Jim Cramer’s Mad Money Picks: 2011 and 2012 Recap

April 22, 2013  |  Finance

After announcing the idea of PunditTracker early in 2012, we solicited suggestions from our readers on which pundits to track. The most requested financial pundit, by far, was Jim Cramer. In fact, during our interview with NPR last March, host Bob Garfield ended the discussion with the not-so-subtle request: “Two words: Jim Cramer”.

We are making Cramer the first in our PT Focus series, in which we take an in-depth look at a pundit’s track record. For those who are unaware, Cramer is the host of the popular show Mad Money on CNBC, providing general financial advice as well as specific stock recommendations.

Cramer currently has an F grade on PunditTracker.com. Let’s walk through how we arrive at that score.

First, here are the parameters by which we evaluate Cramer’s stock recommendations:

  • We started tracking his picks on January 1, 2011.
  • We score only his “Featured” picks on Mad Money and not those made in other segments such as the “Lightning Round.” Our reasoning is that the Featured picks are unsolicited recommendations for which Cramer has presumably done more research than for picks given as live responses to viewer questions.
  • We measure the performance of his picks relative to that of the S&P 500 index over the corresponding period.
  • We assume a three-month holding period, unless Cramer reverses his stance on a given name (e.g. says Buy XYZ and then says Sell XYZ within the three months), in which case we “close out” the original recommendation. This holding period is based on the idea that Cramer tends to revisit his picks each quarter. (Note: We also have calculated performance using a six-month holding period; we are happy to provide the data if there is interest).
  • The baseline stock price is the opening price two days after the recommendation is made, in order to account for any day-one “Cramer bump” effect.
  • The hit rate is the percentage of Cramer’s picks that outperform the index. We equate sell ratings to short recommendations (i.e. they are scored as correct if the stock underperforms the S&P).

With the parameters out of the way, let’s now delve into the details of Cramer’s performance.

Given our assumed three-month holding period, we have now graded two years worth of Cramer’s picks: those made from January 2011 through December 2012.  That amounts to 552 calls overall, of which 254 outperformed the index (46% hit rate).

On average, Cramer’s picks returned -0.08% versus the 1.35% S&P 500 return over the corresponding period. That amounts to 142 basis points of quarterly underperformance, or 568 basis points on an annualized basis, which amounts to an F grade in our grading system. (We award an A for 500+ basis points of annual equity outperformance and an F for 500+ basis points of underperformance).

Let’s now break down his results by year and by quarter:

20112012Total
Cramer's Picks (three-month holding period)-1.6%1.1%-0.1%
S&P 5000.5%2.0%1.4%
Relative performance (basis points)-207-89-142
# picks247305552
Hit Rate (% that outperformed)48%44%46%
PunditTracker GradeFDF
1Q112Q113Q114Q111Q122Q123Q124Q12
Cramer-1.1%-8.3%-5.3%6.0%1.9%2.5%-3.1%2.1%
S&P 5001.2%-4.8%0.0%4.7%1.6%2.8%0.1%3.1%
Relative-234-347-53813329-35-313-101
# picks5963487786816177
Hit Rate39%46%46%58%45%43%36%51%
PT GradeFFFAC+C-FD-

Here were Cramer’s ten best and worst picks during the two years:

10 Best Picks

DatePickS&PRelative
Sell RSH12/22/1133.3%-12.0%45.3%
Sell RIMM05/02/1150.0%7.5%42.5%
Buy TRNX03/18/1140.4%-1.5%41.9%
Sell VRA03/02/1245.5%6.3%39.2%
Sell SVU07/11/1231.9%-7.0%38.9%
Sell MDRX03/15/1239.2%4.4%34.8%
Sell ZIP06/11/1224.7%-8.3%32.9%
Sell FSLR10/13/1127.5%-5.3%32.7%
Sell TUMI04/23/1235.1%2.5%32.7%
Sell NOK05/02/1139.7%7.5%32.2%

10 Worst Picks

DatePickS&PRelative
Sell VRUS06/09/11-130.0%9.2%-139.2%
Buy NFLX07/26/11-70.0%-4.8%-65.1%
Sell Z11/29/12-64.3%-7.2%-57.2%
Buy PACB06/24/11-65.8%-9.2%-56.6%
Sell HPQ11/20/12-59.9%-9.0%-50.9%
Sell ZIP11/19/12-58.6%-10.3%-48.3%
Sell FB09/04/12-47.9%-0.4%-47.5%
Buy QCOR09/07/12-47.8%-0.7%-47.0%
Buy OCLR02/22/11-44.7%1.0%-45.7%
Sell TRLA11/29/12-52.4%-7.2%-45.3%

Cramer underperformed the index on both his Buy and Sell recommendations, although his sells did even worse, with the stocks rising 4.9% on average versus 3.2% for the S&P.

BuySell (Short)
# of Picks494122
Cramer1.1%-4.9%
S&P2.4%-3.2%
Relative-135-173

We will provide quarterly updates on Cramer’s performance going forward.

Can you pick stocks better than Jim Cramer? For those new to PunditTracker, we allow users to compete with pundits. Click here to visit our Finance page and start making predictions on various financial events, including Apple’s quarterly performance tomorrow (using the “Vote Now” buttons).

 

Comments

comments

 


5 Comments


  1. I may be worth listening to as I have experience of over 50 years picking individual stocks- ETF or Mutual fund stuff-which hides they seer from personal responsibility!

  2. hank you for doing this. I’ve developed a real distaste for Cramer’s particular brand of capitalism
    bubblegum casting reviews

  3. Very arbitrary, and not really needed, since whatever bump the stock experiences should be already priced in to the next open after his rec.

  4. I may be worth listening to as I have experience of over 50 years picking individual stocks- ETF or Mutual fund stuff-which hides they seer from personal responsibility!

    *I was cited in Forbes Michaels Del articel in March of 1999 as being the largest single indepenent owner of DELL in 1999-with 1,150,000 personal shares of-
    Dell was the best stock of the 90′s decade-up over 93,000 % in that ten year period

    I am now long with a 19% plus gain in INTC-40,000 shares.

  5. I don’t understand the 2-day delay in opening the position. Very arbitrary, and not really needed, since whatever bump the stock experiences should be already priced in to the next open after his rec.

    If I’m wrong about that, what would perhaps be more interesting is to look at avg. performance of his picks during the first five days, broken down into day 1, day 2, day 3, etc. — to quantify the short-term impact of his recs.

Trackbacks

  1. Why Do People Invest in Stocks or Anything Else? | Cash Cow Couple
  2. Jim Cramer's Biotech Picks Drive Strong Q2 | Pundits and Predictions Blog | PunditTracker
  3. Jim Cramer’s Mad Money Picks Get An ‘F’ – Facebook Inc (FB), Groupon Inc … | Smart Shopping Mommy
  4. Jim Cramer’s Mad Money Picks Get An ‘F’ – Facebook Inc (FB), Groupon Inc (GRPN) & More - Insider Monkey
  5. Jim Cramer's First Quarter 2013 Mad Money Picks | Pundits & Predictions Blog | PunditTracker
  6. Top Newsstuffs (April 22-28) | The Buttonwood Tree
  7. Hot Links: Acquire Knowledge | The Reformed Broker

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