On The 10 Year Anniversary Of Mad Money, An Objective Look At Cramer's Recommendations

Tyler Durden's picture

As CNBC 'celebrates' 10 years of Mad Money, we thought a look back at Jim Cramer's "Featured" Picks performance would help "home-players" in judging their investment advice going forward...

Via Pundit Tracker blog,

For those who are unaware, Cramer is the host of the popular show Mad Money on CNBC, providing general financial advice as well as specific stock recommendations.

Cramer currently has an F grade on PunditTracker.com. Let’s walk through how we arrive at that score.

First, here are the parameters by which we evaluate Cramer’s stock recommendations:

  • We started tracking his picks on January 1, 2011.
  • We score only his “Featured” picks on Mad Money and not those made in other segments such as the “Lightning Round.” Our reasoning is that the Featured picks are unsolicited recommendations for which Cramer has presumably done more research than for picks given as live responses to viewer questions.
  • We measure the performance of his picks relative to that of the S&P 500 index over the corresponding period.
  • We assume a three-month holding period, unless Cramer reverses his stance on a given name (e.g. says Buy XYZ and then says Sell XYZ within the three months), in which case we “close out” the original recommendation. This holding period is based on the idea that Cramer tends to revisit his picks each quarter. (Note: We also have calculated performance using a six-month holding period; we are happy to provide the data if there is interest).
  • The baseline stock price is the opening price two days after the recommendation is made, in order to account for any day-one “Cramer bump” effect.
  • The hit rate is the percentage of Cramer’s picks that outperform the index. We equate sell ratings to short recommendations (i.e. they are scored as correct if the stock underperforms the S&P).

With the parameters out of the way, let’s now delve into the details of Cramer’s performance.

Given our assumed three-month holding period, we have now graded two years worth of Cramer’s picks: those made from January 2011 through December 2012.  That amounts to 552 calls overall, of which 254 outperformed the index (46% hit rate).

 

On average, Cramer’s picks returned -0.08% versus the 1.35% S&P 500 return over the corresponding period.

 

That amounts to 142 basis points of quarterly underperformance, or 568 basis points on an annualized basis, which amounts to an F grade in our grading system. (We award an A for 500+ basis points of annual equity outperformance and an F for 500+ basis points of underperformance).

Let’s now break down his results by year and by quarter:

 

Here were Cramer’s ten best and worst picks during the two years:

 

Can you (or your cat) pick stocks better than Jim Cramer?

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And finally...

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All of which helps explains:

 

Compared to March 2005 when he first launched, the show is down 11% in total viewers and down 35% in the A25-54 demo

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RockRiver's picture

If Cramer would have gotten an A or B would you report it?

 

Just axin'

pendragon's picture

exactly. he ain't on cnbs for his stock picking ability anyway

idea_hamster's picture

So the “Worst Picks” list doesn’t include “There is nothing wrong with Lehamn”?

Um, OK . . . I guess.

The Juggernaut's picture

Cramer is a fucking loser and sounds like Bobcat Goldthwait. Sorry to have offended Bobcat.

EmmittFitzhume's picture

I want to know how he does in a down market

knukles's picture

I have 2 sister miniature Schnauzers.  The smaller one of the two, the runt of the litter, is peripatetic, like a Jack Russel Terrier  ....  best with hyperactive children.  She's also the smart one.  The larger one is about as laid back as is possible, loves to eat and have her belly rubbed.  She's not as smart, by a long shot, as her little sister.  They both have accounts at BoAML.  The slower ones account out-preformed Cramer by 750 bp over the same time frame.  I've actually recommended her to Vicki Nuland for the next ambassadorship to Kenya.  I think Mrs Nuland thinks I'm being mean and humorously cynical.  I'm thinking more, patriotic. 

Shit happens.  Well done, Jimmy

BrosephStiglitz's picture

Hey, maybe we can dress the smart one up in a party hat and they can give stock-picking advice.  People love dogs, and they love something for nothing.  It's a win-win.  The ratings will be astronomical.

(But seriously, anyone watching fucking CNBC for financial tips, and expecting a loud-mouthed jackass who dispenses epic levels of "advice" for free probably deserves what they get.  

Little hint here Cramer fans*.. nothing in life comes free, including stock market returns.  Due dilligence, risk management, and market research take a lot of time and energy.  Anyone who claims to have a good handle on the market [myself included] and is willing to dispense it without receiving something in return is probably going to fuck you over.

^This is probably the best advice me, or anyone else can give you on this website.  Hard work is proportionate with your payoff.  The only question is the nature of the work, how efficient you are, and the wider market trends.)

*Not that they will read this shit anyway. Because, you know, BTFD.

chinoslims's picture

hey knuckles, maybe can have a show like Cesar Milan and teach dogs to pick stocks.  Id watch that

Save_America1st's picture

What else would you expect out of a side-show clown on a worthless fake "business" channel that nobody watches?

