The host of CNBC’s Mad Money has often been grilled on social media for advising people to invest in assets that become unprofitable or vice versa.
Its latest example is the infamous Silicon Valley Bank, which suffered a bank run and ultimately collapsed on Friday.
Cramer said to buy SVB shares
“This company is a merchant bank with a depository base that Wall Street is wrongly worried about,” Cramer explained in his to show of February 8. He added that the bank was “less dependent on private equity and venture capital offerings” before adding that the stock “is still cheap” despite having risen 40% since the start of the l ‘year.
Fast forward to a month later, on March 8, SVN’s woes became public knowledge when the bank announced that it had sold a large portion of the securities at a loss and planned to divest over $2 billion. dollars in new shares to fix its sheet balance.
The company’s shares fell soon after and the announcement sparked panic among depositors who rushed to withdraw their funds from the bank.
The stocks in question, which Cramer touted as cheap a month ago, took another hit on Thursday and were finally halted on Friday. Regulators had to intensify as the Federal Deposit Insurance Corporation took over the bank during the trading day. The independent federal agency usually waits until after trading hours to do so.
“SVB’s condition deteriorated so quickly that he couldn’t last five more hours. It was because its depositors were withdrawing their money so quickly that the bank was insolvent, and an intraday shutdown was inevitable due to a classic bank run,” – said Dennis M. Kelleher, CEO of Better Markets.
The bank’s demise hurt the crypto industry, as it turned out that at least one giant – Circle – holds a substantial amount of its USDC reserves in it. As a result, the second-largest stablecoin lost its dollar parity and it saw over $8 billion of its market capitalization evaporate.
Cramer’s previous strikes
Although he’s been on the air for many years, Cramer has his fair share of controversial investor advice that goes in the opposite direction. He has been particularly questionable when it comes to his views on the cryptocurrency industry.
His previous recommendations ranged from buying BTC and ETH to selling both assets and staying away from anything crypto. This prompted some investors to open reverse tradeswhile the others believe the market will move in the opposite direction to what he said.
Nonetheless, some people on Twitter grilled the Mad Money host for causing losses to some investors.
At first, it was funny that Jim Cramer was always wrong.
Now, it’s extremely sad how many people and families he destroyed by always getting it wrong.
The guy needs to be taken off the air for good.
— Appatunity (@Appa4two) March 10, 2023