Defending The Madness: Jim Cramer

(MoneyWatch) 
The financial landscape is full of plenty of polarizing figures which radical views delivered in egocentric nuggets. Nevertheless, ex-hedge fund manager, CNBC host and Thestreet.com founder Jim Cramer is in a league of his own.

Such is the raw emotion that Jim Cramer elicits in so many, The Motley Fool's Rick Munarriz recently suggested an amusing experiment:

The next time you find yourself in a dwindling social situation, where it seems as if the conversation is running on fumes, just fling the following question into the mix:

"What do you think about Jim Cramer?"

It's as easy as that. Cramer is a polarizing figure. Some people love him. Some people hate him. Either way, everybody has an opinion on financial journalism's reigning rock star.

My Moneywatch colleague Alan Roth is evidently not one who finds much value in Cramer's bite-sized stock picks. In a recent post titled "In Defense of Jim Cramer -- Why We Need CNBC's Mad Money," Roth writes:

Sure, CNBC's Mad Money host Jim Cramer encourages investors to treat their nest eggs like poker chips, but that just means we need him now more than ever.

I'm admittedly not his biggest fan

... In my opinion, by encouraging his viewers to buy hot stocks and move in and out of the market, Jim Cramer does more than anyone on Wall Street to keep markets efficient. That trading volume keeps the market going and is critical to allowing the market to function. Unintentional though it may be, Cramer creates the market mechanism that allows long-term investors to profit from the foolishness of those who think they know what the near term future holds or what the next hot stock will be. Without that mechanism, the landscape of investing would be a pretty barren place.

In other words, Roth likes Cramer because he thinks the Mad Money host attracts numerous "sucker's rallies" in stocks (on both the buy side and the sell side), which ultimately allow him to buy or sell stocks outside their fair valuations.

In Defense of Jim Cramer -- seriously, this time
That's quite a clever argument, and indeed irrational market behavior is the key to much successful stock-picking. But more than anything, it's sad to see yet another piece pooh-poohing Jim Cramer.

Here's why: imagine hosting a nightly show, five times a week, fielding calls from across the country from concerned investors, all while having to constantly provide fresh and entertaining content. You probably can't. It's unthinkable.

For what Jim Cramer does, he does it very, very well, with crystal-clear reasoning underlying his assumptions. If you asked the average investor to trade as frequently as Jim Cramer makes stock recommendations, they'd probably be out of 100 percent of their capital in a couple weeks.

Of course no one is going to invest in a stock purely because Jim Cramer says so. In fact, take Cramer's own advice and you'll be doing a little homework first. But at least his show is full of original, thought-provoking, and fresh ideas on a daily basis.

When it comes to investing, you can't really ask for much more than that. Especially when it's free.