Cramer’s advice to buy Chinese stocks now before his insight about driving global growth is “all priced in” is particularly foolish and misleading. Information about the prospects for China (and all other countries) is well known by the millions of investors in the global marketplace. It has already been widely reported in the financial press. The current price of stocks in China and elsewhere incorporates all of this information. As such, Chinese stocks are priced fairly today. They may go up or down in the future, but it’s tomorrow’s news that will drive those prices, and not information that’s already in the public domain.If Chinese stocks end 2013 with a significant increase, Cramer will tout his stock picking expertise. If they don’t, he will move on to the next prediction. There’s no accountability for bad calls. Eric Tyson, a best-selling personal finance author, wrote an excellent blog post on the perils of following Cramer’s advice. He noted Cramer’s advice on financial stocks (where you might think he has special expertise) has been terribly wrong. Most notable was his recommendation to buy Lehman Brothers on Sept. 5, 2008. The stock was trading at $16 a share. Cramer called it “a screaming buy” and opined that things couldn’t deteriorate further. After bankruptcy, Lehman sold for pennies per share.
The Wall Street bullies like Jim Cramer, know that the viewing public have very short memories. They will continue to make predictions right or wron it does not matter.
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