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Jim Cramer - Investment Advice

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shane
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Mod's note: In a thread about news sources, someone mentioned Jim Cramer's program "Mad Money". This led to more detailed discussion, which I'm splitting into this thread. Since mentions of Cramer were mixed with other material, I am reproducing quotes from that thread here while leaving most of the posts in that original thread.

Television: I have CNBC on almost non-stop; my favorite show is Kudlow and Company and Mad Money.

Is Mad Money really worth your time? I always thought that show was more sensationalist as opposed to authentic.

Profit Motive is good. :)

I like the BBC as well, I should watch it more.

Mad Money---Definitely worth your time if you are interested in investing. Cramer is not a philosopher, he is a stock picker. He is extremely knowledgeable in every area of the market and his picks, which I follow closely, are almost always winners, but you gotta do your homework. The thing that makes him worth watching is he doesn't fake knowledge and he is an independent thinker.

His outrageous style is what makes him a tv worthy personality. There are probably 100 other people that can do his job but he is on tv because of his outrageous style. I find it entertaining and worth and hour of my time everyday.

Edited by softwareNerd
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I've never been able to bring myself to watch Cramer's show for more than a few minutes. I never liked him when he bounced up and down opposite Kudlow, and I like him even less now. What next: Howard Stern's brother touting stocks. This might be "good TV" to some, not to me. As for being good investment advice... I have not paid enough attention. However, from the little I have seen of the show: I am extremely suspicious of anyone who comes across as knowing whether to buy or sell nearly any stock a caller names, and to do so with such appearent confidence. As for his record as a great investor: I'm suspicious.

In financial reporting: I like FT too. I've also heard good things about IBD, but have not looked at it in any depth. Does anyone read that?

Most of the press has a left-bias, including Economist and WSJ. However, if one is looking for the news rather than the opinions, most of the suggestions above work fine. I get most of my non-financial news through NPR on radio, and from BBC and NYTimes RSS feeds. This is supplemented by reading some blogs: e.g. by Iraqis and Iranians.

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Mod's note: I have reproduced parts of posts from the original thread as quotations, to have enough conext in this thread. - sNerd

I have to very strongly disagree with you on this one. Cramer is a windbag that is a symbol of everything wrong with my industry. He is not an investor, he's a trader. Those are two very different things indeed. He also has a history of pumping up stocks that he is actively trying to sell. So he's talking up stocks that he's previously bought. It happened in the early 2000's down market and he's doing it again. He doesn't advocate discipline or research. He uses flashing lights and cute sounds like a sideshow barker getting people to buy a ticket to see the bearded lady. Giving him more credit than that is not very wise. He is good for brokerages and brokers because he gets people that would have otherwise bought good investments jump in and try to trade their way to wealth. You think after he destroyed his marriage, hedge fund business, and a public company he'd have learned to focus on something better. He has a right to be a windbag and appeal to the lowest common denominator but I think most people are better off elsewhere.

Yes, he is an independent thinker. But then there are a lot of independent thinkers out there. John Hoenig with Capitalist Pig and Jim Rodgers with Jim Rodgers are pretty good. Mind you, Hoenig and Rodgers have two vastly different views on investing. Fool.com and the Motley Fool radio program usually have genuinely good advice. But I digress.

What exactly is wrong with your industry? Is it bad to be a trader?

I consider Jim a trader and investor, he has stocks that he trades because he knows they are going to inflate and then he has his "charitable trust" which are his long-term trades. Then he has his short to mid-term trades where he will usually talk about some play between price targets. And he advocates discipline and research, the sounds and lights are the sideshow. A TV trader making recommendations can't inflate a stock that much, unless it is a company like taser with a low number of outstanding shares.

If anyone is interested you can see his performance for the year at www.yourmoneywatch.com. If you are worried about the objectivity of this site create a simulator on investopedia and see for yourself.

Cramer was suspected of pumping stocks, it was never proven. I am sure "Trading with the Enemy" is the biggest source of this criticism. Anybody can write a bitter memoir.

Edited by softwareNerd
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I have to very strongly disagree with you on this one. Cramer is a windbag that is a symbol of everything wrong with my industry. He is not an investor, he's a trader. Those are two very different things indeed. He also has a history of pumping up stocks that he is actively trying to sell. So he's talking up stocks that he's previously bought. It happened in the early 2000's down market and he's doing it again. He doesn't advocate discipline or research. He uses flashing lights and cute sounds like a sideshow barker getting people to buy a ticket to see the bearded lady. Giving him more credit than that is not very wise. He is good for brokerages and brokers because he gets people that would have otherwise bought good investments jump in and try to trade their way to wealth. You think after he destroyed his marriage, hedge fund business, and a public company he'd have learned to focus on something better. He has a right to be a windbag and appeal to the lowest common denominator but I think most people are better off elsewhere.

