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I've always thought that Cramer is shady, now we may have proof

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February 09, 2009 – Comments (9)

 

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 

Deej

Who has never and definitely will never purchase a stock based upon a Cramer recommendation

9 Comments – Post Your Own

#1) On February 09, 2009 at 2:04 PM, RVAspeculator (29.00) wrote:

Doesn't he release his prepared picks an hour or so before the market closes to his "Real Money" subscribers?

That would explain the pump and dump.

PS:  I agree with you that Cramer is horrible.  I rec any blog saying anything bad about Cramer.  :)

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#2) On February 09, 2009 at 2:28 PM, motleyanimal (89.80) wrote:

I used to notice the same thing happening with stocks recommended in the many monthly financial magazines. The stock picks were already up 5%-10% in the week prior to publication.

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#3) On February 09, 2009 at 2:39 PM, blake303 (29.24) wrote:

Doesn't he release his prepared picks an hour or so before the market closes to his "Real Money" subscribers?

An hour wouldn't help you much. The run ups & downs begin over a week prior to broadcast date.

 

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#4) On February 09, 2009 at 3:06 PM, eldemonio (98.92) wrote:

Cramer is a D Bag.  Personally, I believe that he probably makes his picks based on short term growth and then, with his bad juju, sucks any positive climb out of the stock.  Ever heard of the Colbert Bump?  Cramer has the opposite working for him - let's call it the Cramer Screw Job.

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#5) On February 09, 2009 at 3:11 PM, Tastylunch (29.25) wrote:

Deej great post. I've been following this evolving story for a couple months now. Here's a couple other tidbits I found interetsing.

Here's a pots fro falkenblog onCramer's odd retruns at his hedge fun.

http://falkenblog.blogspot.com/2008/12/when-investors-dont-ask-questions.html

There seems to be an increasing amount of evidence that Cramer engages/d in shady tradig practices when he was at his hedge fund. He had minor madoff esque steady returns...

Here is Cramer talking about stock manipation and he seems to suggest at times he did this himself..

Yikes

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#6) On February 09, 2009 at 3:45 PM, hondo928 (99.65) wrote:

If he does release his picks prior to the show, then I'm suprised it hasn't been shut down earlier as easy front running.  The only thing is an hour won't help you since his show goes on after trading hours. I have always hated Cramer, mostly because I don't think he has any originallity in his picking, not because of performance, but he seems to come up with only stuff I come up with on my own...when I don't it's a bad pick.  I do like Fast Money however, I sat in the studio, and had to sign a bunch of papers, saying I wouldn't front run etc.  All of them were actually really cool.  Anyway Cramer is all talk I think most people know that.

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#7) On February 09, 2009 at 8:03 PM, masher41 (< 20) wrote:

Cramer has an incredibly bad haircut on top of everything else.  Statistically, the stock picks of people with bad haircuts trail the market by over 5%.

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#8) On February 09, 2009 at 11:59 PM, monksnake (38.32) wrote:

I've always noticed that his bull picks were stocks that recently bumped and bear picks were ones that recently dropped.

I just take is as that's the extent of his "research".

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#9) On February 13, 2009 at 6:51 PM, lenri (72.39) wrote:

Nice work Deej. I also dislike and distrust Cramer. I remember listening to him as a guest on talk radio a few years back and becoming intrigued but watching a few of his shows made up my mind on him forever. I guess it's just showmanship but if I want to see a circus act then I would go to the round top. Stock play is hard enough without some buffoon lampooning it. Maybe it's just his schtick but personally I think he should put that schtick up his own arse rather than that of the investors. My best free advice comes from the Fool universe but I must admit that I do enjoy the 4 1/2 hour investor segments on Saturday mornings on Fox News especially Neil Cavuto's show. Of course those advisors aren't much better than the Cramer idiot but I do enjoy the individual analyses.

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