Jim Cramer doesn’t beat the market

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Ostentatious
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Jim Cramer doesn’t beat the market

Post by Ostentatious » Fri May 13, 2016 5:31 pm

Confirms what many of knew all along:

http://www.marketwatch.com/story/jim-cr ... 2016-05-13


"Cramer’s Action Alerts Plus portfolio has underperformed the S&P 500 index SPX, -0.85% in terms of total cumulative returns since its 2001 inception, according to a working paper released Friday by Jonathan Hartley and Matthew Olson, researchers from the Wharton School at the University of Pennsylvania. While the fund outperformed the 500-member index in the years leading up to the 2008 financial crisis—which Hartley said was partially a reflection of the fund’s previous inclusion of small-cap companies and growth stocks that were outperforming during the pre-recession bull run—things have gotten worse since 2011, with Action Alerts Plus falling 9.5% in that year, when the S&P 500 was unmoved. It rose just 1.3% in 2014, versus an 11.4% increase for the S&P, the study found."

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Re: Jim Cramer doesn’t beat the market

Post by joebh » Fri May 13, 2016 5:52 pm

"[Insert the name of your favorite investing celebrity here] doesn't beat the market" is never news.

Polymath
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Re: Jim Cramer doesn’t beat the market

Post by Polymath » Fri May 13, 2016 5:55 pm

It is not news, but a good reminder. With the level of marketing that exists for active management folks need reminders its just smoke and mirrors.

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nedsaid
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Re: Jim Cramer doesn’t beat the market

Post by nedsaid » Fri May 13, 2016 5:57 pm

I like Jim Cramer. He is worth listening to because he did run a hedge fund and knows a lot about the market. A very smart and entertaining guy to listen to. I also like him because he is so human, he lets it all hang out, his strengths and faults are there for everyone to see. You can listen and learn but it doesn't mean you have to take his investment advice.
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Re: Jim Cramer doesn’t beat the market

Post by dognose » Fri May 13, 2016 5:58 pm

Lots of people like to fight the basic three-fund portfolio advocated by the Bogleheads. Lots of people are wrong.

Lynette
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Re: Jim Cramer doesn’t beat the market

Post by Lynette » Fri May 13, 2016 6:00 pm

I'm watching him at the moment. His advice on retirement savings is basically Bogleheads. He advises using an S&P500 Index as core fund in 401K.

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Re: Jim Cramer doesn’t beat the market

Post by Ostentatious » Fri May 13, 2016 6:16 pm

I agree that while this is not news, it helps to underscore many of the things that are said here. There is nothing wrong with enforcing many of the ideas that are espoused by BH.

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Re: Jim Cramer doesn’t beat the market

Post by Almost there » Fri May 13, 2016 6:34 pm

I am always amazed how so many hard working people fall for all kinds scams or suggestions on how to make a fast buck. Then they are surprised when something goes wrong. Just heard another sad story from a guy who invested most of his retirement in a scam and he lost all of his money. Remember Madoff. Anything that is too good to be true probably is.

Happy I found the Bogleheads and VG.

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Re: Jim Cramer doesn’t beat the market

Post by joebh » Fri May 13, 2016 6:58 pm

raspino wrote:I agree that while this is not news, it helps to underscore many of the things that are said here. There is nothing wrong with enforcing many of the ideas that are espoused by BH.
I wasn't being critical of your post.

In fact, I think it might be a handy (if rather long) thread if everyone responded with the name of a high-profile investing celebrity in the news who didn't beat the market. That way, folks searching for that name would find it.

I was just pointing out that you could have put pretty much any name there and I wouldn't be surprised.

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Re: Jim Cramer doesn’t beat the market

Post by Dopey » Fri May 13, 2016 6:59 pm

So he's lagged the S&P by less than 1% over the last 15 years? I bet most of our Boglehead portfolios have lagged by more than that with our conservative asset allocations.