As much as I hate Cramer (mostly because he happens to be both stupid and annoying) I have been a stock trader for 8 years now and I never know squat about the financials of a company (other than by coincidence). While you can go the Warren Buffet / Gram (sic) and Dodd method, you cannot achieve the same returns (usually) that a trader could. Only problem is that it takes and ENOURMOUS amount of self-control and ability to not let the gain or loss of money affect you.

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As much as I hate Cramer (mostly because he happens to be both stupid and annoying) I have been a stock trader for 8 years now and I never know squat about the financials of a company (other than by coincidence). While you can go the Warren Buffet / Gram (sic) and Dodd method, you cannot achieve the same returns (usually) that a trader could. Only problem is that it takes and ENOURMOUS amount of self-control and ability to not let the gain or loss of money affect you.

I am guessing you are strictly a day and technical trader. Have you found it has become more difficult as more short-term traders enter the market?

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  • 6 months later...

Some professors from the Kellogg School of Management did a study of Cramer's on-TV recommendations. They only looked at the extremely short-term price-movements and make no comment on whether or not one should follow Cramer's advice. However, the recommendation they make is that one would "be wise to wait before purchasing the small stocks Cramer recommends". They found that the recommended stocks often witness an overnight jump in price, but are back to their original level (when the recommendation was made) in about 12 days. So, they recommend that Cramer's follower wait a couple of weeks. [Though, if everyone follows this new advice, the pattern will change!]

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  • 1 month later...
I've never been able to bring myself to watch Cramer's show for more than a few minutes. I never liked him when he bounced up and down opposite Kudlow, and I like him even less now. What next: Howard Stern's brother touting stocks. This might be "good TV" to some, not to me. As for being good investment advice... I have not paid enough attention. However, from the little I have seen of the show: I am extremely suspicious of anyone who comes across as knowing whether to buy or sell nearly any stock a caller names, and to do so with such appearent confidence. As for his record as a great investor: I'm suspicious.

In financial reporting: I like FT too. I've also heard good things about IBD, but have not looked at it in any depth. Does anyone read that?

Most of the press has a left-bias, including Economist and WSJ. However, if one is looking for the news rather than the opinions, most of the suggestions above work fine. I get most of my non-financial news through NPR on radio, and from BBC and NYTimes RSS feeds. This is supplemented by reading some blogs: e.g. by Iraqis and Iranians.

IBD is probably the best investment news source available. Used with the Web site, the paper is outstanding. I was an economics writer there a few years ago (now back in the mainstream media). I still read it almost every day.

In another thread I get into media bias from a journalists point of view, so I won't repeat it. But suffice it to say, the leftist bias is something I am always needing to be on my toes to watch. I don't think it's so much that it is on purpose, but simply that most journalists are liberal and that's how they see the world - that government is the solution to all our ills and that altruism is something everybody has a duty to practice.

IBD's concerted bias is to promote success and good business. It's the only paper I worked at that did not have a majority left bias in its newsroom.

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I haven't read IBD regularly, but when I've browsed through at the library, it has always seemed to have less news than the WSJ. The latter has some pretty in-depth news items. I should give IBD a serious look.

As for bias, with business-related media, the bias I'm most concerned about is a "short term bias". I find this to be a particular negative of CNBC. If the market is up two days in a row, they have all the optimists on, swearing that it is going to zoom through the roof; if the market is down two days later in the week, they have all the pessimists on. I preferred the style that Lou Rukheyser's brought to his PBS show: calm and reasoned contemplation of the short and long term as a whole.

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  • 1 year later...

Did anybody read his latest interview?

"Capitalism is supposed to be regulated," he says, citing the need to protect the public against dodgier hedge funds and sub-prime mortgage brokers. "The marketplace is really stupid, rapacious at the margins. It's a remarkably inefficient and brutal world."

"The market was so out of control that it almost destroyed capitalism as we know it but these guys thought it was just fine because the market's never wrong."It's that hubris - that belief in the market, that Ayn Rand 'Fountainhead' nonsense that became our mantra in our country. It's embarrassing!

