A warning for investors

The market isn't rigged, but sometimes it's easy to see how Wall Street gets a bad name.

By Jim Cramer Feb 7, 2012 3:32PM

the streetIs the market fixed? Is it a total mug's game? One that is rigged against you?


I don't think so. You can buy plenty of terrific companies doing fabulous things, whether it be Apple (AAPL) with its amazing products or Kinder Morgan Energy (KMP) with its bountiful dividends or Chipotle Mexican Grill (CMG) with its dazzling growth. They aren't mug's games.

 

They aren't rigged.

 

But on some occasions, parts of the market seem very shady to the detriment of home-gamers everywhere, and I understand the revulsion that so many feel about Wall Street.


This morning, I talked with the "Squawk on the Street" gang about this outrageous Caesar's initial public offering, one where apparently only a small sliver of stock will be offered, with plenty left behind it. Do you think the public will understand that the little stock morsel that's offered is just the beginning of a flood of equity coming their way?


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After trying to go public and failing not that long ago, this new Caesar's deal seems outrageous to me, almost a blue-light special drawing you into the store with what looks like a terrific piece of merchandise when in reality, this is an equity stub of a much larger offering that can be dribbled out over time. 


The Securities and Exchange Commission has got to come to grips with these ever-shrinking sliver offerings that trick the public into thinking that the merchandise is pristine, courtesy an attempt to engineer a pop to the IPO, and get them excited, simply because they don't understand that there's a ton of stock that will be offered right behind it.

 

And if you want outrageous, check out the incredible indictment of three Credit Suisse (CS) traders by the Southern District of New York, alleging fraudulent valuation of bonds, inflating prices, in order to obtain gigantic bonuses that 99.9% of Americans only dream of. The government caught this trio allegedly creating phony valuations to boost their pay, including a $7 million bonus for one lucky guy, simply by claiming that the mortgage bonds they owned were worth far more than the market said they were worth.

 

Armed with these sky-high -- and allegedly totally phony -- falsely verified valuations, the traders were able to "prove" to their bosses that they made millions for the firm, when the profits were totally illusory.

 

They were "caught on tape" making up prices out of whole cloth, so to speak, and it makes fascinating reading, a tale akin to a shady firm that kept two sets of books -- the real one, which showed hideous losses, and the phony one, the one they showed to the bosses, that showed bountiful gains.

 

My blood wanted to boil when I read these indictments, particularly because the whole mortgage market was falling apart when these alleged crooks tried to say their mortgage bonds were holding up terrifically. And we wonder how this whole horrible crisis refused to be quelled.

 

Is it all rigged? Not if you stay with clean companies that pay good dividends or offer the best products and sport crystal-clear balance sheets.

 

But the rest? Let's just say, approach it with that age-old Latin mantra, caveat emptor.

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Action Alerts Pluswhich Cramer co-manages as a charitable trust, is long AAPL and KMP.

 

 

 

 

 

11Comments
Feb 7, 2012 6:23PM
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Buyer beware.  Believe it.  This market reflects the players.  If you do not have to guts to play, stay out.Smile
Feb 7, 2012 5:15PM
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why does msn have no credibility?

 

just follow cramer for a few days and you will see

Feb 7, 2012 5:01PM
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THIS GUY IS POISONOUS....ANOTHER MADOFF

 

BEWARE THE SHYSTER WHO IS ALSO A PITIFUL UNFUNNY COMIC

Feb 7, 2012 5:15PM
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LOL LOL can't stop laughing, the MSN hyper link was...

"Cramer:  Why Wall St. gets a bad name"

I read it as:

"Cramer is why Wall St. gets a bad name"  

Thanks for being honest Cramer.
Feb 7, 2012 5:40PM
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 Wall St gets a bad name because smart people take money from not so smart people!
Feb 7, 2012 6:09PM
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Open-mouthed Show me the money from top to bottom and vice versa. Show me how much you really got to support all the current valuations then I believe you.Nerd
Feb 7, 2012 5:08PM
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not only does this fool ruin novice investors he has devastated the

cnbc pre market show..........no matter how hard he tries he can't keep

from talking over all his fellow commentators and interupting useful commentary with his unfunny attempts at humor............i still watch the show for the live ticker and written alerts but

always on mute .............what an insult to the late mark haines to be replaced by such a clown

Feb 7, 2012 10:50PM
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Wanna make money? Do the exact opposite of Cramer's advice. If he says buy, then you should sell. If he says sell, that's the time to buy. That's MY homework, and it's eeeeeasy.  :>)

 

Feb 7, 2012 5:35PM
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I'm  sorry to have to say this Mr. Cramer but nearly every article you have written and I have read lately is ridiculed and scorned to the nth.  Perhaps; and I mean this in a nice way Jim, like all good actors there time comes.  Maybe like Seinfeld said and did.  He went out on top.  Perhaps shortening your horizon here might be a good decision.  Sorry but I'm sincerely trying to be helpful
Feb 7, 2012 4:59PM
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also he lauds corps for under promising and over delivering ......FRAUD

 

secondly if you believe this FAHOLE then you deserve every loss you get

 

NOBODY knows if the books are honest or what the price of an individual stock will do

let alone this JERK

 

he whines that etf's wreck his picks but the truth is that properly hedged etf's are the ONLY way

 

an individual should be in the market.........MSN.....BAN THIS CRIMINAL

Feb 7, 2012 5:10PM
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homework? rigor? lmfao........not even a child would believe this shyster
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