Jim Cramer, the eccentric host of Mad Money, is one of the most recognizable voices in finance. What many aren’t aware of is that he also used to be a hedge fund manager, and is even said to have averaged an annual return of 24% from 1987 to 2001.
As successful as his tenure as a fund manager purportedly was, Cramer has acquired a bit of a negative reputation in his career as a market commentator, to put it mildly.
Simply put, the TV host has an uncanny ability to recommend a stock at the worst possible time. If Cramer publicly recommends buying a stock, the likelihood of it taking a nosedive seems to increase tremendously. Conversely, when Cramer says sell, somehow, a rebound becomes much more likely.
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Investors have certainly taken notice of these odd occurrences, which have become the subject of quite a lot of jokes. Tuttle Capital Management even made an ‘Inverse Cramer’ exchange-traded fund (ETF) that traded under the ticker SJIM, although it closed down on February 13, 2024.
However, enterprising investors are still shorting all of Jim Cramer’s stock picks. Perhaps the most ubiquitous example is an automated trading bot from market intelligence provider Quiver Quantitative. Let’s take a look at how it has performed since the start of the year.
Unexpectedly, shorting Jim Cramer’s picks would have been a bad idea
If you started shorting all of Jim Cramer’s stock picks on January 1, by March 14, your investments would, on the whole, be in the red. To be more precise, this strategy would have caused a loss of 0.45%.
Let’s place that figure within a more meaningful context. In the same timeframe, the benchmark S&P 500 index marked a 6.12% decline.
Despite a less negative result, a 0.45% loss for a short-selling strategy in the middle of a stock market downturn is nothing to write home about.
For additional context, shorting Jim Cramer’s stock picks starting with this time last year would have also provided a negative 23.08% return.
In addition, readers should note that Quiver’s bot shorts ten of Jim Cramer’s most discussed stocks in the past 30 days, and hedges that with a long position in the S&P 500. On the face of it, this doesn’t seem like a rigorous methodology — as discussing a certain stock doesn’t necessarily mean being bullish on it.
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