Wall St. and Business Wednesdays: What Watching Kudlow & Company and Mad Money Can Mean To You
For most of the last couple of years, especially during football and basketball season, whenever I have had time to kill from 5 to 7PM (Est), I have frequently been an ESPN viewer, catching the animated sports talk and news shows, Around The Horn, PTI, and Sports Center. But of late that has not been the case. Often, these days, while finishing dinner or desert, I find myself glued to CNBC. And even when I am not near a TV or am on the computer, or phone, I have my satellite radio tuned to the cable channel where I can hear the audio of two programs that I highly recommend to individuals who want to learn more about financial markets: Kudlow & Company and Mad Money.
Some may remember that the two hosts of these shows, Larry Kudlow and Jim Cramer, respectively, actually had a show together, Kudlow and Cramer, which was actually quite good. But the recent decision by CNBC to break apart the duo and provide them with their own programs appears to be a wise one. With Kudlow & Company, Lawrence Kudlow CEO of economic and investment research firm, Kudlow & Co. LLC, is able to provide a sharper focus to the areas of his expertise: how macroeconomic trends and political events impact financial markets. With Mad Money CNBC and The Street.com markets commentator, Jim Cramer, is able to unleash his animated personality and package it with what some have described as his encyclopedic knowledge of individual publicly-traded companies.
I like both shows primarily for two different reasons. First, Kudlow & Company is one of the few shows that properly identifies the nexus between Wall Street and Washington, D.C. I find that few individuals are able to speak about economics, finance and politics, their real world impact and interrelationships. Most individuals simply do not have the mindset, skill and background that is required to move in and out of these areas and connect them, and as a result I find that I often have to cross reference and go to separate sources to satisfy what I am looking for in order to connect and relate these three areas. Although he clearly has a political ideological bias, in Larry Kudlow, and Kudlow and Company I find an individual with a program with the credibility and scope to handle markets – the primary forum where finance, economics and politics meet.
And although Jim Cramer has had his professional ethical issues (Read the book Fortune Tellers by Howard Kurtz), in him, and Mad Money I find a person and show that both educates and informs its viewers regarding how the most active individuals on Wall St. move and think; what factors influence the decision to buy and sell a stock; and insight into the mechanics, techniques and financial instruments used by investors. Jim Cramer’s show, like no other, transparently offers a specific investment philosophy – that of the trader (I recommend a reading of Trader Vic - Methods Of A Wall St. Master by Victor Sperandeo to get a good perspective on the difference between traders, speculators and investors). And Mr. Cramer authentically offers that philosophy in an interesting way that captures some of the energy of the daily life of the financial marketplace. He is today's quintessential financial stock trader.
Here is how I recommend watching both shows, for those who are interested in using them to learn about financial markets and what affects them. Try this for two weeks and see how much you learn:
- Every weekday, before both programs, read USA Today’s Money section. I have been reading it for 15 years, used it to teach myself a great many things about economics and finance and find it the easiest to understand with good business profiles and clear language. If possible, review the day’s headlines (unless you are acquainted and interested you do not have to read the entire article) in the Wall St. Journal.
- While watching Kudlow & Cramer, keep a pen and paper handy to jot down the names of his guests and the subject they comment on and specialize in. Unless you do this, you probably will not be able to retain or keep track of who said what, but more importantly you will not be able to do follow up research to get a better understanding of what is being discussed, with more basics and depth. Do the same while watching Mad Money, but for the purpose of taking notes on phrases and concepts mentioned by Jim Cramer.
- While watching Mad Money, be sure, during the “Lightning Round”, that you write down the symbol of the companies that people call in and ask Jim Cramer about. The callers and he move pretty quickly, but if you are watching the program on CNBC they always put a graph of the stock price of a company along with its symbol. For example, if someone calls in and asks Jim Cramer about the Black publicly traded radio broadcasting company, Radio One, while he is talking about what he thinks about that stock, CNBC will show a chart of its stock price movements that will have at the top the name, “Radio One” and its symbol, “ROIA”. It is more important and easier to jot down the symbol (this will become clear to you when you are presented with long and hard to pronounce company names). You can use that stock symbol to find a variety of financial information about the company.
- Always understand that understanding how Wall Street works is not achieved through mastery of a particular political ideology or economic theory. Understanding Karl Marx, Adam Smith, John Maynard Keynes, Frederich Von Hayek, Ludwig Von Mises or our great Afro-centric thinkers is not the same as knowing how Black publicly-traded companies raised money during an Initial Public Offering (IPO). It won’t tell you about the shadowy, ‘secret’ "Plunge Protection Team"'s relationship with the American government. It won’t tell you what Securities and Exchange Commission (SEC) filings analysts look at when performing a valuation of a company. It won’t tell you the identity of the ‘official’ primary 22 banks and securities broker-dealers that trade in U.S. Government securities with the Federal Reserve Bank of New York (FRBNY). And it will not inform you about how analysts determine if a company’s infrastructure is too expensive to profitably execute its business model. I have told many that the greatest insight comes from the dialogue betwen a theoretician and an engineer, and between those who carefully compare principles with practices. Learning about how financial markets work is an essential part of a full political and economic education. Understanding Wall Street is an important part of that process.
- Lastly, be sure to remember to think of financial markets in terms of how you earn money, what you enjoy, are interested in and consume. You should want to know how the stock price of the company you work for moves. You should be interested in what went into the decision to launch, or remove a product that you enjoy. And you should understand how entertainment is affected by Wall St. and vice versa. Dave Chappelle is a factor in Viacom’s profitability. And Jay-Z, Eminem and 50 Cent can directly or indirectly affect the stock price movements of Vivendi Universal. I like to tell people that even one’s deepest understanding of the evolution of the Hip-Hop culture and industry depends up understanding how the stock market works. I can point to my unique analysis of how the employment status of Star of the Star and Buc Wild morning show significantly affected the stock price of Emmis Communications, the parent company of his former employer, radio station, Hot 97 FM.
So, watch Kudlow & Cramer and Mad Money from the perspective of a student as well as one who is seeking to make money through investing. Not only will you learn a lot, I think you will enjoy the experience and see yourself and your world in better perspective.
Wednesday, May 25, 2005