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Comment by crazygringo | Hacker News Reader

This is really funny.

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.

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> 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.

I haven't looked at him very closely, but I'm not sure how to read Jim Cramer.

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.

> dops he have personal stake in his advice?

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.

Not speculating whether Cramer or acquaintances of his have a stake on the stocks or not. But from what I remember from posts on WSB his advice if you'd follow through a) doesn't give very significant changes and b) rather goes in the negative direction. To me it seems it's hard to separate from noise. Of course this might be explained by stating a free money paradox. (If everyone invested...) But also it seems his advice is actually rather random and just fits an entertainment narrative at best or sales pitch at worst.

This should give you some idea: https://youtu.be/r07Gg92YjOI

I'm not huge into finance, can you tell me what it's supposed to give me an idea about? It seems like he's talking about his early career in the context of possible advice for people starting out.

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.

There was an NLP based trading firm about 10 years ago that would run sentiment analysis over articles from industry analysts. According to someone that worked there, some of the most useful signal came from analysts that had strong negative correlations with future performance.

That's incredibly interesting.

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.

The basic reason is that in whatever sector that is 'hot' the shares get overpriced and a lot of companies pile into the hot sector increasing competition and also hyping the sector further using investor money. Examples being dot com stocks in the late 90s, crypto stocks recently and probably AI stocks in the near future.

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.

I think it works more like a law of thermodynamics, where no matter how you arrange the elements or what signs you flip, whether you follow his advice or inverse it, any stock betting system based on Jim Cramer is guaranteed to lose money.

Relevant XKCD https://xkcd.com/2270/

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