I've always thought that Cramer is shady, now we may have proof
Like many here at CAPS, I personally find CNBC's Jim Cramer unbelievably annoying. I feel like jamming a pencil in my ear and ripping out my eyeballs every time he pops up on my television.
Worse than his dancing-monkey antics and the inconsistency of his stock picks (particularly in the famed "Lightning Round" when he bounces around more from buy to sell on his picks like the Easter Bunny on speed), I've never really trusted him. I'm not sure why...I've never really had any specific reason to be distrustful of him. Its just that I am usually a fairly good judge of character and I always get a bad vibe from him and his stereotypical used car salesperson antics. He just seems like someone who would would steal his own grandmother’s teeth and sell them if he could.
This week's Barron's contains an eye-opening article on Mr. Cramer. Not surprisingly, his advice stinks, his picks from May to December of 2008 underperformed the S&P 500 by 5% (his bullish picks were especially bad).
What is interesting however is seeing evidence that Cramer's prepared stock picks are either being leaked or traded in advance to their airing on CNBC. This trend was first observed by doctoral students at Northwestern's Kellogg School back in 2006 and it continues today. In the recent seven-month period, Cramer's prepared long picks have risen 4% versus the S&P and his short picks have dropped 7% versus the S&P in the two weeks before they were officially aired.
The statistical evidence here is tough to dispute. If the show's picks aren't being leaked then at the very least Cramer is merely trying to play some sort of momentum game to make himself look great to viewers in the short run while hoping that they ignore the long-term performance of companies that he touts.
Check out these telling charts:
Cramer's Star Outshines His Stock Picks
Who has never and definitely will never purchase a stock based upon a Cramer recommendation