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By Josh Katzowitz, WCI Content Director
In times like these when, thanks to social media, you can yell at the world’s richest people and troll those who hold the most power, why not take the musings of one of the most well-known (and most-mocked) stockpickers and then use it as evidence for why you probably shouldn’t be listening to him in the first place. That’s what the person behind the popular @CramerTracker Twitter account has done, and it’s the reason why an ETF has been created that allows you to do the exact opposite of what famed analyst Jim Cramer says you should do.
If you hate Jim Cramer’s stock picks, here’s some good news. You can make money off wagering against him.
In October, Tuttle Capital Management filed to the SEC a new Inverse Cramer ETF that would basically invest in the opposite of what the famed host of Mad Money advises. How will that work? According to the filing,
“Under normal circumstances, at least 80% of the Fund’s investments is invested in the inverse of securities mentioned by Cramer. The Fund’s adviser monitors Cramer’s stock selection and overall market recommendations throughout the trading day as publicly announced on Twitter or his television programs broadcast on CNBC, and sells those recommendations short or enters into derivatives transactions such as futures, options, or swaps that produce a negative correlation to those recommendations. The Fund goes long on stocks or ETFs that represent sectors that Cramer is negative on. The Fund uses Index ETFs and inverse Index ETFs to take the opposite side of Cramer’s announced market view.”
It's a clever troll. But the Inverse Cramer ETF also might ultimately be profitable—at least for now.
Picking the Opposite of What Jim Cramer Does
The same company that is starting the Inverse Cramer ETF also created an inverse ETF for what’s inside Cathie Wood’s Ark Innovation Fund (ARKK). For the year, ARKK is down about 59%. SARK, which is ARKK’s inverse, is up 54%.
IndexOne, meanwhile, created its own hypothetical version of a Cramer Inverse fund, based on @CramerTracker’s tweets. For the YTD, it’s up 0.71%. Meanwhile, the S&P 500 is down nearly 17% for 2022.
Cramer has been in the stock market limelight for the past 20 years. He’s the sweaty figure on CNBC who rolls up the sleeves of his dress shirt and yells at you through the camera about why you should invest in General Electric (he later said this about that advice: “Rarely have I felt this stupid”) or demanding you sell Netflix (six months after saying that in 2012, the stock was up 175%) or saying that it was just fine to invest in Bear Stearns (a few weeks later, that company collapsed).
Cramer was an investment banker with Goldman Sachs in the 1980s before opening his own hedge fund, where he made millions of dollars a year for more than two decades. To the layperson, he’s a guy who looks and sounds like he knows what he’s talking about, the kind of guy from whom you can take advice.
While Cramer is omnipresent on CNBC broadcasts, he also created the CNBC Investing Club that allows viewers and readers to pay $400 per year to see “every move Jim and his team make for the portfolio and [to] get Jim’s market insight before anyone else.” To the layperson, he apparently seems like a guy to whom you can give money so that you can eventually make money.
A 2009 Penn State study determined, “While Cramer may be entertaining and mesmerizing to many of his viewers, his aggregate or average stock recommendations are neither extraordinarily good nor unusually bad.” But the online mockery of Cramer has become abundant.
That includes the anonymous person who runs the @CramerTracker Twitter account. Here’s a sampling.
The person behind the Twitter account, which now has more than 140,000 followers, says they work in media but also has a background in finance and loves investing. But that love doesn’t extend to Cramer and the advice he gives.
“I've always been fascinated with the idea that public figures/TV ‘experts’ were able to give financial advice and, in Jim's case with the CNBC Investing Club, charge for it,” the person behind @CramerTracker told me, via email. “If you look at his Twitter banner, it says ‘get in-depth investment advice’—a lot of people say Jim is just an ‘entertainer,’ but that's not true. He is marketing himself as an expert to ‘make you money.’ This has always fascinated me because financial advisors, etc., aren't able to talk about specific stocks online, etc., and are heavily SEC compliant. But Jim can do whatever he wants without any accountability.”
@CramerTracker opened the Twitter account in November 2021 to bring accountability to Cramer’s picks. So far, Cramer has been wrong more than he’s been right. As @CramerTracker says, “He is great if you just do the opposite!”
But what happens to the Twitter account if Cramer goes on a hot streak? Could they admit that Cramer is capable of making good calls, that he can bring some value to the stock-picking world?
Said @CramerTracker, “Still waiting on the day . . .”
