Cramer Rips Index Funds in Bizarre 20th Anniversary 'Power Lunch' Cameo
He may have toned down his rancor toward the policies of President Barack Obama, but CNBC “Mad Money” host showed viewers he’s still capable of an outburst at a moment’s notice – even when no one could see it coming.
On CNBC’s April 17 “Power Lunch,” Cramer interrupted a segment featuring Dan Solin, author of “Smartest 401k Book You’ll Ever Read” and Christine Soscia of Invest Financial Solutions to rail against proponents of index funds – stock funds pegged to stock indices, like the S&P 500. He specifically called out the legendary founder and retired CEO of The Vanguard Group, John Bogle.
“Listen, with all due respect – the S&P is flat literally for 10 years,” Cramer said. “That’s John Bogle’s world. If you were to sell at 11,000 like I told you in September, 10,000 like I told you in December and then get back in at 6,500 – who wins? Is that so bad? Is that worth not trusting in?”
Then Cramer kicked it up a notch, railing against those who champion the index funds and demanding some culpability for their lackluster performance over the past decade.
“I’ve had it with people who tell me about the index funds,” Cramer said. “For 10 years, they’ve done nothing, for 10 years! When do they get called on the carpet? When are they ever wrong? Do you have to wait another 10 years? Enough of this! I’ve said my piece, happy 20th.
Solin tried to respond in defense of Bogle, but it was anti-climactic, as Cramer had already walked off the set. According to Solin, comparing Bogle’s view of investing to a straight up fund indexed to the S&P 500 is a gross simplification.
“You have no understanding of what John Bogle’s world is,” Solin said. “John Bogle’s world is appropriate asset allocation, a globally diversified portfolio of stocks and bonds. His world, which you clearly don’t understand is not the S&P 500 for every investor and if people followed historically John Bogle’s world, they would be far, far better off than they are in or outside of the world.