Oops - CNBC's Cramer Said 'Don't Move' From Bear a Week Before Collapse
Hopefully your financial portfolio didnâ€™t include stock in Bear Stearns, but it might have if you had listened to CNBCâ€™s 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.
â€śDear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter
Cramer says: â€śNo! No! No! Bear Stearns is not in trouble. If anything, theyâ€™re more likely to be taken over. Donâ€™t move your money from Bear.â€ť
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 â€śNBC Nightly Newsâ€ť and â€śToday.â€ť On the January 22 â€śNightly News,â€ť Cramer was referred to by his colleague Carl Quintanilla as â€śone of the most influential voices on Wall Street.â€ť
On the â€śTodayâ€ť show March 17, Cramer maintained that â€śif youâ€™re a diversified investor, youâ€™re not going to get hurtâ€ť by the Bear Stearns collapse. â€śThose who only had their money in Bear obviously will get wiped out today. But you most importantly donâ€™t have to take your money out of a bank,â€ť he said.
Cramer clarified his remarks on CNBCâ€™s March 17 â€śStreet Signsâ€ť:
â€śLook, letâ€™s understand two things,â€ť Cramer said. â€śI 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, heâ€™s saying buy the common stock. I mean, what the heck. I cannot cause a run. It turned out the Federal Reserve guaranteed the money. Iâ€™m 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 donâ€™t 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, thereâ€™s 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€ť