Market Sense and Nonsense: How the Markets Really Work (and How They Don't)

Chapter 1

Expert Advice

Comedy Central versus CNBC

On March 4, 2009, Jon Stewart, the host of The Daily Show, a satirical news program, lambasted CNBC for a string of poor prognostications. The catalyst for the segment was Rick Santelli’s famous rant from the floor of the Chicago Mercantile Exchange, in which he railed against subsidizing “losers’ mortgages,” a clip that went viral and is widely credited with igniting the Tea Party movement. Stewart’s point was that while Santelli was criticizing irresponsible homeowners who missed all the signs, CNBC was in no position to be sitting in judgment.

Stewart then proceeded to play a sequence of CNBC clips highlighting some of the most embarrassingly erroneous forecasts and advice made by multiple CNBC commentators, each followed by a white type on black screen update. The segments included:

• Jim Cramer, the host of Mad Money, answering a viewer’s question by emphatically declaring, “Bear Stearns is fine! Keep your money where it is.” A black screen followed: “Bear Stearns went under six days later.”
• A Power Lunch commentator extolling the financial strength of Lehman Brothers saying, “Lehman is no Bear Stearns.” Black screen: “Lehman Brothers went under three months later.”
• Jim Cramer on October 4, 2007, enthusiastically recommending, “Bank of America is going to $60 in a heartbeat.” Black screen: “Today Bank of America trades under $4.”
• Charlie Gasparino saying that American International Group (AIG) as the biggest insurance company ...