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4nursebee
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Re: Jim Cramer doesn’t beat the market

Post by 4nursebee » Fri May 13, 2016 7:04 pm

I read what I think was his first book.
Cramer has education and GS pedigree
He worked hard.
But the book suggested to me that his wife was the success part of the equation, investing included.
4nursebee

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Toons
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Re: Jim Cramer doesn’t beat the market

Post by Toons » Fri May 13, 2016 7:24 pm

Cramer is entertaining. :happy
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Re: Jim Cramer doesn’t beat the market

Post by criticalmass » Fri May 13, 2016 7:45 pm

In other news, half of the sports teams that played today lost.

Cramer has advocated index funds for long term investing and retirement, in particular S&P 500. He has also said that his stock picks are for fun money, extra money that you have and want to invest, make some money and/or have fun with. Most of my investment money is in funds, mostly large cap index funds, with some active Vanguard funds too just to keep things more interesting. I have little use for taxable bonds to meet my needs. Cramer made me think of some individual stocks to buy, in particular MO and MA that I'm extremely happy that I bought. I would never trade as often as he advocates, but have enjoyed his commentary on stocks and learned plenty of information from his show.

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coachz
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Re: Jim Cramer doesn’t beat the market

Post by coachz » Fri May 13, 2016 7:46 pm

I tried to watch him but he is too annoying for me. I much prefer Wealth Track and Bloomberg Go

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TheTimeLord
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Re: Jim Cramer doesn’t beat the market

Post by TheTimeLord » Fri May 13, 2016 7:57 pm

criticalmass wrote:In other news, half of the sports teams that played today lost.

Cramer has advocated index funds for long term investing and retirement, in particular S&P 500. He has also said that his stock picks are for fun money, extra money that you have and want to invest, make some money and/or have fun with. Most of my investment money is in funds, mostly large cap index funds, with some active Vanguard funds too just to keep things more interesting. I have little use for taxable bonds to meet my needs. Cramer made me think of some individual stocks to buy, in particular MO and MA that I'm extremely happy that I bought. I would never trade as often as he advocates, but have enjoyed his commentary on stocks and learned plenty of information from his show.
He also always points out you should diversified your set of stocks, at least 5 sectors and minimum 5 stocks but not so many many as you can't do an hour of research a week on the stock. Also I am not sure the actual picks aren't made by Stephanie Link and Cramer just approves them. The problem with Cramer or or owning individual stocks is it requires time, research and discipline which is in short supply for most. Much easier to use set it and forget it AA and index funds.
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TXJuice
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Re: Jim Cramer doesn’t beat the market

Post by TXJuice » Fri May 13, 2016 8:01 pm

nedsaid wrote:I like Jim Cramer. He is worth listening to because he did run a hedge fund and knows a lot about the market. A very smart and entertaining guy to listen to. I also like him because he is so human, he lets it all hang out, his strengths and faults are there for everyone to see. You can listen and learn but it doesn't mean you have to take his investment advice.
This is how I view him/his show as well. I like getting his take on different events/scenarios simply for the educational/entertainment value, but I would never base any decision on his recommendations.

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JonnyDVM
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Re: Jim Cramer doesn’t beat the market

Post by JonnyDVM » Fri May 13, 2016 8:17 pm

It's a show guys. Not sure what anyone was expecting to find. It's a financial show that's not mind numbingly boring which is impressive in its own right. Barely trailing S&P500 is better than I would have guessed TBH.

Also the data about Kramer's recommendations in that article directly contradicts this article. Not sure which source is more reliable.
http://www.theonion.com/article/everyon ... 5-no-32346
Last edited by JonnyDVM on Fri May 13, 2016 9:05 pm, edited 1 time in total.
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Re: Jim Cramer doesn’t beat the market

Post by Crimsontide » Fri May 13, 2016 8:30 pm

Just my opinion, I can't stand the guy and watched with glee as Jon Stewart took him apart back in 2009.

