Is Jim Cramer Any Good?

Is Jim Cramer Any Good? There is no shortage of opinions about when and how the market will move and no shortage of people willing to share those opinions with investors. In some cases, a handful of investors are invited to become members of an exclusive fund or investing club for a fee. In other cases, opinions are broadcast to anyone who is interested through television, social media, and print.

Jim Cramer offers the second kind of guidance. Anyone can access his popular television program, Mad Money, and he provides his insights online at no charge. Cramer’s followers speak highly of his skill and expertise in understanding and explaining the stock market, and many credit Cramer for their financial success.

So, is Jim Cramer any good? Does Jim Cramer’s track record measure up to his reputation? If so, what stocks is Jim Cramer recommending given current economic conditions?

How Jim Cramer Got Started

Jim Cramer hasn’t always been a television personality. He was interested in investing long before he launched Mad Money. In fact, Cramer’s fascination with the stock market began when he was just a child. He created and managed a mock portfolio, developing a surprisingly sophisticated understanding of investing fundamentals along the way.

At the age of 21, Cramer graduated from Harvard University and began a career in journalism. However, after a few years, he determined that his career path needed some tweaks. He enrolled in Harvard Law School, and while he was there, he began studying the stock market again. His old passion for investing returned with renewed strength, and he decided to try his hand at managing an actual portfolio.

Cramer’s first client was Martin Peretz, editor and owner of The New Republic and a member of the Harvard Law School faculty. Cramer did so well with Peretz’s portfolio that he was hired by Goldman Sachs right after he obtained his law degree. Three years later, Cramer was ready to launch a hedge fund of his own.

Jim Cramer founded Cramer Levy Partners in 1987, and the firm racked up impressive returns for its clients. Within a few years, Cramer’s annual income topped $10 million.

That success, coupled with Cramer’s journalism experience, led to a new partnership with Martin Peretz. In 1996, the two started a financial analysis website called TheStreet.com, and Cramer’s audience grew. His insight and perspective were in such high demand that he added a syndicated radio show to his resume in 1997 – Jim Cramer’s RealMoney.

By 2000, the combination of managing a hedge fund and keeping up with his media projects became too much. Cramer left Cramer Levy Partners to focus on writing and radio, but those channels became so popular that writing and radio weren’t enough. In 2005, Cramer moved into television with the premiere of Mad Money.

Why Is Jim Cramer So Popular?

Jim Cramer is a polarizing figure. People love him or hate him, and there is no in-between. That’s due in large part to his eccentric style of presenting his analysis of the market.

Unlike traditional business programs that feature dry, professional talking heads in business attire, Cramer is enthusiastic and animated. He rolls up his sleeves and raises his voice when he gets excited.

Cramer makes his points through unusual demonstrations and analogies. They are highly effective but insult those who prefer a more traditional approach. Cramer’s critics suggest that his track record is poor, and his recommendations aren’t appropriate for his audience.

The very points that detractors use to discredit Cramer are the ones that make him so popular with his large fan base – and Cramer isn’t about to change his style. He’s proud of the qualities that get and keep his viewers’ attention. In one interview, he said:

I sometimes play a clown, too, and I’m proud of it… So even though the purists think I can’t be rigorous because I have sound effects and props, I’m going to keep up the humor, keep up the education and keep trying to help you make money.

Clearly, Cramer is doing something right. At the start of the pandemic, new investors flooded into self-directed online brokerage firms like Robinhood, and they turned to Jim Cramer for advice on how to invest. Mad Money averaged 287,000 viewers each time it aired.

Of course, that figure has come down now that investors have resumed their pre-pandemic lifestyles, but Mad Money still has a respectable number of viewers tuning in. As of June 30, 2022, the average number of viewers was 137,000, which puts Mad Money on CNBC’s top ten list of highest-rated programs. It is worth noting that Squawk on the Street, which Jim Cramer co-anchors, is number one.

How much does Jim Cramer get paid by CNBC for bringing so many viewers in? The most recent reports put his annual salary at $5 million. Jim Cramer’s net worth is estimated at $150 million.

Jim Cramer Track Record

Jim Cramer’s track record as leader of Cramer Levy Partners was impressive – so much so that it made him a top pick for the media projects he got involved with after leaving the firm. Since then, it has been more challenging to track Jim Cramer’s record because of the volume of stocks he discusses.

Researchers with the Wharton School attempted to pin down Jim Cramer’s track record in a study that was published in 2017.

When they examined Cramer’s Action Alerts PLUS portfolio from 2000 through 2017, they determined that it underperformed the S&P 500. During the period in question, Cramer’s portfolio delivered annualized returns of 4.08 percent, while the S&P saw annual gains of 7.07 percent.

Does that mean viewers should avoid Jim Cramer’s stock picks? Not necessarily – there are characteristics of the Action Alerts PLUS portfolio structure that don’t apply to average investors. For example, the portfolio is owned by Cramer’s charitable trust, which means dividends and distributions are used for donations to non-profit organizations. They are not reinvested.

Cramer’s fans point out that they have made money by acting on his stock recommendations, and his critics highlight the times he has missed the mark.

Some of Cramer’s most publicized missteps include a recommendation to buy Cathie Wood’s ARKK ETF just before it lost roughly half of its value. He then recommended shorting the ARKK ETF days before it rose by more than 13 percent.

Ultimately, investors should approach Jim Cramer’s recommendations with the same thoughtful analysis required for independent trades. Cramer’s opinion is one of many, so the best strategy is to gather information from multiple sources before deciding whether and when to buy or sell.

What Stocks Is Jim Cramer Recommending?

Jim Cramer’s track record has been excellent in 2022 in terms of general economic activity. He predicted the volatility that occurred in the first half of the year, and he now says he expects the market to stabilize in August. Cramer cited market technician Larry Williams:

He predicted that after some choppy trading the market would have a strong rally through late August. Right now, what he’s seeing in the futures confirms that thesis.

Jim Cramer’s most recent stock recommendations include BlackRock, Conagra, JPMorgan Chase, Morgan Stanley, United Healthcare, and Wells Fargo.

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