September 23, 2010

Jim Cramer Results Vs S&P 500

Its very tempting to want to trade stocks.  Its very natural to want to be an active investor.  The irony is that the passive investor beats the active investor all the time over a reasonably timeframe. 

Jim Cramer (Mad Money) is very informative and certainly fun to watch however I read recently that he has beaten the S&P 500 just a few years as a commentator and when you consider the amount of commissions, even at $7 per trade, you really don't end up making more following his trades versus the S&P 500.  Additionally, the capital you would need to follow his recommendations is too large for most investors so you have to pick and choose and you know how that goes, you will invariably pick the losers :(

To be fair, Jim Cramer has claimed that his hedge fund beat the S&P 500 over its twelve year run, although, this has never been verified and its important to point out that he wasn't the only stock picker.

Its boring but buying the S&P 500 when you feel like it and adding to it over time is THE winning strategy, period.  Sure, you can lose money that way too but at least you can sleep at night knowing that with that strategy, you will beat over 90% of the professional money managers over the long haul.


  1. AnonymousJuly 26, 2012

    I've been surfing online more than 4 hours today, yet I never found any interesting article like yours. It's pretty worth enough for me.
    In my opinion, if all web owners and bloggers made good content as you
    did, the internet will be much more useful than ever before.
    Also visit my website : novoline

  2. You are right, Jim is very entertaining but his picks are not very good. I've watched for years and keep track when I can and he sorely loses to an index fund.