The Inverse Jim Cramer ETF
nasdaq.com
nasdaq.com
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
Take I dunno, Bitcoin. As you increase the time window, showing a net loss is less and less possible. I'm not a crypto bull and I think it will tend towards zero someday but this is inarguable using current historicals.
Don't take this as advocacy, it's not. There's plenty of strong arguments against crypto without having to resort to such truisms
While in fiat currencies it may go on to inheritance feeding the market with liquidity, unused Bitcoin does nothing, so demand being equal price would increase.
In this model, the "cards" are the actual unit coins and the "players" are the type of coin (Bitcoin, Ethereum, etc).
So long as there's a vibrant enthusiast community, the assets will hold some value but except for a few mainstays, these things tend to atrophy over time.
For instance, yesterday I was helping an 80 year old neighbor clean out her garage. I found some wonderful vintage RadioShack calculators from the late 1970s. They're extremely rare and also, extremely worthless. The supply and price of something can both tend towards zero.
But you may be overlooking that they're also liquid, popular, benefit from network effects, the supply is algorithmically defined in many cases, and mostly fungible.
This should make for more interested communities.
If you've bought property, it's still gonna be there after you've died, ready to be repossessed. same with gold, shares or anything else, really?
And if it's been illegally repossessed you'll have a good chance to retrieve them again through lawful means too.
It's a pretty unique attribute that only applies to digital ...things that can only be touched with a cryptographic key
One of the primary goals of statecraft is to enshrine stores of wealth with those properties and most don't do that well at it.
In reality the most common regret they have is selling their coins when they should have kept them or trading them for newer hype coins that turned out to be vaporware.
The claim was that all stores of wealth have those properties. Crypto can suffer them faster but someone's real estate investment from say, the 2013 in Ukraine, 2003 in Syria, 1993 in Kosovo, 1983 in Rhodesia... Such things aren't immune.
Heck even without war the rules of who can invest in what can change and your assets can be seized like in Venezuela.
It's more common in crypto but these problems are perennial.
The primary argument against crypto is that it shows why an open, stable, well structured professional governing state is crucial to the preservation of property rights. It painfully highlights all the problems that happen when you create these assets in a way that's ideologically against statecraft.
You can see it as the crypto bros are reinventing government without using the g word as they discover the problems that are solved by regulations from first principles.
I mean, that was my point. It wasn't meant to be a 'truism', it was meant to illustrate that your investment making money isn't nearly as valuable if that value is lost because of problems that don't exist with other investments.
If I put money into a fund and the owner dies I can still get my money through the courts. If a crypto wallet owner dies and has the keys in his head, it is gone forever. Same thing with options for investing. If I have to use a crypto exchange to do my trading, then the chances of losing my assets increases exponentially.
Risk vs return is a fundamental proposition of all investments. Bitcoin certainly has higher risk, but the fundamental idea that risky investments need more return to justify them applies everywhere not just bitcoin.
Bitcoin on a thumb drive kept in a safe deposit box does not go missing.
Anyway you admitted that it is a riskier investment to hang on to then handwaved it when I said that no one is taking it into account.
This is downright silly. Might as well say if an asteroid hit the earth your money probably isn't safe.
> Anyway you admitted that it is a riskier investment to hang on
Than what? I admited that all investments have risk, and that like all investments some investments are safer than bitcoin and some are more dangerous. I would say the same thing about literally any investment. Even a savings account has some (miniscule) risk
> handwaved it when I said that no one is taking it into account.
You haven't presented any evidence that nobody is taking it into account. Obviously some people are and some aren't, but i'm not sure that distinguishes it from most other investments. You could argue that there is a higher porportion of people not taking it appropriately into account with bitcoin relative to say an index etf, which probably is true, but that is a hell of a goal post move from ">90% probability for crypto over a ten year period" to go to zero due to risk of investment being stolen.
Um, no? Flash memory cells hold a voltage. That voltage is not going to stay in there forever. It eventually leaks out and your data is corrupted. This isn't usually a problem because the cells refresh when powered on, and most people don't use flash drives for a decade -- but put it in a deposit box for more than a few years and you better cross your fingers when you plug it back in.
"During normal operation, the flash drive firmware routinely refreshes the cells to restore lost charge. However, when the flash is not powered the state of charge will naturally degrade with time."[0]
> Than what?
Than nothing. My point was that people say 'if you bought bitcoin you couldn't have lost money because on aggregate it has gone up'. This is incredibly misleading because many people bought bitcoin and lost it in an exchange collapse, or families had their investments disappear because the person managing it died or the wallet got phished with no recourse, or they forgot the passphrase, etc. This is a risk that is not mentioned when people proclaim the great investment that is bitcoin.