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Re: Jim Cramer doesn’t beat the market

Post by Fallible » Fri May 13, 2016 8:47 pm

The problem I have with the Jim Cramers and CNBC-type shows is their manipulations of the gullible, the uninformed, the misinformed, the naive, and overconfident investors. They are primarily for the pros, especially the traders who presumably know what to do with the noise, but they also attract those who don't even know what noise is, or if they do, can't resist it. Sure, it's their fault if they get sucked in, but it's also sad.
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Re: Jim Cramer doesn’t beat the market

Post by triceratop » Sat May 14, 2016 2:06 am

Crimsontide wrote:Just my opinion, I can't stand the guy and watched with glee as Jon Stewart took him apart back in 2009.
I agree, but would only note that Stewart's primary focus was on CNBC in general and even more broadly the financial news media. That is, what we Bogleheads call "financial porn". That interview (and the lead-up to it as well) was incredible, though.
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Re: Jim Cramer doesn’t beat the market

Post by dltnfs » Sat May 14, 2016 2:24 am

On the trading forums, people claimed to be making good (Sharpe ~2) money by waiting for the market impact of people who followed his picks, taking the other side of his proposed trade, and then exiting over the next few weeks. But I heard that doesn't work much anymore, because it got too popular...

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Re: Jim Cramer doesn’t beat the market

Post by RNJ » Sat May 14, 2016 5:57 am

Toons wrote:Cramer is entertaining. :happy

Cramer is entertainMENT.

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Re: Jim Cramer doesn’t beat the market

Post by Leesbro63 » Sat May 14, 2016 7:14 am

Dopey wrote:So he's lagged the S&P by less than 1% over the last 15 years? I bet most of our Boglehead portfolios have lagged by more than that with our conservative asset allocations.
Yeah but Boglehead portfolios with conservative asset allocations are SUPPOSED to lag the S&P whereas Mister Big Bucks on TV/Former Hedge Fund manager is SUPPOSED to BEAT the S&P.

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Re: Jim Cramer doesn’t beat the market

Post by staybalanced » Sat May 14, 2016 8:31 am

Jim Cramer talks out of his rear. What an easy job he has. His advice is dangerous, concentrated portfolios for folks who don't even know basic finance. He did have a great track record as a hedge fund manager, but he was using derivatives as most hedge funds do.

I can't be too critical though, he was one of the first people who got me interested in investing. His mad money show inspired me to educate myself in 2007.

Sitting here thinking, I can't remember how I discovered Vanguard and Jack Bogle. I guess I saw him on cnbc one day.

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TheTimeLord
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Re: Jim Cramer doesn’t beat the market

Post by TheTimeLord » Sat May 14, 2016 9:12 am

It is amazing that a guy who recommends index funds if you aren't willing to do an hour of research a week per stock and has a regular segment called "Am I Diversified?" making sure people have their 5 stocks picks in 5 unrelated sectors draws such criticism. Obviously, he isn't going to be the guest speaker at Boglefest but I watched him for years when I actively traded and found the show useful for what it was, an idea factory. Chill. people, chill.
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Re: Jim Cramer doesn’t beat the market

Post by SpringMan » Sat May 14, 2016 9:16 am

I would not ever invest based on Jim Cramer's stock picking advice though I have heard him recommend the S&P500 index. Cramer did reassure me I on my decision to self insure with respect to Long Term Care insurance. His dad had LTC insurance prior to his passing. Jim Cramer did a rant on how he had to spend more on lawyers than what the policy covered to get the S.O.B.s (his words) to pay up. His lawyers forced the insurance company to pay up but apparently the cost was about a wash. Cramer said it was the principle of the thing at that point. I don't have the link handy but the story is readily available on the internet.
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burt
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Re: Jim Cramer doesn’t beat the market

Post by burt » Sat May 14, 2016 6:37 pm

Toons wrote:Cramer is entertaining. :happy
I agree, he is entertaining. From reading/watching interviews I think he is a pretty decent guy.
Watch him for entertainment, not investing advice.

burt

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Re: Jim Cramer doesn’t beat the market

