Boo-yah! Barron's Shorts Cramer 11 comments
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Well, it turns out to be only partly true. Jim Cramer is the subject of this weeks Barron's cover story: Shorting Cramer. While I would surmise he isn't thrilled with the coverage, he shouldn't be all that perturbed.
In our day, we've seen some media hatchet jobs. All things considered, this was a relatively mild ctitique.
The ever popular Ubiq-cerpt:™
THANKS TO HIS NIGHTLY CNBC SHOW Mad Money, Jim Cramer has become the chief cheerleader for the bull market, or what was the bull market until a few weeks ago. Last spring, he was giddily exhorting the Dow Jones Industrial Average toward 15,000, with no troubles in sight. Earlier this month, as the Dow tumbled in the direction of 13,000, he had an on-air meltdown, complete with screaming, sobs and predictions of financial doom. The clip quickly made the rounds on YouTube. Friday, after the Fed cut the discount rate, he said that the Dow's run to 14,500 had begun. With dramatic pronouncements like that, it's no wonder that more than 100,000 viewers tune in each weeknight for his antic mashup of sound effects, Streetwise advice and stock picks.
It's those stock picks that caught our attention. Cramer, by all accounts, had a stellar career as a hedge-fund manager. And he is held out by CNBC as the guy who can help viewers make big money. But a comprehensive and careful review of his stock picks by Barron's finds that his picks haven't beaten the market. Over the past two years, viewers holding Cramer's stocks would be up 12% while the Dow rose 22% and the S&P 500 16%, according to a record of 1,300 of the CNBC star's Buy recommendations compiled by YourMoneyWatch.com, a Website run by a retired stock analyst and loyal Cramer-watcher.
The Barron's article included two charts. The one analyzing Cramer's 3458+ stock picks (see 2nd chart below) was not the one that really mattered to me.
Rather, it was the chart of TheStreet.com (TSCM) itself.
I first mentioned TSCM's stock as a buy back on November 15, 2004 and then again on February 06, 2006 and yet again on April 26, 2006.
Since that first mention, the stock price has since tripled . . .
click to enlarge
Source:
Shorting Cramer
The Cramer Effect -- and Defect
BILL ALPERT
Barron's, August 20, 2007
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This article has 11 comments:
The calls are screened. I have NEVER heard a pissed-off person call the show. I have never heard anyone call the show who bashed Cramer.
You are very naive if you don't think the calls are screened. The question becomes to what extent they are screened. And I believe they screen them to make Cramer look better than he is, by getting more people saying "thank you" than "I lost money."
Cramer is entertaining, provokative, and usually challenges you to think about things in ways you may not have previously. That said, his picks are usually no better or worse than anyone else's. Urging people to buy CAT in mid-July---on the premise that because it hit 80, it was going to 120---was his own brand of "voodoo economics", and clearly hasn't panned out. Around the same time, he told people to "buy tech like it's 1995", shortly before the recent credit crunch/ unraveling that sent stocks plummeting.
Cramer's talent is in educating new retail investors about the homework they should do before investing in a stock--listening to conference calls/earnings transcripts, reviewing fundamentals, etc. Sadly, we're now seeing the limitations of that approach, as hedge funds desperate to raise cash sell off "the good stuff", lke SLB, AAPL, etc., sending their prices plummeting---even after stellar earnings reports. It's getting tougher for the smaller investors--whom Cramer purports to champion--to make money, even when they work hard and do their homework.
Cramer does not add value based on the period analyzed, and investors should be very dubious of his emotionally charged advice.
This is true statement about the vast majority of money managers, and I would guess that the one's that seek attention through journalism are the most dangerous to novice investors.
Unfortunately the best advice Cramer can give to the folks that are entertained by him is to simply invest in an index fund or diversified basket of ETF's. But even though Cramer likely knows that he adds no value, his schtick would not play well if it were preceded by his own admonitions about the financially dangerous spoutings to follow.
Whether Cramer actually added value while he was a hedge fund manager is difficult to know - even so-called sophisticated investors (this usually is just slang for people that can afford to lose money) are pretty clueless about performance evaluation and attribution.
It's a good service for Barron's to point out Cramer's poor track record, but it's not too tough to see his lack of value by listening to his words and following up the results as this internet blogger did:
www.youtube.com/watch?...
You have to give it to Cramer for putting himself up to scrutiny........the unfortunate reality is that he offers little beyond smart sounding conjecture.
johnny b. dog
p.s. those that talk do not know. those that know do not talk.
Even if his picks are right 40% of the time thats doing pretty good.
When you stick your head above the crowd, you will get tomatoes.
In warfare the military shoots at dangerous targets. In business you pretty well do the same think.
Cramer is a product of the 90's bull market......he was an aggressive money manager with a buy the dips mentality - it worked. If he had reached his prime years in the early 70's with that mentality, nobody would know his name, and he'd have alot less money.
Keep in mind that folks like Cramer are getting their wealth by skimming money from their clients risk taking.......not their own (for the most part). Of course, this is how it's always worked on Wall Street.
A certain part of the Barron's article is unfair in that it is difficult to measure the so-called performance of a clown spouting his opinion in order to entertain retiree's that can't get excited from their own adventures in life (ergo they watch television and pretend they are involved in something). Babbling on the boob tube about this company or that company.............
There is only one reasonable way to measure Cramer's performance: the Nielsen ratings !
His phony familiarity with every public company that is publicly traded is truly absurd......."that's a great company", "great management", "my buddy at Anally is money in the bank", bla, bla, bla, bla, bla........
And like many TV personalities, Cramer presumably appreciates how absurd it is that he gets paid for such nonsense.................
Is Barry Ritholtz opinion any better than Cramer's ?
Generally I get the sense that Ritholtz is moderately more rigorous than Cramer, who seems to believe his gut-instinct-ometer is worth something despite the contrary evidence.
At least Ritholtz educational background demonstrates an interest in the analytical/statistical... aspects of the business........Cramer was initially a journalism type / people person........I don't care what he did at Goldman, you can tell alot about a person by the education they choose...........
Of course in the end for Ritholtz to add value as a journalist his readers need to demand he back up his arguments with reasonable evidence........unfort... when you reach a certain poplularity you can just crank out a whole lotta random chit-chat.......and it plays.
why does it play ?
the goal is to have content surrounding the advertising......as long as the content plays to the suckers, the underlying basis of the arguments really doesn't matter much.
regards, johnny b. dog
selfinvestors.com/trad.../