> You haven't presented any evidence that nobody is taking it into account.
Um... the person I responded to?
[0] https://www.ni.com/en-us/support/documentation/supplemental/...
It's why people do moving windows.
The enthusiasts don't actually pay for things in Bitcoin but instead horde it so it doesn't really serve a society function as much as it services an ideology.
The Bitcoin core, the true adherents, are approximately the same percentage of the public that did Liberty Dollars; sovereign citizen types that maintain sprawling websites attacking the Federal Reserve or proffering quack miracle cures.
It's a weird sideshow of frauds, scammers, ponzi schemes, multilevel marketing, occult and conspiracy theorists, the kind that listened to Bill Cooper on shortwave ... That's what will eventually be left propping up the value so it's whatever that group can muster. The boom/bust cycle of Bitcoin being approximately 4 years and aligning with presidential elections could be a coincidence... Let's see what 2025 brings.
Regardless, someday Bitcoin will be integrated into their paranoid delusions as part of the enemy plot and these last holdouts will abandon it.
But that's the long game. I might be talking 25 years here. Or maybe 25 months, who knows?
Regarding the long game, it could go longer. You might consider The Great Disappointment: https://en.wikipedia.org/wiki/Great_Disappointment
It was the purest bunk. Sincere bunk, well meaning bunk, but still bunk. It was proven wrong and wrong and wrong again, but not only did some people take their beliefs to their graves, but an offshoot is still going more than 150 years later.
Sure, it's a dead asset producing nothing and having not much use. But it's easier to transfer than stocks or bonds, and does not suffer of unexpected supply inflation.
The solution is flow weighting [1]. Fewer dollars went into Bitcoin when it was small than when it was big. (By definition.) So you weight the larger flows more heavily.
There is arbitrariness around choosing the delineations. But the basic idea is comparisons across totally-different fund-flow regimes are meaningless for purposes of explaining the present state of the world.
[1] https://www.investopedia.com/terms/w/weightedaverage.asp
Just as some people were Nicolas Bourbaki.
Including monthly investment doesn't really help, either.[1]
[1]: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
ARK tripled in value from April 2020 to Feb 2021. So you get very different results by picking a start date in 2020 or earlier.
Just for kicks, though, here's ARKK versus VTI and cash since April 2020.[1]
[1]: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
Include Michael Reeve's Stock Picking Goldfish too.
https://www.quiverquant.com/cramertracker/
The strategy logic is a bit different than the ETF is being rolled out - this one shorts all the tickers he is talking about the most (whether he is bearish or bullish) and hedges with a long position on the market.
Yet another ETF created for gullible meme-driven investors
I'm not saying ARK is good by any means, personally I'm not a fan of Cathie Wood at all. But context is important as well.
That fund is making big future growth bets. No one would go in with 100% of their portfolio on that.
> An enterprising and clearly meme-savvy fund manager out there, Tuttle Capital Management has actually filed prospectuses for two Cramer-tracking funds:
The Inverse Cramer ETF (SJIM)
The Long Cramer ETF (LJIM)
Consider that the 1x (non-inverse fund) goes up 10% in a day. At the same time the inverse fund, which tracks it, falls 10%. Now consider the following day that the 1x fund falls 9%, to its original price. Consequently, the inverse fund goes back up 9%, but it's about 2% lower than its starting position. So you still lose money even though the original 1x fund is unchanged.
The better strategy is to buy puts or short the non-inverse, 1x version.
But at the same time it reminds me of a certain type of World Cup bet, where you win mega $$ if you correctly pick the winners of all 64 matches. But you also win the same mega $$ if every single one of your picks loses, which of course is just as hard to achieve. (I forget how they handle ties but you get the idea.)
All of which is to say, if Jim Cramer has no expertise in picking stocks, investing broadly in his picks is not much different from an index fund, you'll just roughly track the market. Whereas if he actively gets you to consistently and reliably lose money on high-volume publicly traded investments, then that's still (counterintuitively) a signal that somehow he knows something.
and/or his public predictions influence the markets
I'm pretty sure multiple data vendors compete to sell low-latency feeds of his picks, given his popularity.
If a Cramer-tracking ETF underperforms the market, it's entirely possible that the ETF enters the market late (after the market has mostly priced in the Cramer-bump) and holds during the reversion to the mean. Though, I haven't looked into it.
This is not investment advice.
You don't have any idea why, do you?
