Steve Bannon, White House chief strategist under President Donald Trump, has described his view of the US economy as “economic nationalism.”
Bannon — a former Goldman Sachs banker and editor of far-right website Breitbart — has advocated for greater trade protectionism, large government investment in infrastructure and negative interest rates — policies that many economists have said could harm the US economy.
In a profile by the Wall Street Journal’s Michael Bender, Bannon attributed his shift in economic ideals and distrust of institutions in part to a “Today” show segment featuring financial advice from CNBC’s Jim Cramer.
In October 2008, in the throes of the financial crisis, “Mad Money” host Cramer told people during a “Today” show appearance that “whatever money you may need for the next five years, please take it out of the stock market right now.”
Marty Bannon, Steve’s father, had been accumulating stock in AT&T — where he worked — throughout his career in order to give to his children. Marty, however, saw the Cramer segment and decided to sell all of his stock at around a $US100,000 loss according to the Journal.
Since that point, the S&P 500 total return has been 192% if dividends were reinvested and was up roughly 98% with dividends reinvested in the five years after Cramer’s call.
According to Bannon, this move shattered his confidence in institutions and helped form his brand of “economic nationalism,” telling the Journal that during the recession “the Marty Bannons of the world were getting washed out to sea, and nobody was paying attention to them.”
As noted by the Financial Times’ Matthew Klein, the advice from Cramer wasn’t necessarily bad — if you need cash at any point pulling funds out of the market is a viable way to raise that money. Additionally, panicking and selling during downturns is one of the basic mistakes that any investor should avoid.
Despite this, the losses sustained by his father clearly left Bannon feeling as if the elites of the US had been advantaged over average Americans.
The Journal said that Bannon felt that Wall Street had created the bubble that ultimately led to his father’s mistake.
“The government created this problem. The elites, they got bailed out. Everybody else in the country, whatever happened, happened, and they just had to move on,” Bannon told the Journal.
It should also be said that Cramer is not a financial adviser and that Marty Bannon sold his stock of his own accord, knowing the price of AT&T stock. Additionally, the opinion Bannon holds about the relative beneficiaries of the post-crisis recovery is not atypical of many Americans.
Regardless, it is interesting that one of the most influential voices on US economic policy could be based on one stock investing mistake made on the advice of a financial TV host.