Oops - CNBC's Cramer Said 'Don't Move' From Bear a Week Before Collapse
Hopefully your financial portfolio didnât include stock in Bear Stearns, but it might have if you had listened to CNBCâs Jim Cramer.
After it was announced March 16 that J.P. Morgan Chase & Co. (NYSE:JPM) was purchasing Bear Stearns Cos. (NYSE:BSC) for $2 a share, the stock plummeted over 80 percent at the open of trading on March 17.
âDear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter
Cramer says: âNo! No! No! Bear Stearns is not in trouble. If anything, theyâre more likely to be taken over. Donât move your money from Bear.â
On Jan. 17, 2007, Bear was trading at its high of $171.51 a share. Since then, it has been racked by the mortgage turmoil. On March 11, when Cramer posted the e-mail and his response, the stock closed at $62.97. As of 10:00 a.m. on March 17, the stock was trading at $3.72 a share.
Cramer frequently appears on âNBC Nightly Newsâ and âToday.â On the January 22 âNightly News,â Cramer was referred to by his colleague Carl Quintanilla as âone of the most influential voices on Wall Street.â
On the âTodayâ show March 17, Cramer maintained that âif youâre a diversified investor, youâre not going to get hurtâ by the Bear Stearns collapse. âThose who only had their money in Bear obviously will get wiped out today. But you most importantly donât have to take your money out of a bank,â he said.
Cramer clarified his remarks on CNBCâs March 17 âStreet Signsâ:
âLook, letâs understand two things,â Cramer said. âI said the common stock was worthless on Friday, as soon as this thing was at 36 because we saw a look at the bonds. If you kept your money in Bear you made out. You got the liquidity. Keeping money at Bear â I guess I could have caused a run on the bank and said take your money out of Bear. I guess people could say hold it, heâs saying buy the common stock. I mean, what the heck. I cannot cause a run. It turned out the Federal Reserve guaranteed the money. Iâm not going to tell people to pull money out of these places. The Federal Reserve is guaranteeing the money. They are not guaranteeing the equity. I got a lot of things wrong in my life, but I donât regret the fact when I said don't take your money out of Bear. If you have your money in Bear you still got it today. Remember, thereâs Bear Stearns the common and that person was going to pull the money out of Bear. We got a guarantee. J.P. Morgan is now Bear.â