Jim Cramer is one of the more popular figures in the financial media today. He hosts CNBC’s Mad Money, and co-founded the publicly traded company The Street. But before he became a media darling he got his street cred running his own hedge fund called Cramer, Berkowitz & Co. He retired from the fund after 14 successful years boasting an impressive average annual return of more than 20%
The transition to financial media was easy for him because of his background as a reporter. He also was the president and editor-in-chief of the Harvard Crimson when he was a student at the college.
Should You Take Cramer’s Stock Picks?
On his show Mad Money, Cramer has a section called the lightening round. This is where viewers call in and give him stocks in their portfolio, he then gives him his thoughts on whether or not they should buy, sell, or hold that position.
Despite his best efforts to give responsible advice, it would be foolish to listen to his stock pick advice.
The main reason is that he doesn’t know your financial situation nor does he know your risk tolerance. A professional advisor will sit down with you, look at your finances and help you reach your goals. You have access to them at all times to answer your questions. Cramer could tell you that stock XYZ is a buy today, but change his thoughts on the company days or weeks later. This doesn’t make him a bad person or a phony, but as new information comes across the tape its your job to access it and even change your investment thesis on the company.
Cramer makes a good deal of money from selling books, writing for thestreet.com and being the face of CNBC. It’s his job to talk about stocks and get people excited about the market. However, no one is ever right all the time, and he’s had his fair share of bad calls in the past.
What Can You Learn From Cramer’s Stock Picks
Like him or not, Jim Cramer is one of the most knowledgeable figures in the financial press. He understands the markets and knows virtually every company inside and out. If there is something that you can learn from him is his work ethic. He preaches doing your homework, listening to conference calls, reading what the analysts are saying, and doing your own research. These are all essential if you want to be a successful investor.
At the end of the day, no one is going to care more about your money than you. You owe it to yourself to take responsibility of your investments. It’s easy to delegate that to someone else, but if their agenda is not aligned with yours it could end up being very costly.
It’s okay to speak to other investors, read articles and take stock tip ideas from someone else. However, it’s not okay if you don’t follow up and do your own due diligence. Learn from Cramer’s work ethic and vet his stock picks.