Cramer Fail
On a daily basis, he tells you to forget about the market and focus on the stocks. In April, CNBC’s Jim Cramer told investors that the market was overreacting and recommended buying 49 different blue-chip stocks (all in the S&P 500) whose prices were fell in a recent market decline. In a column for TheStreet.com he referred to these picks as stocks being “clearly marked as winners no matter what.”
So how have they performed through the even steeper market decline of the past few months? A retired Illinois finance professor, David England, placed an imaginary $1,000 in each of Cramer’s recommended stocks and after six months only 14 of the 49 stocks went up in value. Overall, this group of stocks, that Cramer described as “perfectly made for this downturn,” lost over 7% of their value in just half a year.
Sure, the entire market was down over that same period but had you just purchased the entire Standard & Poors 500 you would have experienced a six-month loss of less than 4%.
No one can predict the future no matter how good their research, so forget trying to pick the best stocks or beating the market. If the experts and gurus consistently prove that they can’t do it, neither can you. Yes, sometimes money managers, your friends, or even you make lucky guesses, but so do many lottery players or casino customers.