The "innocent" explanation is that they might be particularly susceptible to "human" biases (e.g. loss aversion) while still extremely knowledgeable about the market, and that they represent a more extreme version of "human" market errors broadly that eventually correct themselves. Which would be a fascinating hypothesis to explore.
While a less innocent explanation is intentional market manipulation, of course.
If anybody knows of research along these lines I'd be extremely curious.
Also it's worth bearing in mind how "articles from industry analysts" get paid for. Typically from ad revenue from the types of companies featured.
Just observing his onscreen personality at face value: He's very loud and bold, erratic, yelling ridiculous things at the audience in a Philly accent (no offense to Philly on that ... it just lends itself to a particular stereotype, like he may as well be at a bar talking about the Eagles). When his investments are bad, you can just say oh, the guy is a blowhard, not basing his opinions on keen intellectual insight; it's all entertainment purposes and so on.
But there's another cynical angle that enters, maybe it's paranoid to say but I think it's plausible: Does he have personal stake in his advice? Does he have some connections at these companies telling him to boost the stocks on air? That would enter into the realm of fraud. I guess when people confidently urge others to make ruinous financial decisions, that kind of concern always enters into it.
In its performance? No. In the number of eyeballs it attracts? Absolutely. It would make no sense to jeopardise the latter in pursuit of the first.
Some of it is career advice that would be applicable to other fields too -- talking about education, building connections and networks, getting your foot in the door at a company, etc.
He was essentially teaching algo trading, and also tracked wallstreet bets sentiment analysis. He went so far as to pitch his investment strategy to serious tech investors (it was ahead of the nasdaq at the time). His Wallstreet bets tracker had been tanking so he focused on the fish investing fund, but I was waiting for one of the investors to suggest he inverse wallstreet bets and make a lot of money.
[1] https://www.npr.org/2021/09/25/1040683057/crypto-trading-ham...
The best way to run a short ETF (on something where no futures market exists) is to also manage the long version of the fund and cap interest in the short fund to be less than or equal to the long. If it's a serious investment it's likely the long fund naturally has more interest anyway.
The explaination could simply be that mainly only smart money short stocks, and they tend to be pretty good at figuring out issues in companies that are not yet fully priced in.
If I were to run a short ETF, I would add filters such as market cap, short interest and day to covers to avoid liquidity issues and squeezes, and/or play it through options structures. Like, it would have been stupid to be short GME when it had 300% of float as short interest. But it is probably fine in a lot of case with a sufficiently low day-to-covers and short interest. A more active strategy would be to monitor the Fee Rate which gives a good indication of the stock supply and is more "real time" than short interest data which often lags a few days/weeks.
So if you pay 3% borrow costs you do worse than putting your money in Treasuries? 3% seems conservative for the most shorted stocks, I checked a few on [0] - TSLA 0.25%, WE 4%, AMC 143%. Uncorrelated returns are great but this is not the most compelling sales pitch for a short fund. Better to use this information to underweight those stocks in your long portfolio.
Treasuries are quite correlated with the stock market as both depend on liquidity, so it's not exactly a hedge, although they tend to do better during recessions, they will go down during unexpected hikes.
1. Buy and hold broad index funds
2. Throw darts at a board to pick individual stocks
3. Be knowledgeable, do your own research, read financial reports, custom build a portfolio
4. Listen to expert advice (Cramer, anti-Cramer and everything else)
0. Get elected to Congress
I wanted to take a look at this because given stock trades are public you'd think there'd be an ETF to track trades for the speaker of the house, but in reality it seems like people wildly overstate the profitability of their winning trades and understate their losses because "slightly underperforming the S&P 500 (SPY)" doesn't make the same headlines. In the long term, they appear to be no better off than the average portfolio picker.
https://unusualwhales.com/politics
they track "usual whale" trades, large or weird trades, often by well known figures. Congress is an obvious and easy one to track.
However, they're not required to disclose the trades in real-time, so following it closely may not really help and may hurt in the long run, as quick blips pops or runs fizzle out or revert as the market starts to react.
IIRC there is a 3-day or more lag. And that's optional, I think there is a 30 day requirement?
And with #3 above #4, you're essentially considering yourself as the top expert. Those should be flipped, and greater care taken to identify and qualify expertise.
Markets are not just random walks, there is edge to be gained with information and that information can be quite expensive to acquire and refine. A fellow would not have the resources to do that.
Until you realize we're entering uncharted territory as the index funds no longer represent external indices but a huge portion of money flows and are becoming feedback loops.
