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13 comments:
Hey Roger. I used to watch Cramer regularly, but now only tune in when there's a particular market development and I'm looking for opinions from different seers who are in the business. Ditto for Fast Money, Barry, Mish, and most of the talking heads on CNBC.
Jim thinks like the hedge fund manager that he was; he's not Hussman. His focus is, after all, mad money and his show should be viewed in that context. I've never acted on his stock picks, but you can track immediate changes in after hours prices on the ticker that scrolls across the screen, so some people do.
In terms of process, I learned some important things from him early on. Two that come to mind are diversification (before El-Erian became a cult hero) and buying best in class stocks. As you've advised, folks should take what the want from different sources and build their own process. I'm a better investor because of that (thank you.)
Question--you write for and read TheStreet. Do you subscribe to Real Money?
Thanks very much.
Hi Roger,
In case you have not seen yet, interesting article today by Richard Shaw...
http://seekingalpha.com/article/125951-it-s-a-winter-warming-spell-but-more-snow-ahead-for-markets
The NY Times also had a great piece about the debate:
"Part of Mr. Stewart’s frustration may stem from the fact that while he clearly won the debate, Mr. Cramer and CNBC stood to profit from the encounter. In today’s television news market, that cable network and its stars are like the financiers they cover: media short-sellers trading shamelessly on publicity, good or bad, so long as it drives up ratings. There isn’t enough regulation on Wall Street, and there’s hardly any accountability on cable news: it’s a 24-hour star system in which opinions — and showmanship — matter more than facts."
http://www.nytimes.com/2009/03/14/arts/television/14watc.html?_r=1&ref=arts
Regarding your thoughts this blog (which I think is great) and active portfolio management, perhaps one of these days you can blog about the difference in active vs. passive management, the advantages of one versus the other, etc. While I enjoy reading your blog for your content and perspective, I was always taught, rightly or wrongly, that "low cost index funds are the way to go." Personally, I would find it very useful to understand and appreciate the benefits of active management. But that's just me.
Incidentally, building on what the first commenter said, perhaps a useful trading strategy would be to short whatever stocks Cramer recommends (in after hours) after viewers of his show have jumped in and purchased them.
Roger's strategy = inverted yield curve + 200 DMA.
Dave--I think some of the pros actually do short Cramer's recos, especially if they're thinly traded. To his credit, Jim advises using limit orders and not chasing stocks that are sky rocketing after he touts them.
IMHO any TV show has to draw in eyeballs. It is entertainment, which can be informative, but it has to draw in the eyeballs. Cramer is pure entertainment, which includes a lot of humor (slap stick perhaps). How he thinks I find of interest, not what he thinks, as sometimes it encourages me think outside my own box. Frankly you do the same thing (no disrespect), just no props. They changed his time here so I don't get to see his show much anymore, but I think folks enjoy his show, which beats HSN most of the time. As to his screaming, yep that happens, but I find the pannel "discussions" that are the normal fare of biz news, to be just multiple folks screaming over each other.. which causes me to turn the channel (well the remote comes out faster when a politician gets on).
Dave
"I was always taught, rightly or wrongly, that 'low cost index funds are the way to go.' Personally, I would find it very useful to understand and appreciate the benefits of active management."
Which would you select out of a passive buy-and-hold (index fund) or an active investment style that averaged 0.5% to 1% p.a. less in earlier years, with very low drawdown, but then would later be migrated into buy-and-hold where a subsequent 6% p.a. higher benefit than the average long term equity return were achieved. In awareness however that the 'earlier' years might span a period of one or two decades (or possibly a bit more).
There's a simple mechanical style that can achieve this, that can be relatively easily backtested and verified and will more than likely continue to perform in a similar manner in the forward (out-of-sample) direction. It isn't difficult to implement, but does require 'active management'.
To put some figures to this, whilst average stocks might compound at 9% p.a., this active managed style might achieve 8% to 8.5% in earlier years, but then 15%+ in later years.
A good fund manager should be able to value-add to that, at least to the degree where they covered their costs.
as an outside contributor to TSCM, I get a sub to Real Money.
i have written many times about active v passive including yesterday.
I was a big fan of Cramer back in 2001-2002 when he saved me a bunch of money in the tech bubble burst. I was a regular reader of RealMoney back then. Back in the early days of RealMoney, I found great value in the site's commentary but learning to read Cramer was somewhat difficult, particularly understanding his time horizons, etc.
When MadMoney started airing, I think Cramer became even more confusing as the TV program conflicts with his commentary and like Roger says, his opinion may change on a daily basis. I don't watch MadMoney as I find it useless and for entertainment only. I still think Cramer has a lot to offer, but you need to be able to weed out the crap which is easier said than ...
I watch cramer occassionally, find him a sharp and entertaining guy; also agree with random's assessment, some utility BUT...
Nice keith jackson imitation towards the end, rog...
I used to watch Cramer but have also fallen off. He doesn’t get under my skin the way he does with some people. I do think he’s smart and, like another reader pointed out, have found some of his points like diversification and “pigs get slaughtered” to stay in my mind. I think he’s got a lot of diligent people working for him and find “The Street.com” to have some interesting insight. There have been times when he’s identified trends and pointed out sectors that have been good;, others have been bad. My biggest beef lately is the targeting of the double and ultra-shorts by him and his minions. He’s obviously trying to use his influence on the powers that be by portraying these as weapons of mass market destruction. I’ve been using the DXD as a hedge in my retirement accounts – I can’t short or buy options in these accounts but have found this tactic to help me sleep at night since I continue to have market exposure in this irrational environment. I’m aware of the volatility of these ETF’S and figure out my potential maximum loss based on a worst case scenario and invest accordingly. Thanks for your insights!
One cannot listen to Cramer for stock pick information, but because of his background, you can gain some insight as to how our markets work. He is not always correct, but it does help to get many points of view.
That said, Cramer has many excellent ideas for how the markets "function". One example: how shorts have put a stranglehold on the market by taking advantage of "lack of regulation".
I want to see some of the head honchos from government telling us why or why not a certian practice will or will not work. Our leaders appear to have deaf ears. Too many ivory towers are protecting them. Could it be our "leaders" have no idea?
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