Cramer’s Bad Advice: Don’t Sell Bear Stearns

Jeff Poor
Business & Media Institute
March 17, 2008

Hopefully your financial portfolio didn’t include stock in Bear Stearns, but it might have if you had listened to CNBC’s Jim Cramer.

After it was announced March 16 that J.P. Morgan Chase & Co. (NYSE:JPM) was purchasing Bear Stearns Cos. (NYSE:BSC) for $2 a share, the stock plummeted over 80 percent at the open of trading on March 17.

But, on March 11, Cramer told an e-mailer not to sell the beleaguered investment bank’s stock on his show’s Web site.

“Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? –Peter

Cramer says: “No! No! No! Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.”

On Jan. 17, 2007, Bear was trading at its high of $171.51 a share. Since then, it has been racked by the mortgage turmoil. On March 11, when Cramer posted the e-mail and his response, the stock closed at $62.97. As of 10:00 a.m. on March 17, the stock was trading at $3.72 a share.

Cramer frequently appears on “NBC Nightly News” and “Today.” On the January 22 “Nightly News,” Cramer was referred to by his colleague Carl Quintanilla as “one of the most influential voices on Wall Street.”

On the “Today” show March 17, Cramer maintained that “if you’re a diversified investor, you’re not going to get hurt” by the Bear Stearns collapse. “Those who only had their money in Bear obviously will get wiped out today. But you most importantly don’t have to take your money out of a bank,” he said.

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