Posted 11 months ago | by Brian Garcia
In a wild interview nearly 20 years ago, famous hedge fund manager and wall street propagandist Jim Cramer went totally off the rails and described exactly how whales manipulate markets by causing short term volatility with large sell orders, then spreading a narrative through the media that will take the market in the direction that they want it to go. This is what they have been doing for years on Wall Street, and now they’re coming for crypto. Let’s dive into Jim Cramer’s detailed description of how institutions manipulate the emotions of the public and retail investors to kick off a buying or selling frenzy when it’s convenient for the whales.
Hedge Fund Manipulation Is Nothing New
Have you ever noticed how often institutional players change their minds about crypto, and how they always have the same opinion at the same time? Whether it’s banks like JP Morgan or news outlets like CNBC, they all seem to be pushing the same narratives, and more often than not, retail investors would be worse off if they traded on these signals.
Maybe there’s a reason for this though. Perhaps retail investors are intended to be the bagholders of institutional firms who have more money, better access to complex financial instruments, and a direct line to media organizations who are desperate for a scoop to make their headlines pop. In a 2006 interview with an independent media channel called Wall Street Confidential, Jim Cramer went off-script to describe a situation much like this, where hedge funds like his use their money to set massive sell orders so they spark fear in the markets before calling up CNBC to plant a negative story about the stock they’re trying to move.
Well now, nearly 20 years later, Cramer has had his own show on CNBC where he pushes retail investors to make bad decisions pretty much all the time. When it comes to crypto, he flip-flops on a regular basis, going along with whatever narrative is popular with Goldman Sachs, Blackrock, or JP Morgan, and as we know, those narratives change A LOT.
So many of the stories that we see come out about crypto are not intended to inform people, they’re intended to play with our emotions. The media is being used as a tool to move market sentiment, but don’t take my word for it, listen to what Cramer has to say.
We know that this is how the manipulation happens. We talk about it all the time on the channel, but what is really shocking here is that he was brazen enough to get on camera and describe all of this illegal and unethical behavior so casually. It’s as if he feels like he’s untouchable, and maybe he is. A few months before this infamous video was recorded, Cramer and a number of other financial journalists were served with subpoenas from the SEC over allegations of market manipulation.
Patrick Byrne, the founder of Overstock.com, and an early crypto adopter accused Cramer of colluding with short-sellers and a data firm called Gradient Analytics to send the stock of his company lower using media FUD. Cramer and the other parties involved simply refused to comply with the subpoenas, and the SEC decided not to take any further action. At the time, Cramer insisted that he was just saving his viewers from investing in a bad stock that was losing its value, but he has made some very bad calls and led his audience astray in some very big ways over the years.
Cramer’s Self Interest For Private Accounts
His most notorious fail was telling his audience to keep their money in the investment firm Bear Stearns in the midst of the 2008 financial crisis, just days before the stock tanked and lost half of its value. Remember this gem?
In the aftermath of the crash, Cramer was grilled by another journalist about his comments, and his response was revealing. He admitted that he knew Bear Stearns’ stock was going to be essentially worthless, but claimed that his advice was not about the company’s stock, but about the private accounts at the firm. According to Cramer, when he told his audience to keep their money in Bear Sterns he was talking to people who had private accounts there, which is pretty much just high net worth individuals.
Most of his viewers thought he was talking about the stock because that was what was relevant to them. At that moment, he made it very clear that his customer is not the retail investor, even though they make up most of his audience.
A few months later, in October of 2008, Cramer went on the TODAY show and told viewers to take all of their money out of the stock market for the next five years. This prediction didn’t work out so well either. A few months later the market bottomed and began to rally. Then, 5 years later, the economy was doing much better than he predicted, with the S&P index up 58.7% through a time that he expected to be a massive bear market. 58.7% might not sound like much if you’ve been into crypto for a while, but it’s pretty significant in the traditional stock market.
Cramer’s calls have been so bad that the Wall Street Journal once reported that traders could make up to 25% yields in a single month just betting against his picks and doing the exact opposite of what he says. Be the opposite of Cramer and smash that like button.
These figures make it look like Jim Cramer is not a very good investor, and maybe that’s true, but there could be a more sinister reason for why he’s wrong so much. We need to consider the possibility that Cramer has been telling his audience to do one thing while doing another behind the scenes. He told us nearly 20 years ago that this strategy is in his playbook, so it would be naive to think that he left these tactics behind, especially when he clearly appears to be pulling the same stunts.
I might be picking on Cramer today, but he is just one part of a larger challenge that will be facing as the crypto markets mature and attract more institutional investors. These wall street goons coming into crypto and offering us financial advice is like a candlemaker arguing with electricians about how to wire a house.
They don’t have enough knowledge or experience with this technology or these markets to be telling people what to do. Yet Jim Cramer has decided to weigh in on Crypto as if he is an expert. He’s been flip-flopping on Bitcoin for the past several years. At first bullish but cautious, never diving into the tech or the financial freedom aspect of crypto, always looking at it as a speculative oddity. He never took it seriously. Imagine Cramer, for the longest time, saying he won’t buy Bitcoin or he won’t buy over a certain price. Then, like clockwork, Cramer touts praise on Bitcoin as how he was able to sell his Bitcoin to pay off his mortgage.
Big Bank Motives
Now this year, the year institutions like JP Morgan and Wells Fargo are buying crypto as fast as possible, The Mad Money Man is now bearish on Bitcoin and offers mealy-mouthed support for Ethereum that is intentionally confusing. You think that’s a coincidence? The big banks have plenty of ulterior motives because they are still deeply embedded in the legacy system.
Crypto was made to be an alternative to wall street and traditional finance, but now that all the suits have seen that there’s money to be made over here, they’re all starting to creep into our space and pretending to be experts. I know that we can’t expect the institutions to stay out of the game forever, and I’m happy to have them pump my bags, but that doesn’t mean that we have to give these people any credibility.