Why do people assume that Jim Cramer is smart?

This was the first reader request:

Why do people assume that Jim Cramer is smart? More bluntly: why
does possession of a JD from Harvard Law School signal to people that
they should listen to you?

Surely an economist has some insights into this odd quirk of human nature.

Not everyone assumes that Jim Cramer is smart but in fact Jim Cramer is smart (though his advice is no smarter than that of a monkey's).  Watch the early Jim Cramer and you will see (can anyone find a good YouTube link?).  But take the smartest person you know and put him or her on TV for hours a week, for years, and see what happens.  (See my book What Price Fame?.)  Usually only very smart people get to experience such fates.  Lots of screaming is an added bonus.

I'm not sure that the average person thinks so much of the typical Harvard Law graduate.

Megan McArdle had a good post on the Cramer dust-up with Jon Stewart.


It really isn't a good post. The people who criticise Stewart have to be arguing that all satire has to be very accurate, which is crazy. Obviously, the Daily Show leans left and the people who watch it, enjoy it because it pokes fun at the right - regardless of whether it's right. If you watch it for that reason it is an indulgence, but it is a comedy show on a comedy channel, so it is asking a bit much to expect them to be accurate about everything all the time. Comedy shows should be funny, news shows should show the news and financial shows should give credible financial advice it they're going to give advice. The world is better when things are what they say they are.

McArdle writes as though Stewart is Michael Moore - who actually is a disgrace. That's just confused.

The elephant in the room, that maybe Comedy Central doesn't want to tangle with, is the CNBC business model. They don't make money by giving financial advice. They make money by daytime ads, overwhelmingly for brokerage and trading companies.

CNBC improves their ad revenues by generating trades for advertisers. The trade can be good or bad, but the broker, and CNBC, still make their money.

Cramer (who may be smart, but needs counseling and/or a sabbatical) is about generating trades.

We do not know that Jim Cramer is smart because he went to Harvard...we do not know that Jim Cramer is smart because he has a JD...we do not know that Jim Cramer is smart because he has a tv show...or because he has been able to keep it on the air...we do know that Jim Cramer is intelligent because of his success at Goldman and at his hedge fund...you cannot...I repeat...cannot...experience that type of success without brilliance...

I think Student needs a new read of Fooled By Randomness. Intelligence is one explanation for success in trading, but so also is chance. Mr. Cramer himself, if he is indeed intelligent, should have some reservations about how much was "being right for the right reason" and how much was perhaps "being right for the wrong reason, with a false narrative."

Cramer , Stewart, Madoff all Liberal Democrats. Ideology always trumps smart..

"a condescending style (which Bush does not have)"

Of course Bush has a condescending style. It's just that instead of talking down to us as if he were a college professor, he talks down to us as if he were a first grade teacher.

Of course the poster child for the emotionally UNintelligent politician is Michael Dukakis, who ran against Bush I.

from wikipedia:
"when Bernard Shaw, the moderator of the debate, asked Dukakis, "Governor, if Kitty Dukakis [his wife] were raped and murdered, would you favor an irrevocable death penalty for the killer?" Dukakis replied, "No, I don't, and I think you know that I've opposed the death penalty during all of my life"...

Many observers felt Dukakis' answer lacked the passion one would expect of a person discussing a loved one's rape and death. Many – including the candidate himself – believe that this, in part, cost Dukakis the election, as his poll numbers dropped from 49% to 42% nationally that night. Other commentators thought the question itself was unfair, in that it injected an irrelevant emotional element into the discussion of a policy issue and forced the candidate to make a difficult choice."

With thst etched in memory, I was convinced that the "punished by a baby" or "above my pay grade" gaffes would have been the end of candidate Obama...

Jim is smart but intellectual horsepower is dangerous if the assumptions that are accepted as true are wrong. Keynesians and Monetarists are not stupid or evil; they simply take as fact what is fiction.

What exactly is this 'emotional intelligence' you speak of, busrider?


"The model introduced by Daniel Goleman [15] focuses on EI as a wide array of competencies and skills that drive leadership performance. Goleman's model outlines four main EI constructs:[1]
1. Self-awareness — the ability to read one's emotions and recognize their impact while using gut feelings to guide decisions.
2. Self-management — involves controlling one's emotions and impulses and adapting to changing circumstances.
3. Social awareness — the ability to sense, understand, and react to others' emotions while comprehending social networks.
4. Relationship management — the ability to inspire, influence, and develop others while managing conflict."

