Cramer on Being 'Early'

Early or Wrong?

The first is an excuse professionals give for being wrong. The second is what professionals should say rather than claim to be early. It's no sin to be wrong. Take Jim Grant's incredibly thoughtful exposition last year about how it's time to buy Japan. It was well-articulated, as always. Pompous and self-serving, as always. And it was wrong, as almost always.

In the most recent issue of this "provocative" newsletter (provocative being another cover word for "wrong") Grant pokes fun at himself for being so "early," which he says is his predilection. So what if being early cost you money (about as much as being "wrong" costs, not ironically), Grant pounds away again and everybody's happy.

Grant, for the record, has also been early on the demise of the equity markets, the rally in gold and gold equities, and the move into the Korean market.

I point all of this out not to pick on Grant, although that's my predilection, but to point out how people who write about finance never want to admit they are wrong. Early is the closest they will come. There are two reasons that prognosticators use this "wrong avoidance" scam. One is because they fear that if they admit they are wrong all of the time, the media kingpins will simply turn them off and put them out of business. The other is because nobody but people at TheStreet.com really seems to care, so why not try to get away with it?

There are pleasant signs that some of this lack of accountability might be changing. In Sunday's edition of the New York Times, Fred Brock, who writes a column that would sooner praise Goebbels' early magazine writings than anything I might pen, notes that the November issue of Money said to dump AT&T at $48, an astoundingly wrong prediction. No matter that the now-deposed Lalli regime came up with that early gem, it was still nice to see that others are willing to step up to the plate of accountability.

SmartMoney has always held a lamp up to predictions, but I don't know if that can be counted because that was something I insisted on when we were starting the magazine. I demanded that all of us be held accountable, and Steve Swartz, the excellent editor in chief at SM, wholeheartedly agreed. It still seems raw and groundbreaking to see Steve blast himself if he or any of his team's picks go awry. Maybe that's one of the reasons why that magazine is so successful.

But the most positive sign yet that the free ride for the "earlybirds" may be over comes from Mark Haines, host of CNBC's Squawk Box. Haines, personally and without handlers (why do the good guys never have handlers?), has created a database of upgrades and downgrades. That database is worth hundreds of man hours of information because it tells us whether analysts actually do make you money or not. Why bother to listen to an analyst that recommends high and pulls the recommendation low? Amazingly, in the time since Haines has been talking about his index, only Tom Kurlak from Merrill seems to have made you money.

Hmmm, no wonder the sell-side has never been into accountability. They have a lot to be accountable for!

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