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Fomenting for FUD and Profit

March 14th, 2009

Jon Stewart finally had Jim Cramer on his show last night, and boy, did Cramer come across as a giant ass. Not to mention, a clip Stewart showed of him in a webcast interview from TheStreet.com from a few years back (before the iPhone was released) shows how and why FUD (Fear, Uncertainty, and Doubt) was “fomented” by hedge fund managers (like he was) to bring stocks like Apple down–because though it was “blatantly illegal,” it was easy to do and the SEC wouldn’t go after you for it. In his words (video here):

Jim Cramer: You can’t create yourself an impression that a stock’s down. But you do it anyway ‘cause 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. This is different from what I was talking about at the beginning where I would be buying the Qs and stuff.

This is just actually blatantly illegal. But when you have six days and your company may be in doubt because you’re down, I think it’s really important to foment if I were one of these guys. …

Aaron Task: Okay. Another stock that a lot of people are focused on right now seems to be Apple.

Jim Cramer: Yeah. Apple’s very important to spread the rumor that both Verizon and ATT have decided they don’t like the phone. It’s a very easy one to do because it’s also you want to spread the rumor that’s it not gonna be ready for MAC World. This is very easy ‘cause the people who write about Apple want that story, and you can claim that it’s credible because you spoke to someone at Apple, ‘cause Apple doesn’t –

Aaron Task: They’re not gonna comment. They’re not gonna –

Jim Cramer: So it’s really an ideal short. Again, if I were a short Apple, I would be working very hard today to get that. The way you would do that is you pick up the phone and you call six trading desks and say, “Listen, I just got off the phone with my contact at Verizon and he has already said, ‘Listen, we’re a Lucky G house. We’re a Samsung house. We’re a Motorola house. There’s no room for Apple. They want too much. We’re not gonna let them in. We’re not gonna let them do what they did to music.’” I think that’s a very effective way to keep a stock down.

Oh, great. So here’s a stock that I have invested in with money that I worked hard for years to earn and save, and there’s some scumwad hedge fund manager who made some bad choices–so to help himself, he goes out and spreads fake rumors to rob me of money. And here is this self-described “banking class hero” scum virtually bragging / instructing others to do this kind of thing, on national TV. And here we are more than two years later, and the guy still has a TV show on CNBC and other high-profile writing gigs.

Yes, unchecked capitalism works so well.

(Click here for an article from RoughlyDrafted on this, from back in 2007.)

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