Where do investment ideas come from and what makes one idea carry more weight than another? Sometimes it is your knowledge or interest in a certain area of business that stimulates you to consider an investment. Sometimes it is the opposite and you feel a need to expand your horizons. It might be the excitement or buzz around a certain company that perks your interest to look further. But often it is the source of the information that does the trick. Maybe sometimes it is a trick, and it is all about presentation.
In Kramer vs. Kramer the movie, winner of five Academy Awards, Dustin Hoffman and Meryl Streep played a husband and wife too preoccupied with their careers to put much energy into their family. In the end they separate and Mrs. Kramer gives up on her custody battle for her son concluding he would be better off with Mr. Kramer, who has lost his job in trying to maintain his bond with his son.
The Kramer/Cramer's of the investment world are at odds with each other too, but not in a personal relationship, only in their delivery of advice.
Here in investment advice and plot-thickening land we have been promoting our adopted K/Cramer's, Hilary and James. While James Cramer throws out stock opinions faster than Groucho Marx spits out one liners, Hilary Kramer takes a more staid approach offering fewer but deeper ideas about her stock picks and pans.
J. Cramer likes to roll up his sleeves and bring his experience and "Street cred" from his days in the trenches of the hedge fund management and day trading world. H. Kramer, on the other hand, fits the image of "First Lady" while not taking second position to anyone. Her message is more methodical and portrayed as having greater depth of analysis. Both K/Cramers have shed little light about their R&D backing up their market calls. Both have taken their Stock Guru personae to celebrity status and are treated as such on our BloggingStocks site.
While both investment world prognosticators offer plenty to think about, H. Kramer offers a more enlightened and understandable rationale by taking you through her considerations and presenting ideas that a broader range of investors might be able to understand and use.
J. Cramer of the TheStreet.com and CNBC notoriety, among other places, tends to inform us in a hyper-active, rapid-fire discourse that may only last moments before he has made his point and moved on to the next idea.
I can appreciate both deliveries and understand where they are coming from and who their audience is. Both have presented ideas that I think merit some consideration. There are also times I think their advice is either not useful or not backed up by enough facts. J. Cramer often drifts away from the investment world to enter the entertainment world to keep his "market share" (viewers) up even at the risk of uttering shear nonsense. H. Kramer gives us fewer ideas to ponder but does have a little more depth to her rationale. I wish they both would tell us about any research they put in their investment ideas or advice and what brought a particular recommendation to mind. What was the source? Why this idea instead of that?
J. Cramer offers so many ideas in a single week that following any portion of them would leave your head spinning. If you followed his buy recommendations that week you probably would have created the Cramer index of 100 stocks. There is a good chance 20 of them would be traded out the following week when he changed his mind, admitted an error or just turned out to be wrong. He always admonishes you to "do your homework." He is right about this -- you must do your homework. He is also right about something else. He wants you to diversify and not put all your eggs in one basket. Not original of course, but very important.
H. Kramer takes a less militant approach in her delivery and often pulls her punches when making a recommendation. I get the feeling sometimes she is already hedging and making sure she has a clear path to an exit, just in case she is wrong. J. Cramer is not less concerned about being wrong, he just seems more emotional and will scream his ideas out to the world from a mountain top (or television studio as the case may be). He speaks in more certain tones, while H. Kramer says you might want to consider this or that this could be a great buy.
Because J. Cramer shouts his recommendations with apparent certainty, he must shout about doing your homework. H. Kramer accomplishes the same thing but it is in her more tentative delivery. In my view J. Cramer is much more likely to get people excited about investing, which is a good thing, while H. Kramer is more likely to give you advice you can use. Investment ideas can come from anywhere, kids, the super market, the media or the K/Cramers.
If this blog reaches either of you K/Cramers, perhaps you could highlight your different approaches to investing in a real point-counterpoint, Kramer vs. Cramer investor extravaganza. After all, if it didn't work out you would not need to file for divorce or get into a custody battle.
Interested in reading more? Check out my other posts for Blogging Stocks here.
Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.