an effort to make a buck. More specifically, he admits in a recent interview to, “manipulating futures to get quick gains in the options market, false-feeding the media, and taking advantage of the moron longs.” Surprised to hear that these activities happen? Don't be. The only surprising thing is that someone actually admitted to them.
Want more? Here's another shocking quote from Cramer, “What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction.” I'd be upset if I wasn't so fascinated that he felt it worth making this statement public.
For any of you that thought you were on a level playing field, I hope this forces you to think a bit about your approach. The game is rigged and not in your favor. Even more reason to develop an emotion-free process for assembling a balanced investment portfolio. Of course, I'm an idiot retain investor so what could I possibly know!?
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