We add another chapter in the ongoing debate between Barron’s, the weekly paper that is sister to the WSJ, and James Cramer, the former hedge fund manager now turned pundit/CNBC star/game show host.
The back and forth between CNBC and Barron’s amounts to an absurd debate over what Cramer’s stock picking record on the show actually is. CNBC claims Cramer’s calls have saved viewers millions of dollars; Barron’s claims Cramer’s picks seriously underperform the markets, and are primarily momentum based. They show that where Cramer responds to viewer queries — when viewers call in to ask him questions sua sponte — are actually are better than his prepared picks.
My take? Its a silly and irrelevant argument. Its TELEVISION, for crying out loud. Television is about entertainment, not actual investing. It can be fun, informative, annoying, laughable and on rare occasion, actually provide a modicum of common sense and information — but it is not the advised way you should be managing your personal finances, retirement accounts, or even your play money.
If you make investments based on a tv show, you deserve to not only to underperform, but to lose ALL OF YOUR MONEY. That should be the penalty for being that stupid — destitution.
As I noted 4 years ago in Lose the News:
“Sure, the data points on occasion may be important, but the rest is essentially infotainment and filler. I find CNBC both informative and entertaining — but it’s not the basis of my investment decisions. This explains why there aren’t any hedge funds running money on the basis of what’s on TV.”
Of course, most media do not go outof their way to tell you this. But now you know, so adjust accordingly.
Barron’s vs. Cramer: The Charts can be found here.
Lose the News (June 16 2005)
Cramer’s Star Outshines His Stock Picks
Barron’s FEBRUARY 7, 2009