I always thought that Cramer was a complete Jackass and here is the proof. But this is hardly surprising coming from a man who is basically the clown of Wall Street. With all the strangle holds on todays economy he thinks its still too free?

Off-camera, an encyclopaedic mind is evident as he sprinkles esoteric historical references into his rapid-fire analysis of America's economic crisis - for which he holds laissez-faire policies in Washington partly responsible.

Like I said what a jackass. Cramer needs to come back down to reality. Now wait here while I get my rope. :thumbsup:

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http://www.cxoadvisory.com/gurus/Cramer/

I would be careful of following any investment advice, even if from someone who has a track record of making money in the markets. You can still loose money even when getting good advice.

Also IBD has some great stock research resources such as proprietary industry rankings, relative strength, fundamentals, accumulation/distribution(from institutions), technical strength etc which are to be used in combination with their CANSLIM method of self-investing.

Edited by airborne
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I always thought that Cramer was a complete Jackass and here is the proof.

Thanks for posting the article Steel. I love this Cramer logic:

Citing rocketing food prices while crops are diverted to ethanol production, he compares the US Treasury secretary, Henry Paulson, to the 19th century British prime minister Lord John Russell, whose free market policies were blamed for exacerbating the Irish potato famine in the 1840s.

The government subsidizes ethanol production causing food prices to rise and the free market is to blame. What a clown.

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Jim Cramer is a moron. Watch Ayn Rand-free market fan Rick Santelli (who reports from the CBOE on the bond markets) call out Cramer on CNBC here.

http://youtube.com/watch?v=SGkrNJ19DSU

The context of this moment is that Cramer had just totally dug into a CNBC guest who had been wrong on the market. Right after that Santelli came in and promptly made him look like an ass.

HAHAH AND I totally forgot about this one, where Mark Haines totally digs into Cramer.

Edited by adrock3215
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  • 2 weeks later...
  • 3 months later...
Mod's note: In a thread about news sources, someone mentioned Jim Cramer's program "Mad Money". This led to more detailed discussion, which I'm splitting into this thread. Since mentions of Cramer were mixed with other material, I am reproducing quotes from that thread here while leaving most of the posts in that original thread.

Profit Motive is good. :)

I like the BBC as well, I should watch it more.

Mad Money---Definitely worth your time if you are interested in investing. Cramer is not a philosopher, he is a stock picker. He is extremely knowledgeable in every area of the market and his picks, which I follow closely, are almost always winners, but you gotta do your homework. The thing that makes him worth watching is he doesn't fake knowledge and he is an independent thinker.

His outrageous style is what makes him a tv worthy personality. There are probably 100 other people that can do his job but he is on tv because of his outrageous style. I find it entertaining and worth and hour of my time everyday.

Actually, I'd say far less on the accuracy. I'd have to dig up the website...but I remember reading his accuracy rating at a little under 50%...that's not superhuman if you ask me.

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  • 6 months later...

If anyone watches Cramer, and hasn't seen his Comedy Central interview, I strongly recommend it. I don't think anyone can watch it and conclude this is a person they want to take advice from. Part 1, part 2, part 3.

(Aside:Which is not to imply I agree with all that his interviewer -- Jon Stewart -- said.)

Edited by softwareNerd
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If anyone watches Cramer, and hasn't seen his Comedy Central interview, I strongly recommend it. I don't think anyone can watch it and conclude this is a person they want to take advice from. Part 1, part 2, part 3.

(Aside:Which is not to imply I agree with all that his interviewer -- Jon Stewart -- said.)

I don't understand what Stewart's issue is. What CNBC does is not criminal. CNBC does what they do because they are catering to a market. If there is some issue with the programming content, why is it CNBC's fault? They are in business to make a profit, not provide a public service to investors.

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They are in business to make a profit, not provide a public service to investors.
I think they would say that they are in business to make a profit by providing a paid service to investors.

Stewart is accusing CNBC of primarily aiming for entertainment, while willfully suppressing information that would help their investing viewers. I don't really agree with him. However, if one accepts that premise, I don't think one can brush it off as their way of making money. Legally, that may be fine; but, not ethically -- not if they truly position themselves as helping investors, while not attempting to do so, and actively suppressing information that would be helpful to investors.

