Last week Barron's [subscription required] socked it to Mr. Booyah!, James Cramer, with a cover story highlighting his overall mediocre stock-picks performance and the associated antics on his highly rated (for cable) CNBC Mad Money show.
There have been many follow up stories reflecting on the Barron's article and I thought I had to add my voice, not to jump on to the bandwagon, but to share my own take. Differing tracking sites weighed in on how successful Cramer has been (or not) in his stock picking. As I read Barron's own take and the many twisted tales portrayed by CNBC and TheStreet.com, I thought about my own tracking. You see, I have actually been tracking Cramer's nine picks for the year and sharing it with our readers each month. This month I posted Chasing Value 2007 picks : Google (GOOG) runs up, Cramer runs down, indices worse and Cramer did in fact beat the indices through the end of July.
Here is an excerpt:
As you can see Cramer did eke out a better return than the Indices, however as Barron's points out and I definitely support, this does not include fees and other costs. I will be posting again next week the results through August. The review includes my annual picks and a comparison to just owning Google Inc. (NASDAQ: GOOG).
Many years ago, when James Cramer was not so overwhelmed with his celebrity status he had time to respond to emails, I corresponded with him for a while. Back then he made some great calls, the best being his call to get out of telecom before anyone else was shouting it was doomed. He was right. He has made many good calls over the years and he has much wisdom to share. But if you follow his advice, advice by the thousands, on his Mad Money show, I'm afraid you will be a loser.
I have written about Cramer often. Earlier in the year I posted Cramer pumps Tech, then hates it days later and The Cramer "Show" can cost you big! and these two stories indicate why I think following Cramer's show is a losing proposition. It is entertaining to some, but to me it has become unwatchable. I liked his radio show a couple years back. Cramer has been on my email list and receives my stories, although he has not commented lately.
In closing, I would like to add that I think Cramer could beat the indices if that was his sole focus. However, that is not his sole focus. He is unfocused and therefore following his picks is not a good idea. Besides, if you make thousands of picks each year, do you not resemble the indices, except with more costs if you actually trade on the calls? There are better places to learn about investing.
To verify my track record, including bad calls, read Chasing Value and Serious Money.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
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Reader Comments (Page 1 of 1)
8-27-2007 @ 11:06PM
Hatfield said...
Thought provoking article, but not valid. To average out all Cramer's picks & match them to the indexes is an insult not just to Cramer, but to the many of us "ordinary folk" who have benefitted tremendously from his show. Such averaging is irrelevant because we don't BUY every pick. If we use Cramer's show the way HE TELLS US TO USE IT, we make a boatload. Cramer himself got so frustrated with the misuse of his show that he wrote a BOOK to tell us how to -- and how NOT to -- use his program. Long live Jim Cramer, King of the little people, King of Cramerica!
8-28-2007 @ 11:42AM
Young Livermore said...
Please will someone inform these so called market gurus that's hating on Cramer to at least compare him in the context he should be compared. Cramer is just giving advice on picks he doesn't say do this or do that he just want you to start thinking about why he chose to do this or do that. The people who just trade what he says should lose money because thats not what he is telling you. He's basically saying I like this stock cause of this reason I like this stock cause of this reason and these are the things you should be looking for in this company and so on. He just trying to educate the non-hedge fund community on how to think like one. Cramer personally is the only reason why I started investing in the first place. More money in the market is good for everyone. And anyway its a bunch of million dollar hedge fund players with doctorate who have not beat the s&p 500 and lost their clients money. It happens people lose and they make money if it was easy you guys wouldn't have nothing to write about. So stop Hating and get your mad money show like a true capitalist would
8-28-2007 @ 1:50PM
Sheldon L said...
Hatfield,
"ordinary folk" should not be stock picking. If you are having some luck, either you are not ordinary or you are very very lucky. Picking among the picks is a fools game and Cramers show is for entertainment primarily and investing secondarily. Cramer has said this on numerous ocassions himself and if you missed it then you are not listening as closely as you claim.