Jim Cramer: winning CAPS?
I took a look at TrackJimCramer, the CAPS page that follows Jim Cramer's picks. (For those who don't know, Cramer is host of a CNBC show called "Mad Money" where he talks about stocks, sometimes 30 or 40 tickers given a thumbs up or thumbs down per hour.)
Here's what Dave Gardner, founder of The Motley Fool and inventor of CAPS, had to say about tracking Jim Cramer:
"One of the things we do on CAPS is we actually track Jim Cramer, so when Jim Cramer goes on TV on CNBC and the lightening round and says he thinks this stock is going to underperform or outperform, we over at CAPS are actually typing in everything that he is saying and so Jim Cramer is represented on CAPS. You can see how he is rated."
You can find that quote by clicking "Help" in the toolbar above and then clicking "An Interview with David Gardner.
So that's all very well and good. What they actually do is input Cramer's picks, give them a lifetime of 3 weeks, and never end them unless Cramer mentions the stock again. It's debatable if this is the best way to deal with these picks - maybe if they're felt to be short-term picks, they should actually be ended after three weeks - but we'll just look at it as a handicap Cramer has to overcome to perform well in CAPS.
How is Cramer doing?
He has a score of about 5800 and an accuracy of 46. The next closest player in score has about 4800 - trailing by almost 18%. (Accuracy scores can be gamed, as discussed in a previous post; obviously Cramer can't game his active CAPS scores the way an active CAPS player could. But he's competing in a universe of people that do.)
Given the way CAPS does the scoring, Cramer has a 77th percentile score. But I think that accuracy is not really important. When I invest money, I want to see a total gain. I don't care how many of my picks are right or wrong as long as I'm realizing a capital gain.
By that metric, I argue that Cramer is winning CAPS. I wonder how Dave Gardner feels about that?