Post by SeeMoe » Sat May 14, 2016 8:53 pm

Due to hearing problems, I miss half of what Creamer says in that high pitched, super fast salesmans screechy voice of his. Doesn't matter because I have found that individual stocks are to risky for my " low information investor centric brain" to process and act upon..So I let go, let VPAS do the brain work for me now. Working out nice too...
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Re: Jim Cramer doesn’t beat the market

Post by Church Lady » Sat May 14, 2016 9:38 pm

It is amazing that a guy who recommends index funds if you aren't willing to do an hour of research a week per stock and has a regular segment called "Am I Diversified?" making sure people have their 5 stocks picks in 5 unrelated sectors draws such criticism. Obviously, he isn't going to be the guest speaker at Boglefest but I watched him for years when I actively traded and found the show useful for what it was, an idea factory. Chill. people, chill.

+1 Quite right! I have learned quite a bit from Jim Cramer's show. It's not just stock picks.
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Re: Jim Cramer doesn’t beat the market

Post by cheesepep » Sun May 15, 2016 1:25 am

I hate Jim Cramer just as much as the next guy with his annoying sounds, but there are some people like me who do not aim to beat the market. My aim is to produce sustainable income to retire early which has worked wonderfully for me.

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Re: Jim Cramer doesn’t beat the market

Post by fortyofforty » Sun May 15, 2016 7:01 am

I used to enjoy Cramer but then he started to annoy me. Now I can only take him in small doses. I will tolerate him when he's on a CNBC panel or just one of several hosts, but no way can I watch his solo show. He speaks with a bit too much certitude on individual stocks (at least he used to), and might lead the uninitiated to believe he knows things that nobody else does.
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Re: Jim Cramer doesn’t beat the market

Post by Leesbro63 » Sun May 15, 2016 9:47 am

cheesepep wrote:I hate Jim Cramer just as much as the next guy with his annoying sounds, but there are some people like me who do not aim to beat the market. My aim is to produce sustainable income to retire early which has worked wonderfully for me.
I get what you are saying, but your statement is kinda not right. If your assets produce income for you that's great, but not if the assets lose value while spinning off the income. And the fact that you are not trying to "beat the market" doesn't negate the fact that a professional money manager, like Cramer, is measured in ALPHA against the market and SHOULD beat the market or is of no value. But back to your comment. You may not be trying to beat the market, but you certainly don't want to do worse than the market, adjusted for your allocation. Why would you accept less than a market return when a market return is close to free (via index funds)?

I also like the idea of having a portfolio that passively spins off enough dividends, income and recognized capital gains to fund my living expenses without having to sell assets. That's easy-breasy. But I don't lose sight of the fact that it's "total return over time" that is what makes the portfolio sustainable.

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ClevrChico
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Re: Jim Cramer doesn’t beat the market

Post by ClevrChico » Sun May 15, 2016 10:22 am

I have a facebook friend that regularly posts his stock tips. I shake my head and keep quiet.

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Re: Jim Cramer doesn’t beat the market

Post by Doom&Gloom » Sun May 15, 2016 12:20 pm

ClevrChico wrote:I have a facebook friend that regularly posts his stock tips. I shake my head and keep quiet.
LOL! That is the only thing I've heard of yet that is worse than endless pictures of food. I almost always hide those FB friends' posts. I'm not sure that I wouldn't keep following these just for some free giggles. Entertainment is where you find it.

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Re: Jim Cramer doesn’t beat the market

Post by cheesepep » Sun May 15, 2016 6:14 pm

Leesbro63 wrote:
I get what you are saying, but your statement is kinda not right. If your assets produce income for you that's great, but not if the assets lose value while spinning off the income. And the fact that you are not trying to "beat the market" doesn't negate the fact that a professional money manager, like Cramer, is measured in ALPHA against the market and SHOULD beat the market or is of no value. But back to your comment. You may not be trying to beat the market, but you certainly don't want to do worse than the market, adjusted for your allocation. Why would you accept less than a market return when a market return is close to free (via index funds)?

