Pimp Your Finances

On Wednesday, Jon Stewart took on CNBC. He was the winner by unanimous decision.

His original intent was to interview Rick Santelli, the analyst who called for a “Chicago Tea Party”. For those not familiar with Santelli, he became a poster boy for anger on Wall Street when he rallied against Obama’s mortgage plan, live from the floor of the Chicago Mercantile Exchange:

How about this, President and new administration – why don’t you put up a website to have people vote on the internet, as a referendum to see if we really want to subsidize the losers’ mortgages? This is America!

How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom, and can’t pay their bills, raise your hands.  President Obama, are you listening?

Santelli was supposed to appear on the show last Friday, but cancelled at the last minute. I was disappointed, and apparently so was Jon Stewart. Here is his response to Santelli’s rant:

Yeah man! Wall Street is mad as hell! And they’re not going to take it anymore. Unless by “it”, you mean $2 trillion in their own bailout money. That, they’ll take…

But see, Rick Santelli is angry that these loser homeowners are going to get bailed out. He believes in personal responsibility. He believes in not rewarding the losers for missing all the warning signs.

I mean, for God’s sake, the guy works at CNBC! They’re the best of the best!

So to all you dumb*ss homeowners out there who let your optimism and bad judgement blind you into accepting money that was offered to you from banks, educate yourselves!

After Santelli bailed, The Daily Show decided to do an investigative piece on CNBC’s investment advice. The findings were less than flattering.

They ran through some of CNBC’s least-greatest hits, and then showed what happened afterwards. Here are the highlights:

March 11th, 2008 – Jim Cramer

• Prediction: “Bear Stearns is fine – do not take your money out! If there’s one take away, it’s that Bear Stearns is not in trouble.”
• Actual: Bear Stearns went under six days later.

June 5th, 2008 – Power Lunch

• Prediction: “[Lehman Brothers is no Bear Stearns]. You can’t compare Bear management and Lehman management. Lehman management is incredibly engaged and responsive.”
• Actual: Lehman Brothers went under three months later.

April 17th, 2008 – Squawk on the Street

• Prediction: “Will Merrill need to raise capital? No. That continues to be the refrain from management, from Mr. Thain. They raised $12.8 billion in capital, $4.2 of that was excess capital. No need to raise capital says Merrill Lynch.”
• Actual: Five months later, Merrill Lynch ran out of capital. It is now owned by Bank of America.

October 4th, 2007 – Jim Cramer

• Prediction: “Bank of America is now the cheapest and the best. And I have to admit, that as much as I like Wachovia, I think Bank of America is going to 60 in a heartbeat.”
• Action: As of [Wednesday], Bank of America trades under $4

December 5th, 2007 – Home Front

• Prediction: “What [AIG] is saying now is that their sub-prime losses or exposure, whatever’s going to happen to them. Is very manageable. Does it mean that they’re not going bankupt? Obviously they’re not, they’re the biggest insurance company in the world.
• Actual: Federal bailout money for AIG – $85 billion in September, $37.8 billion more in October, $30 billion more on Monday.

October 31st, 2007 – Jim Cramer

• Prediction: “You should be buying things, and accept that they’re overvalued, and accept that they’re going to keep going higher. I know that sounds irresponsible, but that’s how you make the money.”

February 1st, 2008 – Jim Cramer

• Prediction: “That’s why the market just won’t quit, no matter how poorly the actual companies are doing.”

April 16th, 2008 – Kudlow and Company

• Prediction: “The worst of this sub-prime business is over.”

June 13th, 2008 – Jim Cramer

• Prediction: “Very simply, I believe that it’s time to buy, buy, buy!”

November 4th, 2008 – Fast Money

• Prediction: “The fundamentals are coming back into play. I think people are starting to get their confidence back.”

It was fun watching someone take CNBC’s talking heads down a notch. They’re great at sound bytes, but not so much when it comes to advice. I’m glad someone finally called them out on it.

I’m not an expert, but I think Jon Stewart best summed up their knowledge and expertise when he said:

If I’d only followed CNBC’s advice, I’d have a million dollars today – provided that I started with one hundred million.

Related posts:

1. Jim Cramer Responds to Jon Stewart
2. Cramer vs. Stewart – Official Debate Scorecard
3. Jim Cramer’s Latest Feud
4. How Much is $787 Billion?