Jim Cramer’s Meta Meltdown
With the meltdown of tech stocks in the last half of 2022, Cramer found himself back in the mainstream news in October 2022 when he nearly broke down on camera while discussing his analysis of Meta. After repeatedly recommending to buy stock in Facebook’s parent company, Cramer apologized on CNBC after Facebook plummeted by 24% and fell to its lowest price in six years, saying, “I made a mistake here. I was wrong. I trusted this management team. That was ill-advised. The hubris here is extraordinary, and I apologize.”
He didn’t get much sympathy from people like @CramerTracker, who said he’s never been contacted by Cramer or anybody representing him.
I asked @CramerTracker if he felt sorry for Cramer while watching him get emotional on national TV or if he celebrated by screaming, “HA! I was right all along!”
“Didn't feel bad because he is the one urging others to buy or sell stocks, but I don't like to toot my own horn either,” @CramerTracker said. “I just track Jim's picks and do the opposite. He was a big believer in Meta, [Mark Zuckerberg], etc., for months and months, urged Mad Money and CNBC club members to buy Meta all the way down and hosted Zuck for an interview on Mad Money in which he praised him over and over and over again. I just call it how it is based on Jim's actions. Jim has probably already forgotten about Meta and has moved on to the next stock.”
Though hardly anybody is going to confuse Cramer with investing icons like Warren Buffett or Jack Bogle, does that mean you should put any significant money toward the Inverse Cramer ETF? Probably not. The White Coat Investor has always recommended investing in low-cost index funds and shying away from individual stocks. As Dr. Jim Dahle philosophizes, good investing is boring investing.
The Cramer Inverse ETF will be anything but boring.
As Nasdaq.com wrote, “SJIM [the Inverse Cramer ETF] and LJIM [the Long Cramer ETF] will be actively managed funds . . . [and] would be significantly more complex. This is not your vanilla buy-and-hold index fund.”
@CramerTracker said they have no relationship to the ETF and that they’re actually not a huge fan of the investment, because Tuttle Capital Management has too much discretion in making choices for the fund and that it won’t be a true Inverse Cramer ETF.
“The best way to Inverse Cramer is to follow my account that tracks moves straight from the source,” @CramerTracker said. “Inversing Cramer straight from the source has been very good so far.”
Money Song of the Week
Joe Ely is a west Texas music icon—a country/rock/folk/honkytonk guitarist and singer who once toured with The Clash and played with the likes of Bruce Springsteen and Lyle Lovett. He grew to fame in Lubbock, Texas when he, Jimmie Dale Gilmore, and Butch Hancock formed The Flatlanders in 1972.
He’s had an impressive career, but I was relatively unfamiliar with him until I recently attended the Austin City Limits Hall of Fame induction ceremony, and I got to see his power as a performer in a live setting.
As could be expected from a man of his location and time, he wrote songs about honky-tonks and boxcars and Billy the Kid and all kinds of other Americana. And that includes women and whiskey and the money he’s spent on both, which he sang about in the aptly titled tune Women, Whiskey, and Money to Burn.
It’s a short song with a rather basic premise, and quite honestly, his ideas about money and spending are a little . . . I don’t know . . . caveman-esque. It’s probably better for Ely to really think through his spending habits and ponder the positive aspects of delayed gratification while learning about the virtues of a solid 401(k).
But the tune is catchy with lyrics like:
“A preacher preached on the sins of man/You hold the world in the palm of your hand/I did not leave a stone unturned/For whiskey and women and money to burn.
Whiskey and women and money and burn/A taste of the high life, you'll never return/From whiskey and women and money to burn.”
It seems to me that somebody should sit down with Ely and recommend doing a Backdoor Roth IRA. But I’m pretty sure that Ely probably wouldn’t listen at all. He’d probably rather be writing songs about tumbleweeds and drinking big bottles of gin.
Tweet of the Week
We all need a little Big Bird in our life. This story confirms it.
Do you think the Inverse Cramer ETF will make money in the long run? What do you think about stockpickers on TV? Have you ever taken Cramer’s advice and made money? Comment below!
[Editor's Note: For comments, complaints, suggestions, or plaudits, email Josh Katzowitz at [email protected].]
The post Can’t Stand Jim Cramer’s Stock Picks? Now You Can Make Money Betting Against Him appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.
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By: Josh Katzowitz
Title: Can’t Stand Jim Cramer’s Stock Picks? Now You Can Make Money Betting Against Him
Sourced From: www.whitecoatinvestor.com/jim-cramer-inverse-etf/
Published Date: Sun, 20 Nov 2022 07:30:19 +0000
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