Why is the best reporter in America a former stand up comedian?
Some of my favorite quotes from Jon Stewart in his interview with Jim Cramer on The Daily Show -
http://www.thedailyshow.com/
Stewart – “My mother is 75. And she bought into the idea that Long Term Investing is the way to go. And guess what?”
Cramer – “It didn’t work.”
“CNBC could be an incredibly powerful tool of illumination for people that believe that there are two markets – one that has been sold to us as long term – put your money in 401ks, put your money in pensions and just leave it there, don’t worry about it, it’s all doing fine.
Then there is this other market – this real market that’s occurring in the back room, where giant piles of money are going in and out, and people are trading them and it’s transactional and it’s fast. But it’s dangerous, it’s ethically dubious and it hurts that long term market.
So it feels like to us – and I’m speaking purely as a layman – it feels like we are capitalizing your adventure, by our pension and our hard – and that it is a game that you (CNBC) know, that you know is going on, but that you go on television as a financial network and pretend isn’t happening.”
“It is this idea that the Financial News Industry is not just guilty of a sin of omission, but a sin of commission. That they are actually in bed with this idea…
The idea that you could have on the guys from Bear Stearns and Merrill Lynch – the guys that have leveraged 35 to 1 and then blame mortgage holders… that’s insane.
You are pretending that you are a doe-eyed innocent.
I understand that you want to make finance entertaining, but it’s not a f***ing game.”
“You knew what the banks were doing and you were tauting it for months and months. Your entire network was. And so now to pretend that this was some sort of crazy, once in a lifetime tsunami, that nobody could have seen coming, is disingenuous at best and criminal at worst.”
“What do you feel like is the role of CNBC? Whose side are they (CNBC) on?
Is their audience the Wall Street traders that are doing this for constant profit, on the day to day - the short term…
These guys at these companies were on a Sherman’s March through their companies, financed by our 401ks and all the incentives at their companies were for short term profit. And they burned the f***ing house down, with our money and walked away rich as hell. And you guys knew that that was going on.”
“But isn’t that part of the problem, selling this idea that you don’t have to do anything? Anytime you sell people the idea that – sit back and you’ll get 10 to 20% on your money – don’t you always know that that’s going to be a lie?
When are we going to realize in this country that our wealth is work? That we’re workers. And by selling this idea of “hey man, I’ll teach you how to be rich”. How is that different than an info-mercial?”
Stewart – There are literally shows called “Fast Money”!
Cramer – …There’s a market for it.
Stewart – There’s a market for cocaine and hookers. So what!
Stewart – What is the responsibility of the people who cover Wall Street? Who are you responsible to?
It Didn’t Work
The Stock Market directly tracks the performance of the economy. As orders for economic products and services rise, so do stock prices.
Since the mid 1990’s, a significant part of stock price appreciation has been tied to the creation of credit and the products and services purchased on credit.
http://www.thedailyshow.com/
Stewart – “My mother is 75. And she bought into the idea that Long Term Investing is the way to go. And guess what?”
Cramer – “It didn’t work.”
“CNBC could be an incredibly powerful tool of illumination for people that believe that there are two markets – one that has been sold to us as long term – put your money in 401ks, put your money in pensions and just leave it there, don’t worry about it, it’s all doing fine.
Then there is this other market – this real market that’s occurring in the back room, where giant piles of money are going in and out, and people are trading them and it’s transactional and it’s fast. But it’s dangerous, it’s ethically dubious and it hurts that long term market.
So it feels like to us – and I’m speaking purely as a layman – it feels like we are capitalizing your adventure, by our pension and our hard – and that it is a game that you (CNBC) know, that you know is going on, but that you go on television as a financial network and pretend isn’t happening.”
“It is this idea that the Financial News Industry is not just guilty of a sin of omission, but a sin of commission. That they are actually in bed with this idea…
The idea that you could have on the guys from Bear Stearns and Merrill Lynch – the guys that have leveraged 35 to 1 and then blame mortgage holders… that’s insane.
You are pretending that you are a doe-eyed innocent.
I understand that you want to make finance entertaining, but it’s not a f***ing game.”
“You knew what the banks were doing and you were tauting it for months and months. Your entire network was. And so now to pretend that this was some sort of crazy, once in a lifetime tsunami, that nobody could have seen coming, is disingenuous at best and criminal at worst.”
“What do you feel like is the role of CNBC? Whose side are they (CNBC) on?
Is their audience the Wall Street traders that are doing this for constant profit, on the day to day - the short term…
These guys at these companies were on a Sherman’s March through their companies, financed by our 401ks and all the incentives at their companies were for short term profit. And they burned the f***ing house down, with our money and walked away rich as hell. And you guys knew that that was going on.”
“But isn’t that part of the problem, selling this idea that you don’t have to do anything? Anytime you sell people the idea that – sit back and you’ll get 10 to 20% on your money – don’t you always know that that’s going to be a lie?
When are we going to realize in this country that our wealth is work? That we’re workers. And by selling this idea of “hey man, I’ll teach you how to be rich”. How is that different than an info-mercial?”
Stewart – There are literally shows called “Fast Money”!
Cramer – …There’s a market for it.
Stewart – There’s a market for cocaine and hookers. So what!
Stewart – What is the responsibility of the people who cover Wall Street? Who are you responsible to?
It Didn’t Work
The Stock Market directly tracks the performance of the economy. As orders for economic products and services rise, so do stock prices.
Since the mid 1990’s, a significant part of stock price appreciation has been tied to the creation of credit and the products and services purchased on credit.
The economy is cyclical. It has long periods of rapid appreciation, followed by long periods of choppy, sideways trading. These periods average 18 to 20 years. The market is now in about year 10 of the current trading range. Price is now back to where it was in early 1997.
This should not be too much of a surprise. Here is a long term chart comparing the annual return in stocks with the annual GDP growth rate.
There are long period where stocks outperform GDP and long periods where GDP outperforms the stock market.
This chart tells me that stocks will underperform the economy for another 6 - 8 years. That means you will need to know how to buy dips and sell rallies.
There will be a time where you will again just need to buy and hold for 20 years, but that is a long way off.
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