Headbanger's picture

Fuck you Cramer Philly boy douche bag.

No offense to otha Philly boy douche bags..

Yo!

Headbanger's picture

<<--Pat's

<<--Geno's

Yo.. What!?

Headbanger's picture

AAAAAAAHHHHHHHHHHHH!!

Where do you get this shit!?

Greenskeeper_Carl's picture

thats not the point of the article. The point of the article is pointing out the shysters like cramer that pervade the airwaves, especially on CNBS. They pay no attention to the underlying reality, and only pimp stocks to the gullible masses. he is shady as hell too. check out www.deepcapture.com

kliguy38's picture

quintessential douche bag.......so that makes him a perfect CNBS whore

Harbanger's picture

Cramer had the right answer but the tape was edited by CNBC.  Brian Williams can backup the story as being true.

813kml's picture

Might have to wait on that, Brian Williams is currently deep undercover working on a sting with Mata Hari and Elvis.

TheReplacement's picture

Are they finally gonna break Corzine outta prison?

knukles's picture

Brian Williams is gonna cover the escape and have the first interview.
Then do a reopening of Al Capone's basement wall with Geraldo Rubbiebeara

Jethro's picture

...not everybody is qualified to work at McDonalds?

813kml's picture

Can't wait til Cramer's back selling used cars, would love to run him down with one of his own lemons.

Thirst Mutilator's picture

Leonard the Bald Monkey

Hubbs's picture

At least we can select Cramer as the flag bearer to lead the parade of the Wall Street Fraudsters that have consumed middle class America.

Squid Viscous's picture

He loves to say momo stocks are going "much higher" even after they have already bounced on "better than expected" 4Q...like WHR, AZO, NFLX,  ... all now "much lower" 

Nafets93's picture

I bet it was Peter Schiff who wrote him that question... ^.^

B2u's picture

Smell a bottom?  That must be Obama's ass.

venturen's picture

Reggie I wouldn't brag about that.

rum_runner's picture

Next we'll learn that Fox News isn't fair and balanced nor is Obama anything more than flapping lips when it comes to a transparent administration.

Jebus, at this point if Boehner was caught mounting Hillary after hours on the floor of the Congress on top of the American flag while Sheldon sits nearby and clicks his claws together while muttering "excellent.. excellent"  I'd pretty much shrug.

TheReplacement's picture

What a horrible visual to describe an even worse truth.

GeezerGeek's picture

I'd pretty much puke. Unless the lights were turned off, anyway.

savagegoose's picture

cramer has his uses, i see as a contrarian indicator, if he says  sell XYS its a safe bet to buy XYS. i recall he said " buy silver its going to da moon"at $50.

 

neuronius's picture

Don't take your money out of Bear, that's SILLY!  Don't be SILLY!

venturen's picture

didn't S&P gain 16% in 2012? What are these numbers?

Spungo's picture

"for which Cramer has presumably done more research"

LOL

CHX's picture

Creamer, Jim Creamer.

Deathstar's picture

This guy is a farce. I remember back in 2006 when he was screaming buy buy buy! on the radio, I called him a "Fuckin used car salesman" because I saw the bust coming.

In 2008 I heard him scream buy buy buy! In stocks in the spring of that year and I thought to myself, this fuckin guy is reckless. In June of that year I told both of my divorced parents that they had 3 months to get everything out. Neither one listened, of course.

The guy is a clown with dollar signs painted all over him for comedic effect.

Lets see if he calls the crash in aug-sept of this year....

Frank N. Beans's picture

According to the last chart, CNBC better pray for another market crash to boost their ratings.

Cheapie's picture

November 2006, Cramer pimped Fannie Mae, then selling for about $65.00. Cramer shrieked that the new dem congress meant that they could "start making some real money".

About three years later, Fannie Mae was going for about .25. Nice one Jim.

 

Chuck Knoblauch's picture

Jim is a great entertainer and salesman.

That's it.

Augustus's picture

He makes it seem as if he actually knows something about a subject.  Generally he does not have a clue.  Generally he is most clueless about the oil industry.

chinoslims's picture

Cant ishares come out with the Cramer triple inverse fund?

Lumberjack's picture

Short bastard shorting suckers. Say that 3 times fast.

The Shape's picture

It's worth remembering Cramer's hedge fund returned 28% the same year his public stock picks returned -82%.

It must be grand to put a whole bunch of idiots on the wrong side of your personal trades.

Nimby's picture

First and foremost: fuck Jim Cramer.  

That said, how is it an "objective" look when you just pick a two-year period arbitrarily?  Did I miss something?  Is there some important reason these two years were picked?