Monday, February 27, 2012

Deja Fool

February 27, 2012
Reading Buffett's letter, 'quaint' comes to mind (Jim Cramer)

That's because they are based, first, on an old benchmark that has lost relevance for a generation -- book value -- and another benchmark that has lost its gravitas in the most recent brutal 12 years of lost performance.

Let's go back in time exactly 12 years to verify the wisdom of Jim Cramer.

February 29, 2000
The Winners of the New World (Jim Cramer)

If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management.


A-ha, that just leaves us with tech. That's why we keep coming back to it. That's why, despite the 80% increase in the Nasdaq last year, we are looking at another record year now. It is by that process of elimination that I have picked my top 10. And my next 10 and my next 10 after. Only those companies are worth owning. The rest?

You can have them.

NASDAQ Composite

February 29, 2000: 4,696.69
February 27, 2012: 2,966.16
Net Loss: 37%
Average Loss per Year: 3.8%

Berkshire Hathaway Inc.

February 29, 2000: 44,000.00
February 27, 2012: 120,350.00
Net Gain: 174%
Average Gain per Year: 8.7%

It would seem that the past 12 years were a bit more brutal to Jim Cramer than they were to Warren Buffett.

So what's the moral of the story? If Jim Cramer is publicly heckling book value again then perhaps we should all start bracing for impact again? Well, maybe. I certainly wouldn't rule it out.

Book Value

1. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated.

Or perhaps the moral of this story has a simpler meaning.

Jim Cramer, don't quit your "Mad Money" day job!!!

Fine Print Disclaimer: This heckle seemed way too easy. Did hidden cameras record my shocked expressions? Am I being Punk'd? Where's Ashton Kutcher?


dearieme said...

I've been slow on the uptake: I've only just realised that the whole Euro shemozzle has been an attempt to get us through winter before all hell breaks loose.

Stagflationary Mark said...


Now is the winter of our content
Made glorious summer by this son of New York;
And all the rates that low'r'd upon our house
In the deep bosom of prosperity buried.