Monday, September 05, 2005

Riding the Shark

The scene is a coffee shop in coastal Rhode Island, not too far from the University of Rhode Island.

The characters are two men: one, a pot-bellied, middle-aged, academic-looking man with reading glasses perched atop his head and a kind of retro, John Quincy Adams hair style—complete with mutton chop sideburns; the other is a young man in shorts, t-shirt and baseball cap, who uses the word “Dude” incessantly.

The actual unedited dialogue:

John Quincy: You watch Cramer?

Dude: No.

John Quincy: He’s on at night, on television. Stock market show.

Dude: What’s he saying?

John Quincy: Genentech. He thinks Genentech is for everyone.

Dude: Dude, you believe it?

John Quincy: Sure. Cramer was a hedge fund manager…

Dude: Hunh.

John Quincy: That’s like riding on top of a shark and surviving. He knows how they do it.

Dude (Nodding): Dude.

John Quincy: He’s very funny. He’s a nut. He’s VERY good.


Understanding fully that this post may become Exhibit A in whatever new Conspiracy Theory is being constructed by Patrick Byrne to attract attention away from his company's poor financial performance, that last line sums up "Jim Cramer's Mad Money" precisely, for me.

Jeff Matthews
I Am Not Making This Up


mamis said...

Speaking of poor financial performance, check out the following speech from Cramer, given 2/29/00 when the Nasdaq was at 5000:

Pay particular attention to the phrase "I wouldn't own any other stocks in the year 2000."

I don't think Cramer is dumb and I don't think he's a liar. But I do think he'll say anything if it gets people to pay attention to him. Remember: he doesn't want to make friends, he just wants to make money, and if you're on TV, the way to make money is to get more people to watch.

stealthelephant said...

Cramer is entertaining to a wide body of investment non-professionals because he does know "how they do it." He speaks the language of fast money. It's exciting, sometimes smart, brazen, and wholly inconsistent. For the most part, it is a different kind of investing than what the general public has done in the last 20 years which makes it compelling. The show is a vehicle for Cramer's vanity and not a helpful way to make money for the schmo. This is the new Rukeyser? Sigh.

Its_strange said...

He is far better now than when he was with Kudlow giving the Bush team a pass so they would appear on his show

ninkiga said...

Hypocrite Jeff Matthews lambasts Byrne for making a reference to the Sith Lord, while Matthews has been referring to Luke Skywalker and Darth Vader. I'm not making this up. Here's Matthews in December 2002 as quoted in this article:

If Borland OKs a sale to Microsoft, "it would be like Luke Skywalker selling out to Darth Vader," said Jeff Matthews, general manager at Ram Partners, a Greenwich, Conn.-based hedge fund.

Warning: Jeff Matthews runs a hedge fund. Do not invest any funds with him. He cannot be trusted.

Chug-A-Bug said...

There is a difference between comparing people to Star Wars characters, and claiming that a Star Wars character is out to get you.

ninkiga said...

chug-a-bug said There is a difference between comparing people to Star Wars characters, and claiming that a Star Wars character is out to get you.

How typical of a Jeff Matthews' sycophant, too stupid to tell the difference between making an analogy to a star wars character, and claiming that a stars war character is out to get you.

Buy a clue bug-chug. Neither Matthews nor Byrne claimed that a star wars character was out to get either of them. But one of them is a hypocrite and cannot be trusted, and that's Matthews.

ninkiga said...

Jeff Matthews on July 2, 2001 in Business Week

Amazon's core business of selling books isn't growing, and it is still learning to sell other products. He expects its debt will be restructured at the expense of stockholders. Avoid it, Matthews says.

On July 2, 2001, AMZN closed at $14.53. That was near the bottom for the stock. After that, it went on an upward run, lasting around two years, and peaking just under $60.

Nice call Jeffy. Way to miss the bottom, and miss out on a 400% run.

Jeff Matthews wrong about an e-tailer then, and wrong now. Don't let him lose your money.

DaleW said...

What the hell? We had a nice little thread going here.

In any case, I think any good investment professional would recognize Cramer's talents. The guy is an information sponge, can admit he's wrong and turn on a dime to make money, puts things in a larger context (in terms of industry, economic, and historic linkages), and is ruled by neither shame nor pride. Read the Schwager books -- Cramer possesses all the qualities shown by successful operators described in those books.

Sam S. Park said...

