How to Take Jim Cramer’s Advice
Here’s the thing about Jim Cramer: He’s a great entertainer, and I’m sure he’s smart as hell, but it’s hard to call his show, Mad Money, anything but thoroughly irresponsible. Every piece of advice Cramer dispenses on his show gets executed with hyperbolic enthusiasm, so much so that the market becomes a more volatile place with every one of his picks.
My first instinct with regards to Wall Street’s biggest bag of bombast is to ignore him completely. Every time Cramer tells his viewers to buy a stock, they do so, causing the price of that stock to rise artificially and then burst days later. I’ll stick to my index and bond funds, thank you very much. They’re tanking out, too, but I bet they’re still doing better than a portfolio full of Jim Cramer picks is doing right now.
Volatility bad.
But then, I take a deeper, more meta look at the issue. When Cramer says to buy a stock, the price bubbles and then bursts the next day. When he says to sell, the price dips and recovers. Wait a minute! I’ve got it!
The key is to do the opposite of what Jim Cramer says!
More specifically, do the opposite of what Cramer says for one day, and then take his advice the next day.
Example: Cramer picks a stock and says “Buy buy buy!” and presses a button and makes a cow sound. You look at your portfolio and see that you own that stock. Suddenly, there’s a rush of buyers looking to pick up this newly hot stock, so you take all of your shares of that company, set your asking price a few bucks above market value, and wait for a bite. The next day, the bubble bursts and the stock returns to its normal price, so you buy your shares back for less than you sold them for, pocketing a nice profit in the process.
Opposite end: Cramer picks a stock and says “Sell sell sell!” and presses a button and makes a poo sound. Suddenly, there’s a rush of owners desperate to unload their shares. You put in an offer for a few bucks less than market value. Cheap stock! The next day, the artificially deflated stock returns to its normal value, so you sell the stock, making a profit.
Bam. Jim Cramer decyphered.
Bzzz. Moo. Ka-ching.