'RealMoney' Radio Recap: Coming Clean

It isn't common to hear analysts or gurus "'fess up" when they get it wrong, but that's exactly what they should do, said James Cramer Thursday on his "RealMoney" radio show.

Cramer said he "screwed up" on Fording Canadian Coal (FDG). "I made a mistake," he said. Fording lowered guidance not once but twice after Cramer recommended it, and he has since sold the position from his ActionAlertsPLUS charitable trust.

Cramer wishes he would hear the same from two Merrill Lynch analysts, one who downgraded Qualcomm (QCOM) ahead of its "most perfect quarter" Wednesday, and one who downgraded Broadcom (BRCM), which Cramer believes is in bull-market mode.

Instead of hearing mea culpas, though, Cramer said we're more likely to see the analysts hunker down and reiterate their downgraded ratings, doing all they can to find the "flies and hair" when a simple 'I got it wrong' and a promise to do better would suffice, he said.

In response to a question about how much analysts really know, Cramer said "most don't know much." They don't have the time to do quality work, he said, and they are conflicted. "There are a handful of analysts who are in the business of trying to help you make money," he said, but "no more than that."

Cramer likes to use analysts' downgrades to buy stocks cheaper than he otherwise would be able to. Because of Regulation FD, companies are required to make material information available to all investors at the same time. Consequently, the analysts "can't know anything," he said. "The rules have changed. I never feel these guys know anything."

If you've done your homework, most of the time your work will trump theirs, he said.

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