May 07, 2009
“Unless something is done, and done soon, to straighten out the capital markets and bring back the enforcement of laws that protected us from rapacious capitalism for so many years, I would never suggest to the young graduates leaving soon from here that they have anything to do with the stock market.”
That was the advice of Jim Cramer ’84, host of CNBC’s “Mad Money” and co-founder of “The Street.com” to participants at Reunion weekend in April at HLS.
In a keynote address on Saturday, Cramer outlined what he believed went wrong with the Securities and Exchange Commission and the stock market, detailing what made the market, as he described it, such a “cesspool” and “mug’s game.”
He called for prosecution of key players who manipulated the markets in ways that stood to make them wealthy if securities went up and even wealthier if they went down—detailing the whispering campaigns and other nefarious strategies that were used to destroy Bear Stearns and other banks.
Until there are criminal prosecutions, he said, investors will not be protected from a recurrence of devastating manipulation.
“I say let’s bring on the prosecutions. Let’s urge that we roll back the rules to where it’s no longer a mug’s game. Urge that a special federal white-collar prosecutions office out of Justice be created,” said Cramer.
“After years and years and years of helping to level the playing field for individual investors, this SEC made a radical turn, deciding to dismantle rules that were put in place to keep short sellers from preying on smaller investors,” said Cramer.
A former hedge fund manager and founder/owner and senior partner of Cramer Berkowitz, Cramer also worked, earlier in his career, for Goldman Sachs in sales and trading. While at Goldman, he wrote for The New Republic about stock market issues.
In December 2007, he published his latest book, “Jim Cramer's Stay Mad For Life: Get Rich, Stay Rich.” Cramer is also the author of “Mad Money: Watch TV, Get Rich,” “Jim Cramer's RealMoney,” “Confessions of a Street Addict” and “You Got Screwed.”
In his hour-long talk, Cramer acknowledged he has “never taken more heat” than he did for his calls to abandon the stock market at DOW 11,000 and DOW 10,000, but, he said, his advice wasn’t based just on the recession, or a “garden variety Depression.” “It’s the criminal lack of protection from those who truly only know how to make money by destroying your nest egg,” said Cramer
He believes the market is heading higher short term, but he says he can no longer embrace stocks as the best asset class until they are rendered clean and honest again and until those who were responsible are held accountable.
