How valid is....

Question

Cramer's Mad Money? I have recently started watching this show and reading the WSJ. Now I have little doubt that the Journal is a credible source to start reading, but what about Mad Money? It seems to me, the uneducated trader, that it is accurate and credible, but I would really hate to start learning or digesting information from this show if it is garbage.

dukes · Answer

According to this site, a monkey makes better stock picks than Kramer. https://cramerwatch.org/

eazyb81 · Answer

He's entertaining, but I would take his stock picks with a grain of salt. 

One thing I did when I started watching his show was to write down some picks he was high on over a two week period. I then followed those stocks for awhile to track their progress, and I wasn't very impressed at their results. 

Not surprisingly, he didn't mention his picks from the previous weeks/months that had tanked.

lepium · Answer

I found this site quite interesting (I liked their down to earth attitude): https://www.fool.com AKA Motley Fool

dabots · Answer

i like the fool, they don't condescend to know exactly what will happen

kramer's good for hearing about yesterday's news

kidderek · Answer

The problem with most traders/brokers on tv is that they use absolutes to sound authoritative when in the end, it's the absolutes that are hiding their ignorance.

rusk521 · Answer

I also recommend going with motley fool. They have a neat program called CAPS, it is a stock picking simulator with thousands of participants. You choose what stocks will outperform or under perform the market, and you give a short pitch explaining why. Everyday the program assigns a new score based on your results. The best part is... you get to see what other people think about each stock. Last October I choose five stocks on CAPS with good pitches and rankings (1-5 star). As of today, my average return is 20%, with only one stock (Honda) in the red. 

Even if you don't choose to invest, plenty of knowledge can be gained from the site.

squali83 · Answer

I started looking at motely fool as well. I will definitely start looking at CAPS, seems like a great learning tool!

aceman626 · Answer

is it free or do you have to pay $$$? I'm talking motley fool.

lepium · Answer

Significant portions of it are free. But there are a few subscriber only services, mainly a few stock pick recommendation newsletters.

L.

lhotseface · Answer

Motley fool's hidden gems is partly paying for school...you get the idea

cnc2 · Answer

Cramer's Mad Money is mostly entertainment, you could pick up a few good principals from watching it. However, if you are truly interested in investing in equities, I would recommend a primer book for investing. Pat Dorsey of Morningstar actually has a great introductory book on investing in equities. It is called, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market.

My favorite resources to keep updated on market happenings are WSJ & Barrons. IBD is also a good daily resource. For an international view the Financial Times. I pick up magazines such as BW, Fortune, Smart Money, etc only as a last resort. I don't find the articles well formulated (many lack sufficient supporting evidence) and the material is often dated.

As for TV, I prefer Fast Money over Mad Money. I enjoy the variety of perspectives and they usually spend more time describing why they recommend a position (ie the logic behind the decision) than Cramer does.

riverripper · Answer

It has been my opinion for a while that if he was so good at picking winning stocks he would be at a big bank making millions of dollars and not on TV. I am sure the salary he gets paid is damn good but nothing like what he would pull down if he was amazing as he tries to come across. His show is up there with Suze Orman for entertainment but lack of substance...Suze mainly cause the people that call up appear to be so incredibly clueless. Like can I buy a BMW, I take make $9.75 an hour and have 60,000 worth of credit card debit.

flapjack · Answer

During the mid-late 1990s the Motley Fool was a great website. There were always interesting articles and they constantly complained about the mutual fund industry's high fees. One of their basic mantras was that the only type of mutual funds worth buying were low cost index-tracking funds.

I think that the original owners in the website sold a stake to a media outlet (possibly AOL) a few years ago and there has been a noticeable change in journalistic quality since then. Now they are always trying to sell their mutual fund ratings and they encourage people to invest in actively-managed mutual funds (exactly the opposite of what they used to do).

They recycle their articles far too often. Someone will write a generic article about investing and then every few months they'll relase the same article with a new date and the "new" article will shown up linked to Yahoo Finance.

I think they lost a lot of credibility a few years ago when they sold out part of their intiial stake and changed the focus of the website from simply being informative to trying to sell investment products.

If you really want good stock analysis, check out the Value Line - https://www.valueline.com . I used to have a subscription, which I recently let lapse when I started aggressively saving for business school.

Cramer is interesting, but by the time he mentions his stock picks, it's too late to profit off them, as the picks tend to shoot up in price.

naturallight · Answer

If you're looking to gain some easy-to-apply knowledge about evaluating companies and picking stocks, try this book:

The Little Book That Beats the Market 
by Joel Greenblatt 


I know, the title is ridiculous. And you probably take some of what he says with a grain of salt. 

But he clearly lays out two crucial investment principles that I think should help anyone. Also, the book is a breeze to read--no finance background is required.

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