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ikkyu2 (99.52)

Jim Cramer: winning CAPS?

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October 16, 2007 – Comments (7)

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?

7 Comments – Post Your Own

#1) On October 16, 2007 at 3:38 AM, saunafool (98.68) wrote:

You will note that Jim Cramer also has 1714 active picks. The normal CAPS player is limited to 200 active picks. If you gain more on your  winners than you lose on your losers, then more picks equals a higher score.

This is not necessarily what you want with your real money portfolio. First, there is no way to own 1714 stocks unless you are managing a multi-billion dollar fund. Second, Cramer's average pick score is only about 3.5.

For your real money, the average pick score is the most important number. If you only have 5 stocks, but your "average" is beating the market by 20 points, you are making big money. Even the accuracy doesn't mean much (other than influencing how well you sleep at night).

At the end, CAPS is a game, and your real money is your real money. If I had to put my real money with a CAPS player, it would be the one who had a lot of active picks with a very high average score (like me, with my average pick score of about 13). 

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#2) On October 16, 2007 at 3:50 AM, cluelessmorgan (98.09) wrote:

wow, I'm more accurate that Cramer.  Pretty sad. 

I did get one pick idea from him once.  I researched it heavily first though.  ;)

 The only good thing about another market downturn would be to get to watch Cramer go nuts again and blow smoke out of his ears and watch his head explode.  No, I wouldn't want that really; he's too funny not to keep around :D

 

 

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#3) On October 16, 2007 at 3:52 AM, ikkyu2 (99.52) wrote:

Ah, I didn't realize that the total active picks number was different for Cramer than for the average player.  Thanks for pointing that out.

Comparisons are odious; I shall quit making them.

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#4) On October 16, 2007 at 8:17 AM, TMFBent (99.84) wrote:

Aronen, don't get hung up on average score per pick. One, we know a single lucky call can move the average a ton. Moreover, average score per pick, in the context of caps, is also a misleading measurement, because is doesn't account for pick duration. Also doesn't account for multiple picks per ticker.

In other words, if I make 10 calls on one ticker in one year, for 100 points, you'll see an average per pick of 10. Someone who made a single call on one ticker and gained 40 would show that. Who's doing better? What if player one made those 10 calls across a 6-month period? (Even if you assumed 50% friction fees for a "real life" scenario, number one would be beating number two like a NY Yankee...)

I've asked the caps guys to look at this, but nothin' changing as far as I know. IMO, we should see annualized scores, total scores per ticker, and a few other metrics in order to get a better idea of what's going on.

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#5) On October 16, 2007 at 8:41 AM, EPS100Momentum (71.71) wrote:

I was just going to post what you quick guys already did , that Cramer has for some reason the ability to make over 1700 active picks while us lemmings are limited to only 200 active picks.

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#6) On October 16, 2007 at 8:44 AM, EPS100Momentum (71.71) wrote:

I am aiming on beating CRAMER's point total with my small 200 active picks compared to his 1700 active picks. Only 1000+ behind.

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#7) On October 16, 2007 at 12:08 PM, ikkyu2 (99.52) wrote:

Yeah, agreed, TMFBent, average score per pick the way it's implemented here is a simply ridiculous stat.  There's no reason ever to look at it or consider it for any purpose.

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