I'm Watching You, Jim Cramer

Financial theater's rock star is once again in Barron's crosshairs.

The weekly financial publication is ripping into Jim Cramer, leaning on research that suggests that his picks on CNBC's Mad Money are losing to an already sinking market.

"Cramer's recommendations underperform the market by most measures," Bill Alpert writes. "From May to December of last year, for example, the market lost about 30%. Heeding Cramer's Buys and Sells would have added another five percentage points to that loss."

Accusations are bound to fly, of course. Now that News Corp. (NYSE: NWS  ) owns Fox Business and Barron's parent Dow Jones, it's only natural for CNBC's largest stakeholder, General Electric (NYSE: GE  ) , to take the jabs personally. Derailing the success of Mad Money -- and it's now more popular than ever -- would be beneficial to Fox.

Or so the conspiracy theory goes.

In reality, no financial celebrity should be allowed to pontificate unchecked. I've ripped into Cramer in the past, given his zigzagging swings on Intuitive Surgical (Nasdaq: ISRG  ) .

Some would suggest that I also have an ax to grind. Fool.com competes with Cramer's TheStreet.com (Nasdaq: TSCM  ) for website readers and newsletter subscribers. I don't necessarily agree. I don't know too many enthusiasts of financial news that tether themselves exclusively to one site. What is good for one site operator should be good for the entire industry.

What would conspiracy theorists suggest, that no financial site or publication dare to question Cramer's track record on his fast-paced show? Does anyone really want him to be an unquestioned celebrity?

I don't expect anyone, Cramer included, to beat the market consistently. I am part of the analyst team for Rule Breakers, and we too got pounded in 2008. Accountability is important, and I think investors will learn more in down years than they ever will when everything is rising. However, when you put out a book called Watch TV, Get Rich you better darn well get used to the idea of scrutiny.

Me, I'm a fan of the Baron of Boo-yahs.

"Cramer is worth every penny," I wrote when he signed a contract extension with TheStreet.com last year. I won't always agree with what he says or the impulsive nature of dismissing due diligence for the sake of a lightning round, but I think his ambassadorial ways have helped make stock investing cool and interesting to mainstream audiences.

I rarely watch his show, though. In fact, I have never sat through an entire episode. That will change this week. I'm going to watch Mad Money every day this week. I'll be back the next morning, praising him when he's right and calling him out when he's wrong.

I don't for a second believe that I'm better than Cramer. I just think that his audience deserves a second opinion.

Bring it on, Jimbo.

Other Cramerica tales:

Join Rick and David Gardner as they keep investors updated on Rule Breakers recommendations like Intuitive Surgical by becoming a subscriber. If you want more than sound bites, try the newsletter and dig as deep as you want into all of the past and current issues -- for free -- for the next 30 days with a trial subscription.

Longtime Fool contributor Rick Munarriz is a fan of Cramer and even read his autobiography a few years ago. He does not own shares in any of the companies in this story, save for Intuitive Surgical. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 09, 2009, at 12:17 PM, AnnaDcc wrote:

    Cramer is wrong more often than he is right, so he does actually serve a purpose in predicting stock price. I just wait for Cramer to start bashing a stock, and then I know that it's a good time to buy. Likewise, when he puts out a recommendation to buy, I know that it's time to sell.

  • Report this Comment On February 09, 2009, at 12:50 PM, dargus wrote:

    I find Cramer entertaining and he can provide good information, especially in his interview segments. Clearly, he's targeting people who understand very little about the market. I think he's dangerous only because a little knowledge is a dangerous thing and his temperament can make his viewers a bit overzealous. To be fair, I think he realizes this and makes an effort to counter this effect. However, his erratic style probably trains people to make poor, impulsive decisions. I also have a running joke about him. I say he simply says to buy and sell everyone stock once each quarter so no matter what happens he can claim to be right. As far as attacking Cramer, is it fair to judge his performance over one year, especially last year?

  • Report this Comment On February 09, 2009, at 12:57 PM, Linksmanrjf wrote:

    I like AnnaDcc's idea, but I'm wondering if AnnaD can confirm that this strategy has worked by providing some specific examples.

  • Report this Comment On February 09, 2009, at 1:06 PM, PauvrePapillon wrote:

    Anecdotal evidence aside, you can track all of Jim Cramer’s picks at Motley Fool. He’s an interesting case. His accuracy rating is below 50 percent, which means he is wrong more often than he is right. However, his score is high, which means his winners make larger moves than his losers. His overall rating puts him in the 83rd percentile (82.67) and rates him an All-Star.

    http://caps.fool.com/player/trackjimcramer.aspx

    Pretty good but that still leaves him behind over 11,000 other Motley Fool prognosticators that don’t have their own TV show including, like this guy, about 600 or so in the 100th percentile…

    http://caps.fool.com/player/pauvrepapillon.aspx

    I guess it helps to yell a lot and generally act like a clown.

  • Report this Comment On February 09, 2009, at 5:59 PM, IIcx wrote:

    Any "Fool" that takes the "Street" at it's word isn't a "Fool"?

    It's a show about investing, get over the idea that Jim is ever going to give you a solid "Buy" in real time.

    Small Caps return -- Jim and the entire Squak crew pitch big caps - ads pay the rent for the noise -- ; )

  • Report this Comment On February 10, 2009, at 5:20 AM, GunLock123 wrote:

    You've never watched a show? Really??? lol! And to think you've been touting yourself a fan of Jim Cramer all these years...

  • Report this Comment On February 10, 2009, at 7:54 AM, TMFBreakerRick wrote:

    GunLock, yep. I've never sat through an entire hour of Mad Money (until last night). I have READ a ton by Cramer, and while channel surfing will tune in for a segment every so often.

  • Report this Comment On February 14, 2009, at 1:10 PM, hawkise wrote:

    I would hold to Mr. Cramer's rules of investing

    I would not buy a stock just cause he says so

    I bought FCX at 100. It went up to 105 and I sold cause I had the willies.

    FCX is an excellent company that is now trading around 30 with a low around 15.

    Buy and homework and watch. Jim is more of a momemtum trader with some investments since he recommended MS and GS. Sometimes as when MS when sub 10 last fall he does not recommend to go in with both feet.

    At least he gets out there and he preaches research. The lightining round does have the tenor of instant decisions but people love excietment and this is the gambling part of the show. Even with the Casino stocks buying them is a better investment most of the time than playing the slots but now not by much,

    However I'll never forget his warnings in September and I do not believe he caused that slide. Helped it a few points in the very short term but he went against the grain.

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