A Sore Disappointment: Cramer is just another TV guy
I used to be a fan of Jim Cramer, but I will be cancelling my subscription after two years, and after losing so much money on Cramer’s bad recommendations.
1) No good sense of market-timing or sell decsipline:
I had hoped to hear some big calls from Cramer, who keeps boasting as someone who told ordinary investors to get out of the market in 2008, and then, to get back in near the March bottom of 2009. Over my subscription period, he never gave us one. When the market really tanked in 2011, he held on to many positions at first, trying to justify them, and later, turning bearish, realized huge losses in some. Anyone can turn bearish after the market moves down so much! There are a number of positions where he let gains evaporate completely, and sank into deep losses. This is totally unacceptable. He keeps saying that stops should not be used in portfolio management because we are not robots, and that stocks should be bought down instead. But then, what’s the point of buying down, if you may end up cutting losses after a huge fall at which point you are compelled to concede your judgment has been proven wrong?
2) Inconsistensy in his own investment decisions:
He often talks about and writes in his books certain principles, such as investing in only the best of breeds and not getting in IPO’s after they start to get traded in the secondary market. Guess what? He violates those of his own principles and, what’s more, gets burned. One example is GM, where Cramer got so hyped with its IPO and started to purchase shares after it went public, even though that’s typically not what he recommends to do, and GM is not even the best of breeds, as he keeps saying F is the best. After so many months of bleeding, he ended up taking a huge chunk of losses.
Another example is LOW, when he keeps saying HD is the best of breeds. He bought LOW because, according to him, it was a turnaround situation. In this case, it is even more outrageous, as he, a few days later, went on to highlight LOW vs. HD on the MadMoney show after completely getting out of LOW with big losses, and to slam LOW, explaining why LOW should not be bought. He apparently does not care whether some suscribers who purchased LOW based on his initial recommendations may still hold some shares.
This kind of Cramer’s flip-flopping can be often found not only in stocks, but also in general market directions.
They show S&P500 as a reference or benchmark against the AAP portfolio’s performance. But who cares about such relative performance, if the market collapses? All of us ordinary investors only care about is absolute return. In fact, isn’t that what Cramer said in his books (e.g., “Getting Back to Even”)?
4) Too much TV exposure and too much emotion:
Cramer shows up too often on CNBC and NBC programs (including his MadMoney show). I wonder how much time he really has for investment analyses. I must also wonder whether his ego may get even larger, every time he talks passionately about certain stocks in public, as he always does, whereby making it difficult for him to change his mind quickly. One example is NFLX, while this is not an AAP portfolio name. He kept touting the stock as it continued its ascend above $200 and up to $300, but stopped recommending it only after the price fell way below $200. Again, it’s just ridiculous. I believe too much emotion can be a dangerous enemy to a successful investor or trader.
This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
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