Don't Downplay Disclosure

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Some journalists will tell you that professional money managers like me -- the ones putting their money on the line -- shouldn't be writing or talking about stocks at all. And that doesn't make any sense.

This debate was sparked by my comments last week on


about a company called



, which I used as an example to explain the characteristics of a short squeeze. Before going on TV, I had asked my trader to look into whether the stock could be shorted. (A short-seller is betting that the price of the stock will fall.) As I expected, it couldn't be. What I was trying to do was explain why WavePhore stock had recently soared -- I never had any intention of shorting the stock. One lost element: the CEO was grilled on


that day, both by myself and


reporters. After my appearance and the interview, the stock dropped, and WavePhore complained loudly that I had said inappropriate things about it. The company also implied that I had done so to gain an advantage in the stock, which is totally untrue since I did not and do not have any position in WavePhore.

But the entire fracas has raised the debate anew about money managers talking on television. A

Chicago Tribune

reporter suggested to me in an interview that the "conflicts" are simply too great for a professional money manager to be on television talking about stocks. That's plain wrong. I put my money where my mouth is. That's what my column in

is all about. That's what my appearances on


are all about. The key issue is not whether a money manager


talk on television about stocks. The issue is


that money manager talks about stocks. And the key here is disclosure. I and other money managers must disclose positions when we discuss stocks. If we are long, we must say so. If we are short, we must say so. Frankly, too few money managers follow this dictum.

The concept of simply denying money managers the chance to talk on television or to write columns about investing defies logic. For starters, the idea that money managers can't talk about stocks on television would, by logical extension, also mean that they can't talk to journalists about stocks. Isn't that the same thing? A reporter's quote of a money manager about stocks is no different than the unfiltered version of the money manager discussing it him or herself.

And, again, this is an issue that must be solved by disclosure. If you read in the

Chicago Tribune

a story by a reporter that quotes Joe Fund Manager as loving some stock, you should be told in the same story if the manager is long or short the stock. But that's not the


policy, nor is it the policy of most newspapers.

Moreover, the concept of telling money managers they can't discuss stocks isn't consistent with how the rest of the news world works. Think about it. We have op-ed pages filled with politicians writing about the president and impeachment. These politicians are in the arena, and they have a stake. As long as the reader realizes the stakes for the writer, these kinds of columns are invaluable information from the inside.

While news reporters must offer objective coverage, commentators and columnists are best when they have working knowledge of what it's like on the field of play. Saying that a money manager must never discuss stocks because it is hopelessly conflicted is a head-in-the-sand mentality that would deny investors substantive information from those actually in the business.

Now, that said, do money managers abuse their position on television or through the writing of columns? You bet. Many money managers fail to disclose their positions, and this is a disservice to listeners and readers. Many commentators fail to disclose their positions. This lack of disclosure turns an informational moment into a potentially treacherous situation. Is the money manager talking up the stock to sell into a position? Is the money manager talking down a stock because he or she is short? Without disclosure, the comments from the money manager become suspect.

That's why I have aggressively disclosed my positions when I write. That's why I have my trading sheets with me at


, so the hosts know exactly where I'm coming from and so I can disclose my positions, just as I did when I said on


that I had no position in WavePhore. I think all columnists -- whether money managers or full-time columnists at the hometown paper -- need to disclose their interests.

What is strange about this most recent incident, the one concerning the comments I made about WavePhore and the likelihood of a short squeeze, is that these comments came in a stock in which I have held no position and never intended to hold a position. The

Chicago Tribune's

David Greising suggested that perhaps I wanted to knock the stock down so I could buy it more cheaply! That's something that I would never be foolish enough to do.

It's really a surreal experience to watch journalists get very hot and bothered about what is also a free-speech issue. And usually, when it comes to free speech, journalists are on the front lines waving the First Amendment. The bottom line is that in all walks of life, the voice of the professional adds another layer of information that is very useful to the individual. From politics to sports to investing, as long as those in the arena disclose their stakes, professionals should be allowed to offer insight into the debates of the day.

I love


"Squawk Box." It's a ton of fun being on that show. And they are handling this issue in a judicious manner. They received a complaint, they've looked into it, and they are attempting to develop policy that will solve issues related to having professionals on television going forward. It's not an easy issue, but it's one that deserves to be solved so investors can get the best information in a way that does not abuse the viewer.

James J. Cramer is manager of a hedge fund and co-chairman of

At the time of publication, the fund had no positions in stocks mentioned in this column, though positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to