Is Jim Cramer Really a Mad Man?
Jim Cramer, a popular TV personality likes to call himself "Mad", but is he really? Jim Cramer pops up in trader's conversation quite frequently, but until recently I had no opinion of my own, I have seen him on TV but that was about it.
A few months ago however I decided to sign up for his service and take a closer look.
I am not affiliated with Cramer in any shape or form, and please do not take this as any kind of endorsement, but overall I liked his portfolio.
I liked how he runs it and I liked the way he presents it to his followers.
He is not as mad as he wants to be perceived.
Yes he likes to brag about some good calls he made, and he keeps quiet about bad calls he made.
For example, he might boast in his blog about so-and-so company that he recommended to purchase some time ago, and now this company is 30% up...
"So what - a critique can argue - so what you bought that stock, and it is 30% up? You allocated only one percent of your money to it, respectively effect of this stock on your entire portfolio is minuscule, and your entire portfolio is not doing that great.
" Yes these are valid counter-Cramer arguments, but nevertheless (and putting the hype aside) Cramer runs a decent stock portfolio.
All ins and outs considered he consistently outperforms broad market by a couple of percent points, which is better than most mutual funds.
Here is how it works.
For a few bucks a month you get an on-line access to his account.
At any point you will see what he owns at that very precise moment, for example: 1400 shares of Intel, 2050 shares of Boeing and so forth.
He would also send you email updates several times a day.
Each time when he is placing a buy or a sell order you will know that right away.
For example his current holding might be 1400 shares of Intel, when he decides to sell it all, liquidate entire position, you will know that right away.
Or when he decides to simply buy 100 more shares on Intel you will know that right away too.
It is hard to find a similar stock advisory service that not merely yells out recommended buys, but also tell precisely when it is time to sell, or when it is good to scale a position up or down.
Cramer uses a discretionary type of trading based on intuition, news releases, company's non-quantifiable data plus some (very little) fundamental and technical analyses.
And with every email he explains his logic.
By reading them you may eventually learn his method.
It might be quite useful for a novice trader.
In spite of his web site meticulousness and precision, if you are a regular investor it is not that easy to follow Cramer on your own account.
His account is almost 3 million dollars.
What account will you be operating? I am guessing it would be more like 100,000 dollars; so you would need to scale down 30 times over all his holding and orders.
But you cannot do it mechanically.
If he holds 1500 shares of Intel you would need to hold 50 shares - no brainer.
But when he buys extra 100 shares of Intel you cannot proportionally buy 3; that would kill you on commission payments.
So you need to be smarter than that.
What you can do, if you want to try out following Cramer, open simulated brokerage account with VivaTrader.
com or any other paper trading site.
Make your simulated account be 100K, or some likewise amount that is reasonable for you.
See if you can apply your own discretion on the top of Cramer's.
You will need to take a pass on some of his calls, skips some of his positions and ignore some of his orders.
And after a few month of paper trading see if you can replicate his results, as expressed in percent terms, or do it better.
A few months ago however I decided to sign up for his service and take a closer look.
I am not affiliated with Cramer in any shape or form, and please do not take this as any kind of endorsement, but overall I liked his portfolio.
I liked how he runs it and I liked the way he presents it to his followers.
He is not as mad as he wants to be perceived.
Yes he likes to brag about some good calls he made, and he keeps quiet about bad calls he made.
For example, he might boast in his blog about so-and-so company that he recommended to purchase some time ago, and now this company is 30% up...
"So what - a critique can argue - so what you bought that stock, and it is 30% up? You allocated only one percent of your money to it, respectively effect of this stock on your entire portfolio is minuscule, and your entire portfolio is not doing that great.
" Yes these are valid counter-Cramer arguments, but nevertheless (and putting the hype aside) Cramer runs a decent stock portfolio.
All ins and outs considered he consistently outperforms broad market by a couple of percent points, which is better than most mutual funds.
Here is how it works.
For a few bucks a month you get an on-line access to his account.
At any point you will see what he owns at that very precise moment, for example: 1400 shares of Intel, 2050 shares of Boeing and so forth.
He would also send you email updates several times a day.
Each time when he is placing a buy or a sell order you will know that right away.
For example his current holding might be 1400 shares of Intel, when he decides to sell it all, liquidate entire position, you will know that right away.
Or when he decides to simply buy 100 more shares on Intel you will know that right away too.
It is hard to find a similar stock advisory service that not merely yells out recommended buys, but also tell precisely when it is time to sell, or when it is good to scale a position up or down.
Cramer uses a discretionary type of trading based on intuition, news releases, company's non-quantifiable data plus some (very little) fundamental and technical analyses.
And with every email he explains his logic.
By reading them you may eventually learn his method.
It might be quite useful for a novice trader.
In spite of his web site meticulousness and precision, if you are a regular investor it is not that easy to follow Cramer on your own account.
His account is almost 3 million dollars.
What account will you be operating? I am guessing it would be more like 100,000 dollars; so you would need to scale down 30 times over all his holding and orders.
But you cannot do it mechanically.
If he holds 1500 shares of Intel you would need to hold 50 shares - no brainer.
But when he buys extra 100 shares of Intel you cannot proportionally buy 3; that would kill you on commission payments.
So you need to be smarter than that.
What you can do, if you want to try out following Cramer, open simulated brokerage account with VivaTrader.
com or any other paper trading site.
Make your simulated account be 100K, or some likewise amount that is reasonable for you.
See if you can apply your own discretion on the top of Cramer's.
You will need to take a pass on some of his calls, skips some of his positions and ignore some of his orders.
And after a few month of paper trading see if you can replicate his results, as expressed in percent terms, or do it better.