I don't accept Stewart's premise, though. I think CNBC -- in aggregate -- does try to give investors what they consider to be helpful information. I think they are caught up with the short-term focus that has spread to many businesses and analysts. In that, they simply reflect the bulk of the intellectual culture in their field, as one would expect a major news-organization to do. They are not opinion leaders, they will follow and report on the herd without much consciousness of this being a herd headed in the wrong direction.

As evidence of complicity, Stewart brings up the tapes where Cramer admits to trying to pump some stock up or down with rumors; but, that's not what got the current market to where it is. So, that old Cramer video -- while showing Cramer in a bad light -- really did not support Stewart's thesis.

To recap: If we accept Stewart's premise that CNBC was somehow consciously complicit in cheerleading people that they knew would fail and cause losses to their viewing public, then CNBC would be morally culpable. However, I don't accept his premise; I think they're not that bright.

Edited by softwareNerd
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Stewart is accusing CNBC of primarily aiming for entertainment, while willfully suppressing information that would help their investing viewers. I don't really agree with him. However, if one accepts that premise, I don't think one can brush it off as their way of making money. Legally, that may be fine; but, not ethically -- not if they truly position themselves as helping investors, while not attempting to do so, and actively suppressing information that would be helpful to investors.

I think that clarifies it a bit, but I still don't see what the big deal is. CNBC is in business to make money. The way CNBC makes money is by attracting large amounts of viewers. The way CNBC can attract large amounts of viewers is by airing the interesting, engaging and entertaining programming that viewers demand about finance, e.g. Cramer's show. As you say, there is nothing I have seen on Cramer's show which leads me to believe that he is intentionally doing anything. What would be his motivation anyway?

Stewart claims that CNBC lets executives come on air and spread false news about their companies. So what? Has this idiot ever listened to an earnings call? Executives always act like their company is fine, or in a condition to improve in the near future, despite what the facts are. Often times that's actually what executives believe, just like the small business owner who won't admit that his business is failing. That's why we have these people on Wall St. called research analysts. Stewart could make his case much more convincing if he brought in some guy who heard a recommendation on CNBC, and then ran as fast as he could to the phone to call his broker and make a trade. I suspect he won't find a single person on earth.

Stewart makes money by offering a comedy show. His show is not a news show, nor is it done in the public interest. Incidentally, he offers a lot of news on his show and presumably does things that interest the public (this CNBC feud for example). But because CNBC covers financial markets, he thinks that things should be different and he feels justified in calling out the network?

Edited by adrock3215
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Well, consider this exchange (from memory, close but not verbatim):

Stewart: I know you want to make [finance/investing] interesting; but, it's not a fucking game! That makes me angry...

[Earlier, he spoke talking about the fact that people have lost tons of money in their 401-Ks.]

Cramer: Absolutely, we can do a better job...

At this point, Cramer could have said: "Are you nuts! Our show is primarily entertainment. We don't expect people to use the things we say in their actual investing."

Why didn't Cramer respond like that?

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I was listening to Peter Schiff’s podcast this week and he mentioned the Daily Show was episode about CNBC and how none of their analyst saw the recession coming. He pointed out that he is frequently on CNBC and has been predicting this very recession for years. He requested an interview but he said the Daily show kept coming up with “unusual “reasons why they could not have him on.

It seems that the daily show didn’t want Schiff screwing up their rant and wants it to appear that no one saw this coming.

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It seems that the daily show didn’t want Schiff screwing up their rant and wants it to appear that no one saw this coming.

Well, yes. The Daily Show is a comedy show which goofs on the media from a liberal perspective. I think Stewart would have no problem admitting that he can't really take on Schiff in a serious debate. But he doesn't do serious debates, he does comedy: The reason why he had Cramer on is because everybody knows him, he's so easy to parody.(It wasn't to give it an honest try in debating him) If he were to attack Peter Schiff the same way, people would stare and boo, because it would come across as unfounded.

Basically, there is no reason to have serious ecoomists on the Daily Show.

And I really don't think there's a need to publicly challenge John Stewart and his views. If Schiff wishes to challenge someone, challenge the idiots who accept his views as facts and news (if there are such people, I'm not sure there are). Stewart is doing a legitimate job-it is called satire. He isn't running for office, or giving out advice and opinions, the way Al Franken or O'Reilly and Cramer are.

The best one could do against John Stewart is not come across as comical on television.(the way Peter Schiff would look, getting up in arms about views expressed on Comedy Central.) Then, the only way he can attack you is by ruining his own show, and exposing himself as a target. I doubt he'll do that after all these years.

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