Jim Cramer has a show for one good reason... He is one crazy and entertaining dude. That guy must take three shots of espresso after finishing a pot of coffee made from Red Bull instead of water. I have nothing against the man, and sure he may make bad calls here and there; but his viewers should do their due dilligence before taking his calls as gospel.

Frankly, I have to give him credit for knowing so many companies off the top of his head... he's like this stock listings dictionary. Sure, he's probably not going to reveal stocks before the smart money places their bets; but he backs up his calls (good or bad) with his reasons when he identifies some minor opportunities. Like he says... he's not trying to make friends; he's just trying to make money. For who? I guess that's the real question. Whatever the case, I think GE and CNBC made a good decision to give Cramer his own show... it's just good rating$$$.

Sam S. Park said...


I have a question. Are you trying to imply that OSTK will replicate Amazon's performance? The whole e-retailer business was in a nascent industry back in 2001, and MANY things remained uncertain to claim that the e-retail business would be a sure bet. There were too many competition, and ease of entry was relatively easy. NOW, Amazon has made grounds into households and has established that loyalty base. Perhaps if OSKT keeps burning their cash on advertisement, they may be able to take a small portion of Amazon's customers; but how long do you really think OSTK will last before they fold? To be fair, I've personally asked people who have shopped online, and none of them knew However, many have realized that Amazon now offers more products than just books and trust their services. Who knows, maybe Overstock will miraculously take away Amazon's current and potential customers... but that's a pure bet. Going long on OSTK seems more of a roulette play than an investment. Going a little off topic, that slogan about the "O" confuses people... I thought it was a reference to Oprah or one of her products.

DaleW said...

Going a little off topic, that slogan about the "O" confuses people... I thought it was a reference to Oprah or one of her products.

No, it was dreamed up by Stormy "Not a Stripper" Simon and refers to an orgasm. It is, like the rest of Overstock's marketing, quite cheesy.

SiamTwin said...

Cramer recommends his picks first on the alerts through the for his $349/yr paid subscribers, next he hawks the stocks on his radio show, then on the TV show. So the game is, if you're a paid subscriber, you get first dibs, when you get the alert you start buying, then the radio audience hears about it and buys, then the TV lemmings lick up the scraps if there are any. Makes his paid newsletter service performance look great, but as long as he doesn't profit by buying or selling the stock directly, it all appears legal. It's all sleazy and probably unethical but the SEC lets him get away with it. Makes me want to gag.

Jeff Matthews said...

I apologize for the bizarre and diversionary posts of "ninkiga"--but have decided to leave them up for now as a reminder of the kind of infantile Yahoo Message Board mentality we deal with when expressing critical opinions about a company such as

I used to get the same critical response when discussing Amazon at the height of the Internet Bubble.

What "ninkiga" did not discover in his Google search of my comments on Amazon, however, was the "Real Money" post in late 2001 in which I told Real Money subscribers in some detail about the reasons why I was covering our Amazon short at $12.50 a share.

I felt I owed it to Real Money subscribers--with whom I had shared my analysis of Amazon's problems since we had begun shorting the stock during the Bubble--to explain why Amazon was no longer a short.

My only regret in covering Amazon at $12.50 was not buying it outright.

The funny thing is that after covering the stock and writing positively about the changes in the Amazon's business and the stock's low valuation, I proceeded to get hostile calls from the same business magazine reporters who had been hostile when interviewing me while Amazon was at $50 and everybody was drinking the Internet Kool-Aid and nobody wanted to think ill of Amazon.

Those same reporters couldn't imagine why anybody would have turned positive on after a 40 point drop in the stock.

I write this to correct the kind of ill-informed nonsense from "ninkiga"--which is precisely what the Message Boards thrive on, and precisely why I insist on keeping comments focused on the issue at hand.

Otherwise, the bad drives out the good.

Sam S. Park said...

Sorry to go back to OSTK, but the Motley Fool’s Jeff Hwang wrote an interesting take on and its profitability. He points out that if Overstock ceases to spend on advertisements, then the company will be profitable. He assumes that by cutting on advertisements, OSTK will continue to grow at a zero percent rate.

There are some things to consider. He also assumes that the past customers will continue to return to and spend the same amount. There are a lot of “ifs” to Hwang’s version of “worst-case scenario”. The real worst-case scenario would be OSTK ceases to advertise, customers do not return, and OSTK’s revenue falls.

I personally do not wish the worst for OSTK. I’m simply pointing out the immense hurdles that the company must overcome to survive. I don’t thinks it’s wise or realistic to completely stop spending on advertisements. Perhaps a change of its marketing to that of something more effective would be in OSTK’s best interests.

