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Dow Jones S&P 500 NASDAQ 10-Year Note
10,414.14 1,114.05 2,237.66 36.82
Oil *
72.73
UP
85.25
UP
11.58
UP
25.97
UP
1.36
10 Yr
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+1.17%
+3.84%
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Dow Jones S&P 500 NASDAQ 10-Year Note
10,414.14 1,114.05 2,237.66 36.82
Oil *
72.73
UP
85.25
UP
11.58
UP
25.97
UP
1.36
10 Yr
3.68%
SPDR Gold
106.95
+0.83%
+1.05%
+1.17%
+3.84%
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RealMoney.com : James J. Cramer


What Individual Investors Should Learn From Enron

By James J. Cramer

11/30/2001 07:43 AM EST

Read More
Click here for the latest from James J. Cramer

Stop blaming the feds for Enron (ENE:NYSE - news - commentary - research - analysis). That's ridiculous. When people don't tell the truth, when bad actors strike, you can't do anything about it. You can't game alleged fraud. You can't talk about it ahead of time. Look, I still had to use the word "alleged."

Rooting out bad actors is darned tough. You need someone to come forward from the inner circle, who was really in the room, someone in the executive suite, to rat out everybody else based on conscience or tapes.

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Sources: Enron Preparing Bankruptcy Filing
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Enron's Done Deal Never Was

If you don't have anyone with a conscience and you don't have any tapes, you don't have any case until after the damage is done.

That's the importance of seeing the warning signs in the market and taking action immediately, even if it means making a lot of people angry.

Take Enron. In August, CEO Jeffrey Skilling resigned for no reason. There was tons of speculation about whether it was something personal or corporate.

Wrong question!

When people quit for unexplained reasons, and those people are important, you don't try to find a reason to stay long. You quit, too. You walk. One of my proudest moments writing for RealMoney was my column the day Skilling resigned, when Enron was at $40, in which I wrote, don't walk, run from Enron. I said the stock was a "goner."

I said that because I have traded off probabilities for years, and the probability that things are good after top execs resign for no reason is nil. Nil.

I didn't do this when the CFO of Cendant's (CD:NYSE - news - commentary - research - analysis) CU International Division resigned for no reason in the last week of March 1998 and it cost me $18 million in 30 seconds a few days later.

Telling.

Don't confuse the issues and the lessons of Enron. It has nothing to do with the vigilance of regulators; they are doing all they can. They are beaten up and trashed every day very unfairly. Regulators will never get you out of a stock in time, which is all we should care about in these cyberpages.

Learn from this stuff. Learn from Cendant, learn from Enron, learn from Sunbeam, learn from Waste Management (WMI:NYSE - news - commentary - research - analysis): When you see inklings of this stuff happening, you sell.

Period.


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Dow Jones S&P 500 NASDAQ 10-Year Note
10,414.14 1,114.05 2,237.66 36.82
Oil *
72.73
UP
85.25
UP
11.58
UP
25.97
UP
1.36
10 Yr
3.68%
SPDR Gold
106.95
+0.83%
+1.05%
+1.17%
+3.84%
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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@realmoney.com.
Read our conflicts and disclosure policy.
Order reprints of RealMoney.com articles. Top


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Sorry, the page you requested could not be found

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TheStreet Directory

Dow Jones S&P 500 NASDAQ 10-Year Note
10,414.14 1,114.05 2,237.66 36.82
Oil *
72.73
UP
85.25
UP
11.58
UP
25.97
UP
1.36
10 Yr
3.68%
SPDR Gold
106.95
+0.83%
+1.05%
+1.17%
+3.84%
Data delayed 20 minutes

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Latest Headlines