Listening to Pundits:

Yeah, it’s been ugly in the trenches. Markets across the board and around the globe are down. Many took a pretty good hit. But, Confident Trader members saw it coming and were prepared. The market always tips its hand but you have to know what to look for. Since mid November we have taken final profits and closed almost 80% of our positions, locking in profits while most watched theirs evaporate. The market never moves in a straight line and the tide lifts all boats equally – two old Wall Street adages that come to mind at this time of market uncertainty. It also lowers all boats equally.Ifyou’re silly enough to sit there twiddling your thumbs as the tide goes out.

Jim Cramer, the screaming “Mad Money” guy, is as mistake prone as anyone... This stock Svnegali is paid big bucks to provide entertainment under the guise of investment advice. He’s all over the TV; he writes books and sells himself on the web. The guy makes mistakes.

The week (3/11/08) before Bear Stearns – the sub-prime-mortgage-lender-investment-banking behemoth went belly up, Cramer is screaming at his viewers to hold on to their BSC positions at $60 a share. The guy is screaming into the camera. “Don’t sell. It’s not going anywhere!” he shouts at his viewers!

Two days later, a Friday, analysts report that Bear Stearns has been downgraded and the share price plummets throughout afternoon trading. The following Monday, BSC tanked and landed at just $2 per share. The per share price dropped $58 overnight, sending panic through the lending sector of the economy. The sky is falling! The sky is falling!

So self-anointed stock pundit, Jim Cramer got it totally wrong. Totally. And those poor investors who took the advice of this “expert” took a major, major hit. Even after the Fed stepped in to prop up Bear Stearns (a move that caused a real ruckus among economists – too much government intervention within the private sector), the share price only bounced back to $10, closing the day of this writing at $10.72.

There’s a real lesson to be learned here, albeit an expensive lesson for many. Listening to these stock pickers on TV is the surest way to lose money in any market. The fact is, these talking heads are as clueless about market movements, as most everyone else.

Oh, we know what to look for. We read the balance sheet, track charts and trade on various indicators. But the simple fact is: stock markets don’t always work the way we expect them to and any stock jockey on TV who tells you to buy, sell or hold doesn’t have any better idea about the movement of a stock’s share price than you do, and frequently less. They aren’t paid to be right, they’re paid to look and sound good.

Watch the Fox News Stock Block some Saturday morning. It’s one stock picking prognosticator after another. And for every one of these so-called experts who says XYZ is going to fly, there’s another expert at the same table who says XYZ has seen its high and we should expect a strong sell off. And these are highly paid experts!

On personal level, when you buy 1,000 shares of XYZ at $20, you do so because you think the stock price is going higher. But remember, you bought those 1,000 shares from a seller who thought the stock was about to drop in share price. That’s why the seller sold. That’s why you bought. And that, ladies and gentlemen, is what makes a stock market a stock market – the divergent views of investors who believe share price is going up or about to go into decline. But remember, the market always tips its hand to those who know what to look for.

Hey, here’s a thought, “Why not learn how to do it yourself”? That way you’re not at the mercy of “experts”.

Note: The first rule of investing is “Don’t lose money”. Ever, for any reason.

Jim Cramer is a lunkhead as often as anyone else; he just gets paid better for it.

One final note, clips of Cramer backtracking are all over YouTube. Check them out. And if you want Cramer’s current view of BSC, learn more. No one knows better how to manage your assets than you do.