Dale makes a good point about the "O" standing for orgasm. Have you guys seen that commercial? That hot sweaty model completely distracted me from what the commercial was pitching. I think they went a little "over"board with that whole sex sells marketing. Don't get me wrong, I really enjoyed watching that model wipe her sweat off herself... but come on, if I didn't know what was, I'd be unclear on what OSTK sells.

Aaron Koral said...

Hi Jeff - yet another entertaining post! I'm not sure how your post would be a cause for Patrick Byrne (CEO of "to detract attention away from his company". I will say this, though - the guy is paranoid with a capital -NOID! I came across an article on Red Herring's web site. Back on 8-15-2005, he gave an interview where he believes he's being targeted by the SEC, hedge fund managers, et. al. where he intends to "take care of them on his own"! Very weird behavor for the CEO of a publicly traded company.

As for JQ and "the Dude", those are the type of guys that probably couldn't tell you what Genetech does, let alone form their own opinion of why the stock should be bought or sold, regardless of how Jim Cramer "promotes" DNA. Just my two cents...

Its_strange said...

This ninkiga person is a TTWO fan and roams the boards to trash Herb and Rocker . I wonder if he is part of a cabal with Phil ?

Ed said...

OSTK is corrupting dialogue on this blog...

going back to cramer, i think the valuable function his show provides is in his extended monologues on companies and portfolio management.

he walks you through ideas, states the case, and makes good points.

the problem is with cramer's "lightning round".

i cannot imagine a more destructive example for a professional investor to set for non-professional investors.

basically, cramer is devoting amazing amounts of his energy every day to give viewers something that is bad for their investing skills:

short, quick answers about companies that allow novice investors to avoid thinking for themselves.

the foremost challenge of a teacher is to get students to think for themselves.

in allowing the lightning round to gain such prominence in his show, cramer fails royally at the task of teacher. - Ed

Sam S. Park said...

Ed's right... I'm tired of talking about OSTK. I agree that Cramer's lightning round isn't so enlightening and has some potential dangers to the non-professional investors. However, I'm wondering if his lightning round callers realize that Cramer doesn't factor their risk tolerance levels, among other time-consuming considerations, when making his suggestions. Maybe these callers know that all they simply get is a 15 second analytical option... but maybe not. Boo yeah, skeedaddy!

Its_strange said...

Its hard for me to imagine getting bored with the oSTK story until its over....

Here is a Bob O'Brien produced tape that has Patrick Byrne claiming he is happy with OSTK's stock price . That its a 3 bagger...My question is why the suit ?

Ed said...

to clarify:

i didn't mean that jeff's posts on OSTK aren't interesting. quite the contrary - jeff's work on OSTK is some of the best stuff i've read on the web about any investment.

what I mean "needs to stop" about OSTK is all the morons posting unconstructive comments on this blog. they are corrupting what is otherwise a great free and potentially collaborative resource.

if you disagree with jeff...get your own blog. (you will be frustrated in this effort, of course, because no one will read it.) but stop spoiling this one for those who appreciate it.

- Ed

FrmrOstkGrunt said...

OK let me help you people.

The Groups of 126 and 38 Diamonds were Sold Wholesale most likely by what is left of the B2B team. Most likely for a minimal margin.

$600,000 Electronics Buy in Q2 was a Stormy Simon Blunder. Patrick is taking the heat on. Dont know if it ever was given a nifty codename but the electronics were for a Grocery program that was being implemented. This would represent the liquidated loss off of a 1.5 million purchase from Sony

Shawn Schwegman a Superstar ??? Most likely a Rockstar. It is time for his month long vacation to IBIZA. Just in Time for Q4 and oh yeah the neverending Oracle migration is still going on and most likely stalled.

Any other questions you have just ask

Jeff Matthews said...

"FrmrOSTKGrunt": shoot me an email at and we can talk off-line.

Its_strange said... a Dec. 2, 2004 press release ostk tells us they auctioned off a diamond from Delmar international for $156,000...Now thats a successful deal for big money. Why didn't they continue doing business ? If the answer is noteworthy yet you don't want to post here perhaps you could email Jeff. Its his blog

Its_strange said...

ostkgrunt "what is left of the B2B team " .." $600,000 buy in Q2 was a Simon Blunder" .." never ending migration , mostly likely stalled"

It sounds like anarchy . It sounds like a circus. And it sounds like it all started long before the ostk / Rocker lawsuit stuff. How long were you at ostk ?

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