I also like the idea of having a portfolio that passively spins off enough dividends, income and recognized capital gains to fund my living expenses without having to sell assets. That's easy-breasy. But I don't lose sight of the fact that it's "total return over time" that is what makes the portfolio sustainable.
I don't agree that it is total return over time (aka the Boglehead way), but I do agree that one shouldn't lose any money while spinning off the income.

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Re: Jim Cramer doesn’t beat the market

Post by Leesbro63 » Sun May 15, 2016 8:25 pm

cheesepep wrote:
Leesbro63 wrote:
I get what you are saying, but your statement is kinda not right. If your assets produce income for you that's great, but not if the assets lose value while spinning off the income. And the fact that you are not trying to "beat the market" doesn't negate the fact that a professional money manager, like Cramer, is measured in ALPHA against the market and SHOULD beat the market or is of no value. But back to your comment. You may not be trying to beat the market, but you certainly don't want to do worse than the market, adjusted for your allocation. Why would you accept less than a market return when a market return is close to free (via index funds)?

I also like the idea of having a portfolio that passively spins off enough dividends, income and recognized capital gains to fund my living expenses without having to sell assets. That's easy-breasy. But I don't lose sight of the fact that it's "total return over time" that is what makes the portfolio sustainable.
I don't agree that it is total return over time (aka the Boglehead way), but I do agree that one shouldn't lose any money while spinning off the income.
Total return over time is just math. Explain how it can't be that?

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Re: Jim Cramer doesn’t beat the market

Post by cheesepep » Sun May 15, 2016 8:50 pm

For reasons irrelevant to this thread, I will not explain.

To keep it on topic, some people like JC, some people do. I'm in the party who doesn't.

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Re: Jim Cramer doesn’t beat the market

Post by malabargold » Sun May 15, 2016 8:56 pm

No, he is truly awful.

But he holds people's hands - gives
Them declarations onto which to cleave -
assumes the mantle of "expert"
advisor and prognosticator - which
so many people, even on this site,
are desperately seeking.

Sad snake oil.

But then there's a reason
why the snake oil salesman never vanishes:
they have an annoying tendency to become
rich.

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munemaker
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Re: Jim Cramer doesn’t beat the market

Post by munemaker » Sun May 15, 2016 9:06 pm

Why would anyone on this forum care what this entertainer has to say? Sorry, I don't get it.

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Re: Jim Cramer doesn’t beat the market

Post by abuss368 » Sun May 15, 2016 9:19 pm

I read his first book "Confessions of a Street Addict" many years ago. The book was not bad at all and one has to respect the work ethic and determination.

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Re: Jim Cramer doesn’t beat the market

Post by EyeYield » Sun May 15, 2016 10:18 pm

The main purpose of his show, and shows like it, is to please the advertisers who are mostly brokerages who make $7.95 a trade times millions. When he recommends buying or selling, cash registers ring.
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Re: Jim Cramer doesn’t beat the market

Post by Alchemist » Mon May 16, 2016 12:55 am

I find him entertaining. I also have him to thank for buying an index fund when I first opened my Roth IRA upon graduating college. Mind you this was spring of 2009, few people were singing the praises of investing in stocks. But he was, and he recommended young people should have at least $10k in an S&P 500 index fund and be debt free before thinking about doing anything else. By the time I got that much in the account, I found Jack Bogle's books. So it is thanks to Cramer that I never got into active management or stock trading weirdly enough, and had the gaul to start investing right after the bottom of the market after the post-financial crisis crash. Most people were still running for the hills, and thanks to Cramer my initial $5,000 Roth investment in 2009 (and maxing it out every year since) in an S&P 500 index fund was an excellent starting point for my investing life. Still hold the Spartan 500 fund in my Roth IRA and plan to do so for decades to come.

So..thanks Jim Cramer for geting me interested and confident enough to invest in stocks, and an index fund at that.