If your argument is that this feedback loop is distorting the value of the companies index funds invest in, such distortion would impact anyone who buys stock in those companies whether or not they do it through index funds. Therefore, picking and choosing individual stocks doesn't become more attractive even if we know index funds distort the market, unless you only invest in stocks that are not owned by index funds -- good luck with that.
Especially in the world of finance, I don't think you can possibly go on TV, in good faith, and make any recommendation other than "hire and expert" or "invest long term." It's fundamentally too late of someone is telling you about it on TV; could be a great company to invest in but not short term.
But, sadly, the stock market is a merciless test proctor. You may do all the work you think is necessary, you may research until the cows come home and you may still be wrong because you read things that were biased, you did not look at things in the proper perspective, there was some important discovery somewhere that changed the industry, geopolitics, etc.
So even if you are planning on doing your own research you should be well diversified.
Also, do not listen to experts! The stock market is one of the few fields where "experts" will intentionally try to mislead you. Always try to get primary material, or as close to primary material as possible. And do not fool yourself into thinking that reading a bunch of secondary expert articles, or listening to Cramer or other experts is doing research. That's like hoping to become a paleontologist by watching friends.
If every single stock investor bought index funds, investing in stocks would be pointless because it would not reward companies that perform better.
Well they don't, so why discuss meaningless hypotheticals? Yes this advice doesn't make sense in a world where there are no active funds, no wealth managers, where day trading doesn't exist, hedge funds all shut down, there are no quants, no HFT, no one trading derivatives...but until that happens I'm still telling the average person to buy index funds.
Ok, I just wanted you to say this. Your original advice should only be applied to an "average" person.
They will beat out the other investors on this one pick.
Once someone starts winning and getting a better return the money flocks to them and away from the index funds. That then causes index funds to rebalance, which causes those investors looking for a better return to find other stocks, rinse and repeat.
It will never be the case that everyone is investing only in index funds. It would be so easy to beat out everyone else in that scenario.
So in a lot of cases they'll miss out on those hidden gems. And, again, they're not in the hidden gem business, they're in the min-risk, capture broad gains business.
Lots of funds are focused on capital preservation - if the market is down 20% in a year, a funds goal will be to be even (0%) or maybe down slightly like 3-4%.
They may be less focused of being up 20% when the market is up 10% and instead may only be up 8%.
Only because this article was written in October of last year. Since then SARK is down 30% (along with the rest of the market).
You can tell that the entire investment services industry is totally fucked up simply by the form of the information they put out. Investment returns calculated over a single time period is a case in point. What you really want to know is the expected value of the return given random entry and exit dates, but no one publishes that information. Another example: investment recommendations are published as buy and sell recommendations, but that is totally wrong. For any stock, there is a price at which it is advantageous to buy it, and a price at which is it advantageous to sell it, and a range in between where you should hold. But no one publishes those price ranges, they just say "buy", "sell" and "hold" as if the price is irrelevant, or on the obviously false assumption that the price when you act on the advice will be more or less the same as the price when they produced the advice. The whole thing is a colossal scam from start to finish.
"Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? No, NO, NO!!!" (Afterwards... 90% loss in the next 6 days.)
It’s clear to you and I what Cramer’s deal is, but there are plenty of people out there who take him at face value.
[0] - there’s sometimes product placement or even a little feel-good message about friendship or family, but rarely if ever anything that looks like actionable advice.
Presenting biased views that shape people’s entire views of society can be much more destructive over a lifetime than bad stock picks. Destroyed family connections because people refuse nuance, non-existent careers because “capitalism bad”, etc.
Picking against Cramer is no more different than picking against a random person with random picks, which is like 50/50 except you will pay some ETF fees to do so but you will at least have fun losing money like in casinos
I don't know why I feel I should point this out. I'm sure it's completely true. Don't even know why it would cross my mind to wonder. The financial world is so honest and full of integrity that it's obvious that this is true.
The theory behind exploiting the gradient created by alignments caused by factors other than fundamental business performance is better than random.
on some cases it can actually be way worse.
an inexperienced trader may end up losing money on a trade regardless if they picked the "correct" side because they usually have no exit strategy and they will inevitably screw it up.
The inverse Cramer analyses on WSB are some of my favorite posts there (although it's a cesspool today so that's not much praise). But yeah, there are actual data-driven strategies to make money by inversing Cramer.
So if you disagree with him and follow him anyway, you have a sort of moral equivalent of insider information. If you sell a stock in the middle of their buying frenzy at least. If you buy a stock the day after he says sell, you can benefit from the market correction when the rest of the cramerless world can’t figure out why TSM dropped five bucks on Monday for no reason, and decide to buy more.
Updated story https://www.etftrends.com/2-etfs-offer-inverse-and-long-expo...
