WALL STREET – Holding a bullhorn up to the phone and incessantly slapping the ‘BOOYAH’ sound effect 30 times, Jim Cramer screamed, “I’m doubling down on Bear Stearns! It’s a deep value buy at zero!”
Jim Cramer, known best for acting like a clown on CNBC’s Mad Money, was reported to be screaming how the failed investment bank is a buy, 12 years it’s collapse.
“Half of my net worth is tied up into Bear Stearns!,” Cramer screeched. “And I’m doubling down on it. You can’t go lower than zero! Margin of safety! You only lose when you sell! BUY, BUY, BUY!”
“I think Jim has finally lost it, a spokeswoman for Mad Money stated. “It was only a matter of time before this happened. After decades of horrible calls, I’m surprised he has lasted this long.”
Cramer’s most notorious investment call was the advice he gave a Mad Money caller when they asked him about Bear Stearns. In the call, Cramer stated Bear Stearns was a buy right before their inevitable collapse.
“Bear Stearns is fine. Do not take your money out. If there’s one takeaway, Bear Stearns is not in trouble. I mean, if anything, they’re more likely to be taken over. Don’t move your money from Bear. That’s just being silly. Don’t be silly.”
And the question that begs to be answered; is Jim Cramer the definition of the sunk cost fallacy? The simple answer is yes.
Sunk cost fallacy is a term when an individual continues a behavior as a result of previously investing a significant amount of time into the endeavor. The fallacy has been related to loss aversion and is an important concept for anyone interested in behavioral economics.
“BUY BUY BUY BUY, BOOYAHH!” Cramer screamed. “Everyone needs to own Bear Stearns. This is a blue chip, high dividend paying FANG stock! If you don’t own it you will miss out on massive gains!”
After doing a quick search, I have yet to find a way to buy Bear Stearns, a stock that collapsed over 12 years ago.