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Re: Jim Cramer doesn’t beat the market

Post by Day9 » Mon May 16, 2016 2:54 am

Alchemist wrote:I find him entertaining. I also have him to thank for buying an index fund when I first opened my Roth IRA upon graduating college. Mind you this was spring of 2009, few people were singing the praises of investing in stocks. But he was, and he recommended young people should have at least $10k in an S&P 500 index fund and be debt free before thinking about doing anything else. By the time I got that much in the account, I found Jack Bogle's books. So it is thanks to Cramer that I never got into active management or stock trading weirdly enough, and had the gaul to start investing right after the bottom of the market after the post-financial crisis crash. Most people were still running for the hills, and thanks to Cramer my initial $5,000 Roth investment in 2009 (and maxing it out every year since) in an S&P 500 index fund was an excellent starting point for my investing life. Still hold the Spartan 500 fund in my Roth IRA and plan to do so for decades to come.

So..thanks Jim Cramer for geting me interested and confident enough to invest in stocks, and an index fund at that.
I was about to comment this identical story. Are you me?
I'm just a fan of the person I got my user name from

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Re: Jim Cramer doesn’t beat the market

Post by coachz » Mon May 16, 2016 6:16 am

malabargold wrote:No, he is truly awful.

But he holds people's hands - gives
Them declarations onto which to cleave -
assumes the mantle of "expert"
advisor and prognosticator - which
so many people, even on this site,
are desperately seeking.

Sad snake oil.

But then there's a reason
why the snake oil salesman never vanishes:
they have an annoying tendency to become
rich.
Agreed. What makes him so dangerous is his lack of accountability and his certainty about day trades while he talks about long term investing. He's too annoying for me to listen to and try to learn anything. I don't need money to be entertaining. Shows like Wealth Track are fine for me but she has little information for middle class people. Most of her show is some guy who manages 10 billion and tells how he gets better than TIPS yields. Hell, I can do that.

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BREAKING NEWS! S&P 500 Index Tops Jim Kramer

Post by wak » Tue May 17, 2016 3:33 pm

Can I see a show of hands of those that thought this entertainer could beat the index?

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Re: BREAKING NEWS! S&P 500 Index Tops Jim Kramer

Post by BarbaricYawp » Tue May 17, 2016 3:35 pm

Are we talking returns or rating points, 'cause the measurement of success definitely affects my choice.
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Re: BREAKING NEWS! S&P 500 Index Tops Jim Kramer

Post by SpringMan » Tue May 17, 2016 4:03 pm

Rhetorical question, you do mean Cramer spelled with C?
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Re: BREAKING NEWS! S&P 500 Index Tops Jim Kramer

Post by linenfort » Tue May 17, 2016 4:07 pm

Thread in progress.
viewtopic.php?f=10&t=191252
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Re: Jim Cramer doesn’t beat the market

Post by triceratop » Tue May 17, 2016 5:17 pm

I merged wak's thread into this one, as they cover the same topic.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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nisiprius
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Re: Jim Cramer doesn’t beat the market

Post by nisiprius » Tue May 17, 2016 6:50 pm

I think it's very important to establish that Cramer hasn't been beating the market. The article doesn't address the question of risk, which is also important because even if he were beating the market it wouldn't mean much if he were doing it by taking more risk. Conversely, the underperformance might be excused (as people like to do with hedge fund underperformance) if it could be shown that he was achieving his results with substantially less risk. My eyeballs are not good enough to judge from the charts.

The problem is not just Cramer, but the myth that it is quite easy for anyone to beat the market if they are just willing to put in a little time and effort with individual stocks, rather than taking the lazy way out with index funds. This myth presents itself in a thousand forms. As with the Beardstown Ladies, everyone would like to believe that any ordering investor can beat the market with a little gumption and attentiont details. Dozens of advisors would like their clients to believe that they, they advisors, can easily beat the market on their client's behalf. But it's not at all easy to do. The record of actively managed funds suggests that some managers actually can beat it by a small amount like 0.5%, but they take it all themselves in the expense ratio, so there's about zero benefit to the fund shareholders after costs.

It's mildly interesting that Cramer hasn't been doing it because he's such a prominent name. But financial data being what it is there's a lot of luck involved and perhaps someday in a few years his record will show that he's beating it. Shrug.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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