I find Cramer's advice to be intelligent, but aimed at the wrong audience. He was a hedge fund manager. Hedge funds can afford to diversify enough that losing Bear Stearns would be a bad loss but not catastrophic. That same advice given to someone who holds 10 positions on the market? That can wipe out 15 years of savings.

Jim Cramer is very smart. So is Jerry Springer. The people that watch them, maybe not so much. They earn a good living entertaining the brutes. So does Jon Stewart. There is less here than meets the eye.

I loved the show in which Jon Stewart ridiculed Barnie Frank for saying that Freddie and Fannie are solid institutions a few months before they collapsed. Man, that was hilarious. And it shows that Jon Stewart is very impartial, as comedians should be.

But seriously now, suppose there are two ugly men, one white and one black. And you see a comedian cracking jokes about the black man without ever mentioning that the white man also has a very long nose and his face is also full of zits. Would you find that funny? I wouldn't and I hope you wouldn't either. Open minded people would not find a racist funny. How could they find a Democrat (or a Republican) funny? How could you not cringe at Jon Stewart's Bill Ayres jokes made, safely, on November 5th, but never aired before?

I really don't understand why people, including bloggers that I respect, like Jon Stewart's brand of comedy. His entire shtick is the "face of incredulity" and carefully edited "gotcha" moments. Both of these things can be funny, used sparingly, but even just a minute into Stewart's supposed "takedown" of Jim Cramer, I had to stop because he just exuded the aura of a self-satisfied douchebag. Some people have the talent to make that sort of physical comedy work, like John Kransinski's character in The Office, using other affectations as well so not to come off smugly. The Daily Show has snowballed into having a certain image that Comedy Central quite consciously markets to its somewhat elitist, quite liberal viewers as being a well-informed take on current events and politics. And indeed the show's viewers are famously well-informed by the abysmal standards of modern politics, but I doubt that gap has anything to do with the Stewart's journalistic pretensions and much more to do with the demographics of those who watch him. The show acquired considerable cultural cachet during the Bush Presidency; if the path-dependent history were changed, I don't believe Stewart would receive the same acclaim he enjoys today.

Student: "we do know that Jim Cramer is intelligent because of his success at Goldman and at his hedge fund...you cannot...I repeat...cannot...experience that type of success without brilliance..."

Surely we'd just say that it's steadily more mathematically unlikely that it could be purely luck over time.

Megan claimed that "half of [the March 4th selection of CNBC clips] were anchors and reporters simply quoting someone else" and that these were "very misleading clips". That is simply untrue. Most of the clips were editorializing; they were fair game.

Tyler, Similar point about the evolution of Cramer made here http://ultimibarbarorum.com/2009/03/14/cramer-vs-stewart/

Student is familiar with Mr.Taleb's arguments but this is not an either or story...surely Mr.Cramer must have gotten lucky quite a few times....nevertheless...it seems a much more plausible explanation...to me at least...the one that has intelligence as the primary factor in producing 17 years of success...over chance...particularly because the higher up that you go...the more that one screw up is all that it takes for your career to go bye bye...and of course....when chance isn't there to help you out...what will?...intelligence seems as good a candidate as any...now, if someone would like to defend the position that Mr.Cramer's 17 years of success are explained by one largely uninterrupted spell of good luck...they are free to do so...

Well, I'm the one who asked the question.

Thanks for your response. It is interesting and thoughtful.

Warren Buffett claims that anything above 125 IQ is wasted in the stock market, and dare I add, dangerous. If these people weren't smart, they'd do less damage. No different than certain economists and politicians.

The problem, rightly asked, is not Cramer, but the folks. Would the folks take Cramer's advice about their job or how to raise their kids? No, then why would they take it about something that requires intimate knowledge and a 'circle of competence'? Because they don't understand the nature of investing.


George Bush has 2 Ivy league degrees, ran a baseball, was governor of a large state, won 1.5 elections to the White House, and still is a moron.

Really? you think he ran a BASEBALL and HE's a moron?

Agree with Bernard Yomtov. Who cares what megan mcardle says. She is unoriginal and annoying.

I see I'm a little late to this party, but I can't resist adding a point about Harvard Law School alums. I think one CAN safely assume that someone who was accepted by Harvard Law School (though not necessarily Harvard College) is smart. The same could be said for Yale Law and Stanford Law and probably several other top law schools. To get into those schools today, one must have excellent grades and an excellent LSAT score. You just can't have those qualifications without being "smart." (Also, while HLS practices affirmative action in its admissions, it need not and does not reach down to the not-smart pool of candidates. And there are no legacy admits in the Law School.)

Of course, being smart and being right are two different things.

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