The “Inverse Cramer” Strategy?

 

Date: 9/28/2022
Author: Chris Hood

 

 


The jiujitsu mats are my time away from work.

But most of my teammates know I’m a professional trader – it’s something that occasionally comes up in conversation.

Now I’m not one to give unsolicited advice.

After all, I get paid for coaching.

Most non-traders don’t want to hear about the intricacies of volatility, theta, or credit spreads anyway. If they were, they’d hire me to teach them.

Last week I was honestly pretty stoked about the armbar I landed on one of the younger guys.

I’m not one of those irritating martial artists who celebrate or talk sh*t. Instead, I just quietly smile and feel good I still get to train.

But after class, I heard a blue belt say he doesn’t have time to learn to trade. So he just follows the advice of experts.

Expecting that he had his money with a financial advisor, I didn’t take much notice.

Then I heard it.

“I follow Yahoo finance and stuff. But I really love Jim Cramer on Mad Money. That guy knows what’s up.”

My head almost exploded.

I wanted to scream, jump on my soapbox, and go on a 3-hour tirade.

But I knew it wouldn’t do any good, and I was done offering trading advice for the day. An hour of hard sparring had me relaxed and tired, so I just let it go.

So you’re going to hear my thoughts.



Jim Cramer is an entertainer, not a market advisor. If people understood that, it would be fine, but lots of people actually follow him.

Cramer rants and screams some of the worst advice I’ve ever heard.

Avoid his recommendations at all costs.

How do I know he’s full of it? I look at the data. It’s just my nature as a professional.

Enter the “Inverse Cramer Strategy.

Yes, it’s just what it sounds like. When Cramer sells, you buy, and you sell short when he buys or holds.

There isn’t a tradable ETF for this, but a Twitter feed (@InverseCramer) and several other sites track its performance.

The website www.unusualwhales.com has an excellent performance summary of the strategy over the past six months. Check it out if you don’t believe me.

Those who followed Cramer’s buy and sell picks, the Pro Cramer Index, are sitting on a -35.09% return as of this writing.

If you followed the Inverse Cramer strategy, you’d be up 14.07%.

Okay, I realize many investor portfolios are down right now. So why do I pick on this guy so much?

First, he has a vast viewership and authors lots of books.

Cramer’s popularity and the illusion of credibility have lost many a lot of money. People have conveniently forgotten his endorsement of Bear Stearns just days before it collapsed in 2008.

Second, I just can’t stand him. As you can see from that clip, his delivery is clownish. His voice sends shivers down my spine.

Real traders don’t speak in absolutes, as if their opinions come directly from God himself.

The takeaway is that you can’t trust anyone in the mainstream media to give you sound advice. So if you’re going to trade, learn to do it properly.

Get a coach.

Otherwise, just invest your money into a well-diversified index fund before you lose it all.

Cheers,
Chris Hood

PS – Work continues on our live trading room. You aren’t going to believe the results I’m getting with my tools. Stay tuned for access.


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