Someone gave me one of his books. It has advice like make sure you have disability insurance (loss of work is the #1 financial risk for most people) and max out your tax advantaged accounts in appropriate low cost investments.
The "Mad Money" thing is for money left after you cover all that stuff.
The analogy with the inverse cramer fund is pretty obvious as YALL is pretty much a reverse ESG fund "more or less much hand waving here".
An inverse ESG fund would be to use the inverse weighting of an ESG fund.
Also, 25%+ of YALL is TSLA + NVDA + BA.
> Bear Stearns went under six days later
I guess, if you wanna say that is calling it.
They can do that with leveraged and meme ETF's so those same reasons don't hold.
So no, I don't think "do the inverse of a stockpicker" would on average do any better than just following their advice. Additionally, if the fund charges for their service of maintaining that inverse exposure, it will perform worse in end-user returns.
https://twitter.com/CramerTracker/status/1634237672997699602
"I think the fears are not justified SIVB and it's a very compelling situation" about 0:25 into the video
Last trade in SIVB before the markets opened on Friday were around $40 so that's about 87.5% down from where Cramer was touting the stock.
Over a period of a year or two nobody knows anything, possibly even in general. So can't blame Cramer too much. On the other hand there's no reason to listen to him either.
The reason has to do with the mathematics of inverse fund decay. inverse funds of indexes will decay exponentially long term. It has a quadratic decay factor relative to volatility.
e^(-at) which a is the volatility and t is the time.
to get an idea of what this looks like long-term:
https://api.wsj.net/api/kaavio/charts/big.chart?nosettings=1...
The only way to create a working system is to keep it a secret, and keep your trading volume low enough so that nobody notices what you're doing.
Bernie Madoff's "system" worked only because he back dated the trades. Oops.
Part of the inverse Kramer ETF's success is that if you run a hedge fund you can make bank on 20 positions over a year or two.
If you are on TV every night you need a new "winner" 5 times a week, which just isn't possible.
Who do you think was tricked into investing with him?
His fund did well, not sure how you are imagining an investor is being tricked into investing in a successful hedge fund? Can you elaborate on that?
His returns according to wikipedia beat the market so again, I'm confused as to where you figure he did what the market did.
It's a good way to return close to 5% right now without the time lock in period of a CD.
Theoretically should be very low risk unless a bank collapses, although the amount of money that the ETF fund managers place with each underlying bank savings account is obviously way behind FDIC deposit protection.
An inverse of all major actively managed funds will get you the same average performance before the fees (the same as the overall market's), but it won't dip into those managers' bank accounts and transfer their fees to you. It will charge its own fees. So it will underperform, too.
The management fee for this ETF, for example, is 1.2% per year.
I buy options on a small amount of this, as a hedge against my regular Jim Cramer portfolio going south.
What?? He doesn't really do all those investments he recommends? Well, I never.
No it is not at all theoretically sound. The biggest issue with stock picking is low volatility. This does not solve that. The other issue is that stock pickers don't do better or worse than a random selection of stocks after adjusting for factor tilt. That means stock pickers can't do better than average, but they also can't do worse than average - so the whole premise makes no sense if you actually buy into the idea that stock picking doesn't work.
Not True. In fact virtually all stock pickers will do better or worse then the average. What you mean to say is the "average" stockpicker can't do better or worse then the average but that is of course a tautology.
I'm not saying you could extract profit for those situation as there are too many other people trying to do it. But losing money should certainly be possible.
1. You could try to do worse than average, and you'd succeed, but only because of the skewness of individual stock performance. You'd be no better than random chance at picking losers, it'd just be that most stocks are losers.
2. Factor-correction means the strategy of "choosing dying companies" won't work (e.g. in the Fama and French five factor model a dying company would an outlier in terms of high-minus-low, robust-minus-weak, and probably conservative-minus-aggressive).
https://www.trackinsight.com/en/fund/SARK
The short index of ARKK Innovation ETF by Cathie Wood
Hint: It won't
Hint: Inverse ARK is down 25% YTD and down 40% from peak.
tl;dr Memes are not the way to base your investment decision on
But honestly these meme ETFs aren't meant to be held long term, they're intraday funds. If you read their prospectus, they're charging you a lot to hold it with an expense ratio of 1.06% (compare that to VTSAX at .04%)
The fact that it still exists means, they are happy to collect fees from gullible people who are pro/anti large-internet-personalities.
they decay exponentially
if you want to bet against Cramer, short the 1x funds or buy puts
EDIT: it launched today... Either way - TERRIBLE idea.