Once again, Barron's Bill Alpert takes down Jim Cramer (previously). From May-December 2008, Alpert says, Cramer's Buy calls trailed the market by 10%, while his Sells beat by 5% (see this chart). In the aggregate, someone playing every one of Cramer's calls (is there anyone, anywhere that actually does this?) would have fared 5% worse than just stuffing his money in some index fund - minus, of course, the ubiquitous management fees.
If CNBC - which hosts Cramer's Mad Money show among other segments - was evasive last time Alpert stuck it to Jim, this round they're downright dismissive, claiming Alpert is no more than a shill for Fox Business TV (owned by News Corp. (NASDAQ:NWS), which also owns Barron's).
"You wrote a premeditated hatchet job to curry favor with your new bosses at News Corp.," said CNBC's Steel on Friday. "[Cramer] doesn't consider you a journalist."
"Barron's and News Corp.'s repeated attempts to take Jim down have been a complete and utter failure."
CNBC counters that Cramer's advice is "nuanced, complex and often qualified on either a future price or a specific market event," noting even the official Mad Money database sometimes misinterprets Cramer - for example, putting down a Buy recommendation when Cramer meant it sarcastically (wow!).
Ok, but Cramer gives his stamp of approval to the Mad Money Performance database, saying, "I turn my performance monitoring over to this unique service and I thank you for taking the time to monitor me, as you should, regularly, to be sure that I am doing my job in trying to make you Mad Money."
CNBC's Steel suggests Barron's Alpert join him in watching six months of recorded shows so that he could decide whether Cramer really meant that viewers should buy or sell a stock, a proposition Alpert ridicules. "CNBC wanted to debate its horse bets after knowing how the races ended."
Noteworthy is Alpert's discussion of the movement of Cramer stock picks and pans before they're hatched - a phenomenon which has led some to question the security surrounding Cramer's show, and whether "information leakage" is allowing those in the know to buy/sell ahead of the crowd.
Our research reveals that the stocks Cramer picks as Buys have been rising versus the market for several days in advance of his show, while his Sells have been falling.
The effect is quite dramatic (see chart): Mad Money Buys rose 4% in the two weeks ahead of their recommendation, while Sells dropped 7% over the same period. CNBC explains that Cramer's picks are primarily momentum plays: "Jim likes to recommend 'what is working.' So it is no surprise there would be movement in these stocks prior to Jim mentioning them." Alpert doesn't outright dispute the theory. But he does wonder why when it comes to Cramer's Lightning Round picks - which deal only with stocks mentioned by call-in watchers - there are almost no market-excess moves before Buys and Sells (see this chart).
Bottom line: "By most measures, Jim Cramer did worse than the market, but CNBC and the TV journalist have taken few steps to clarify his exact performance for his show's growing audience."
Not sure how many people will be shocked by Alpert's research. Nor by CNBC's evasiveness. As Alpert notes, Barron's 2008 recommendations fared no better than Cramer's.
He's obviously annoyed - perhaps justifiably - at being given the runaround, and CNBC's lack of transparency. Still, Barron's and CNBC are in the business of selling a product, a TV show or a magazine, that purportedly makes us better investors - yet both seem to be doing more damage than good.
Guys, how about you stop your bickering - and spend more time helping people make intelligent investment decisions.