On 'Cramer's Way', EAFE and Shorting Oil

By Jim Wiandt

Heather Bell sent me this recent link to commentary from Jim Cramer, who in it is quoted as saying, among other things, "I'm going to tell you why I think my way, my method, is better than putting your money in a mutual fund, or an index fund, or playing around with exchange-traded funds," Cramer said.

Why do I think it's unlikely that I'll soon be pouring all of my money into his way?

I had a great recent discussion with a close friend of mine who is a serious trader (and a serious ETF guy as well). And he told me the humorous story of how he's made a fortune in recent years shorting Jim Cramer's picks. I searched on line, and there are even one link to people who show you how to do it (make money shorting Cramer).

Here's the sure fire short-Cramer plan (though I'm not pouring all my money into this one either).

Barron's also took a look at the performance of Cramer's picks.

Every once in a while, I find it cathartic to take a gratuitous shot at Cramer and the relentness noise machine of the financial media.  Listening to Cramer speak, I get a similar feeling to the one I get when I'm in a shopping mall, or listening to late night talk radio...vaguely nauseated, borderline self-righteous.

I've got a few other things to talk about.  First on Matt Hougan's EAFE reprise: EAFE is Dead! Long Live EAFE!  I think if you think EAFE is going away, then you think the S&P 500 is going to disappear...and you're vaguely deluded. 

One thing you'll get NO argument on is that there are much better ways to look at the total market and the range of investment opportunities in equities that these mostly large-cap, developed indexes. But for that you've got ACWI or now any number of other great options.  So I'm not quite sure what the debate is. There are not many sophisticated investors using EAFE for all of their international coverage.  At LEAST they're tinkering in EM, and increasingly they're looking at broader cap investment opportunities as well, or they should be.

Also - how about that market? I'm looking like a short-term market call genius lately.  Last week in Matt's 5 interesting ETFs no one is investing in column, I pointed out that you might do better right now to short the two petroleum-heavy offerings he highlighted.  And as Hugo blew by, oil continued to dive, now below $110 a barrel and (you read it here) headed not for $200, but below $100 a barrel.

It's logical: global economy falters, demand for commodities fall, near-term commodity prices come down.  Long-term, those prices are headed up, but near-term, not so much.

And the dollar has broken into early 2008 levels in the 1.43s (vs. the euro), so even the most pessimistic dollar observers now see that reversal I called a couple weeks ago and that we've talked about extensively.  It's fun even for us index guys to look at the market.

Comments

[Ant:]

You don't understand his picks. Hedge Funds, and other big houses ALWAYS short Cramer's picks. This is because there is a spike in buying right after his recommendations. Which is why you WAIT to buy his picks. They love to slams the longs.
Watch the show sometime, learn the game.

2008 Sep 03 08:23 AM