[HN Gopher] I analyzed 20k recommendations made by Jim Cramer du...
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I analyzed 20k recommendations made by Jim Cramer during the last 5
years
Author : prostoalex
Score : 51 points
Date : 2022-01-05 21:30 UTC (1 hours ago)
(HTM) web link (old.reddit.com)
(TXT) w3m dump (old.reddit.com)
| spicyusername wrote:
| > Before you go daytrade on his recommendations you should know
| that the numbers we are seeing here are heavily influenced by
| outliers. If you miss out on the top 1% of recommendations (~110
| stocks out of the 11,000+ buy recommendations he had made), your
| 1-day return would be -0.062% instead of +0.034.
|
| Pretty big caveat there...
| sjfidsfkds wrote:
| It's true of many good investment strategies that if you
| retroactively ignore the best winners (without also ignoring
| the worst losers) that your measure of performance drops
| dramatically.
| twobitshifter wrote:
| Interestingly, the point about outperformance being due to only a
| few stocks is often true of the broader marker. In 2018 10 stocks
| contributed more than 100% of the S&P 500 gains.
|
| https://m.investing.com/analysis/6-stocks-responsible-for-ne...
| cheonic8492 wrote:
| Jim Cramer is an entertainer. Not a financial analyst.
|
| He's a very good entertainer.
| bidirectional wrote:
| Precisely, this is one of the few fields where actually being
| able to do it will make you more money than becoming an
| 'influencer' who talks about the field to other people. The
| fact he is doing the latter says a lot.
| thedigitalone wrote:
| He appears to significantly outperform the market if you only
| hold for 1 day. We need someone to create an ETF that does this
| and we can all join the fun.
| bhk wrote:
| > On average, the Buy and Positive mention stocks went up by
| 0.03 and 0.05% respectively
|
| You would get eaten alive by transaction costs, the bid/ask
| spread, and, if trading in large quantities, the market's
| response to your buy & sell orders.
| cecilpl2 wrote:
| On average the S&P increases by 10% annually. Across 250
| trading days, it increases by 0.04% daily on average.
|
| So his picks do not beat the market on average.
| blantonl wrote:
| The more people know about your secret sauce, the less tasty
| the sauce becomes.
|
| This almost reminds me of the typical /r/WSB stuff that
| "literally can't go tits-up"
| kfarr wrote:
| > As the astute among you might have noticed, if you sum up all
| the stocks used in the analysis it would only come to 18.5k. I
| removed ~15% of the overall recommendations as either they did
| not have stock data present in Yahoo Finance/Alpha Vantage or the
| price data did not match with the one given on the Mad Money
| website.
|
| That seems like a big caveat. Wouldn't lack of stock price data
| be an indicator of delisting?
| in3d wrote:
| Yes, good catch, not taking delisted stocks into account is
| probably the most common backtesting mistake out there.
| snapetom wrote:
| That analysis shows his best performance is 1-day
| recommendations. How is that just not a plain simple pump and
| dump like crypto traders do?
| gumby wrote:
| I don't think anyone is claiming that Cramer is making money
| off others peoples' trading, except very indirectly (this
| behavior causes more people to watch, which increases
| advertising value, which increases his bargaining power with
| his network when negotiating compensation).
|
| I can't see it's illegal, nor do I think it should be. I don't
| think it's wise for the punters, but I doubt that's terrible.
| If someone had sunk their life savings into one of these picks
| and lost their shirt, it would have been widely reported.
| jandrese wrote:
| Wait, he's not? My assumption is that he always buys the
| stocks right before recommending them and then dumps them at
| the close of the next day. Why else would he spend all that
| time and energy making the TV show?
| beepbooptheory wrote:
| The TV show pays him, for one thing.
| ralph84 wrote:
| As corrupt and captured as the SEC is, even they wouldn't
| let that kind of thing fly.
| gumby wrote:
| > On average, he was making more than 20 picks per episode of his
| show [1]. This is a staggering number of picks to be made by one
| person!
|
| Presumably there's a small team coming up with a list, just as
| there's a team of writers for a comedy show.
|
| The program is pure entertainment and as far as I can tell
| unashamedly so. I can't really find fault with that any more than
| I can with people, say, watching sports on TV.
| delecti wrote:
| Based on that data, I'd be curious to see a strategy that takes
| his "negative mentions", waits a day, and then buys and holds for
| a month.
| Rodeoclash wrote:
| This might be a bit odd but I'm going to try and link this with
| Steven Seagal of all people.
|
| Currently Steven Seagal is getting raked over the coals on Reddit
| due to some of the extraordinary claims he's made about his
| martial arts abilities, they don't quite line up to our current
| understanding of what is effective (think, less Aikido and more
| Ju-Jitsu, at least in the ring).
|
| I think what has happened to Steven Seagal (and here to Jim
| Cramer) is that we're now in the era where it's possible to
| (somewhat) easily fact check the claims that you make and prove
| that they're wrong.
| acdha wrote:
| I think more than fact checking is the ability to share the
| results. 30 years ago, you would have needed to be a reporter
| or known one to have analysis reach that many people.
|
| In the 90s, I thought that was a purely good thing but now I'm
| wishing we had an in-between version where stuff just shy of
| time cube has millions of fans.
| pb7 wrote:
| Jimbo is a TV personality and knows just as little as anyone
| else. The little positive correlation his recommendations have on
| a short term basis are from people buying in and pushing the
| price up. Casual market manipulation.
| hammock wrote:
| What caused you to come to these conclusions?
|
| edit: Stop downvoting me. I did not realize parent commenter
| was OP of the reddit post.
| brewdad wrote:
| "I analyzed 20k recommendations made by Jim Cramer during the
| last 5 years"
| blantonl wrote:
| you can literally watch a tick-by-tick chart of a Stock/ETF
| that is talked about by any of the CNBC talking heads during
| market hours and watch this occur in real time.
| snapetom wrote:
| Cramer tells everyone to buy, everyone buys. Price goes up,
| then smart people cash out in the profit taking. It doesn't
| matter what the recommendation is after that buy. Cramer can
| tell you to sit in a dark closet and fart for the rest of the
| week. He's successfully driven the price up on a very short
| term basis, and those that have caught on make easy money.
| cols wrote:
| This is a well known effect.
|
| https://www.investopedia.com/terms/c/cramerbounce.asp
| Traster wrote:
| I do think that limiting yourself to 1 day, 1 week, 1 month
| horizons is... limiting. Making predictions on that horizon is
| essentially predicting events (earnings, mergers etc.) and market
| dynamics. For example, I've worked at a public company who _I
| knew_ was in trouble from an engineering perspective. I left,
| over the 3 years before, and 3 years after I left, the stock
| performed very well. So in terms of stock market predictions, it
| 's not about knowing he underlying performance of the business.
| It also lends itself to letting Cramer market his own homework -
| did the stock go up due to his influence for example? Could be
| the case for smaller cap stocks, and particularly over a 1 day
| horizon.
|
| It's also rather comical that he's right a little over 50% of the
| time when making a positive prediction and a little less than 50%
| of the time when making a negative. Or to put it another way, the
| stock market goes up -so when you predict it goes up, you're
| generally right.
| oa335 wrote:
| I read a similar analysis on Cramer's picks in 2007. IIRC on
| average There was a transient increase (lasting several days) in
| the stocks he recommended...however sometimes the increase would
| begin several hours before his show aired. Also the magnitude of
| the effects scaled negatively with market cap of the stock (small
| caps moved more).
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