Say what you want about him or his track record but his recommendations carry a lot of momentum in the markets.
I'm holding a small position in a company that had absolutely no news or macro variables affecting it.
Lo and behold Cramer comes in and says to a caller not to buy and the next day the stock sinks 5%
He has a huge following of amateur DIY investors and their momentum can move stocks in the short term.
Surely you jest.Originally Posted by donald
As always, there are two sides of a coin.
Jim Cramer these days is mostly a theatrical character.
He loves to exude this type of persona - waving his hands, thumping the desk, barking "buy, buy, buy" or "sell, sell, sell".
His mad money show is mostly of entertainment value, IMO.
Or maybe to gather a list of ticker symbols for further research, and maybe once in a while, take a position in one out of a hundred.
However, it cannot be denied that he was a very successful hedge fund manager.
The guy must know how to pick stocks and how to make long/short bets.
During his career at Goldmac Sachs and then his own private fund, he averaged nearly 25% annualized returns over a period of 14 years - quite a venerable record.
He consistently beat the S&P 500 by wide margins.
Yes, there were occasional allegations of market manipulation and pumping, etc.
His record as a TV/radio personality is more controversial than his investing career.
Most of the controversies and manipulations occured during the TV years.
Anyhow, I wouldn't look to him for investing advice and neither is he a Warren Buffet.
But the guy has a great record and is no fool.
Cramer had a great record as a hedge fund manager, but a poor record as a TV host-cum-stock picker. See http://online.barrons.com/article/SB...755995100.html
The Barron's article is from 2007. I don't know what his more recent record is. His record of out-performance was made in the tech bubble days. I'm not sure if he was brilliant or just lucky. I found an older article from 2000 by David Dreman that criticizes Cramer. Cramer's fund gained an annual 30% per year in the last half of the 1990s. It sounds impressive - until you realize that the NasDaq100 (Cramer invested in tech) was up 56% annualized over the same time frame. See www.forbes.com/forbes/2000/0221/6504172a.html
I suspect Cramer's style "worked" in the internet/tech bubble days, but I'm not sure it would work in any other period. So was Cramer/fund manager skilled or lucky? I'm thinking the latter.
Last edited by Larry6417; 2011-07-17 at 12:42 PM. Reason: grammar
I watched his show (Mad Money) for a while, a few years ago. Lot of TV hype, bells and whistles, "cat calls"..( bulls snorting/bears growling etc).
It was a amusing one ring investment circus and he was good at pushing those buttons, and people's buttons too.."booyah!"
Whether he was lucky or just in the right segment of the stock market at the time, it's hard to tell.
It was an entertaining show to some..I got bored after a while, because it was always the same hype.."buy buy buy!" or "sell, sell, sell"..and if you went by his TV advice on some stock that you happened to have, and he
featured that on his show...well...
lets say... if Jesus asked you to walk on water and you KNEW you couldn't swim..would you still jump out of the boat and try it on blind faith?
His confession was that hedge fund managers always play the pump and dump game. Everyone does it.
I think all his investments are arms-length now and have been since he joined CNBC.
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