Paul Merriman did a thoughtful blog entitled: “Ten Reasons to Ignore Jim Cramer’s Advice.” He noted that Cramer ignores the high cost of active trading, uses shaky evidence, ignores proven basics, misses real diversification and extolls the virtues of “research,” despite data indicating it is a waste of time.The harsh reality is that relying on Cramer’s stock picking or market timing advice is no more reliable than basing your investment decisions on the picks of a monkey throwing a dart at a board filled with all the stocks in the Wilshire 5000 index.
Cramer’s hyperkinetic personality is particularly appealing to young, high testosterone men. It has made him a hit with the college crowd and a popular, cult figure. That’s precisely the problem. The quest for ratings has trumped responsible financial reporting. I have seen no evidence that entertainment value is a component of intelligent, responsible investing. It has the opposite effect by distracting you from engaging in a careful analysis to determine how much risk you can take in order to achieve a maximum return.
It’s simply irresponsible for CNBC to continue to air a show that appeals to younger investors and starts them off on their investing journey by providing a daily dose of misinformation.
Following Cramer’s advice is gambling with your investment dollars. For many it is the thrill of hitting the home run. Many investors dream of investing a small amount and turning it into enough money to retire. Although this is possible it is nearly impossible. Develop a prudent globally diversified portfolio and remain disciplined. The discipline is the most difficult so hire an investor coach to help you through the tough times.
Please comment or call to discuss how this would affect you and your financial future.