http://www.youtube.com/watch?v=708wDFX28lc
hmm interesting, anybody completely follow what he's talking about?
hmm interesting, anybody completely follow what he's talking about?
jim cramer on stock manipulation...
- Thread starter theGlove
- Start date
Yes, most of what he is saying is pretty basic language for market evaluation.
Cramer made millions out of the markets, ran a hedge fund and heads a ridiculously popular financial show. I'd hardly call him an idiot.
I don't follow his show, but according to Cramer Watch he's at ~49%. That's completely playable depending on how big his winners are. I haven't looked at his picks enough to know.
Cramer made millions out of the markets, ran a hedge fund and heads a ridiculously popular financial show. I'd hardly call him an idiot.
I don't follow his show, but according to Cramer Watch he's at ~49%. That's completely playable depending on how big his winners are. I haven't looked at his picks enough to know.
1. So what? Any idiot can make millions running hedge funds, I know plenty.
2. Who cares if he runs a ridiculously popular show? So does Jerry Springer.
3. 49% and a monkey beats him? Not even beating 50% shows that you, in the long run, can flip a coin and be more correct. His ROI is 1/3 of that of a monkey.
Mindless crap entertains the mindless. I don't care if he ran a hedge fund for 5-10 years. Delivering consistant results that beats the market over 10-15 years is impressive, especially when you can do so *AND* your return net of fees and other expenses still beats the market.
The thing with hedge funds is that they have so much damned money, they can 'move' markets.
I used to work at one... they had an average of 20% return every year, because of how much money they had at their disposal.
I used to work at one... they had an average of 20% return every year, because of how much money they had at their disposal.
iversonyin
Diamond Member
- Aug 12, 2004
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You mean they are leverage up their arse (2-10 times buying power)? Hedge funds get rich off their fees....even if they lose money for their investors...
A word on Cramer...watch him as an entertainment show (a prime time replacement or replacement for an episode of Simpson). Investors are better off stashing most money in a long term index fund.
i agree he's a dbag but what are the overall returns on his recommendation? 49% is meaningless...1 of his wins could go up 100000% and even if he is 10% you make money
iversonyin
Diamond Member
- Aug 12, 2004
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Some hedge funds do outperform the market because of the leverage/strategies they use. There are handful of people seek hedge funds as a different asset class that provide diversification. But generally, they expect hedge funds to generate "alpha" or excess return.
THe purpose of a hedge fund, in the sense we are talking about, is to provide alternative ways of utilizing funding that is risky, but at an investment amount that allows the absorbsion of risk. They can go into private equity, high leverage, and other alternative investments that offer very high returns but also allow for diversification through raising of massive amounts of capital.
Most of the people have to be high net worth because, in order to beat the market, you need to be able to absorb some losses, especially in the short-term.
A similar case would be stocks v bonds. In stocks you can lose *everything* in the short undiversified manner. However, bonds are assured payments (assuming AAA). Once you look at the two in the long-term (20+ years) stocks return MUCH higher.
Sure, you decrease your short-term principal loss risk with bonds and stocks are more volatile. But with stocks, your diversification and long-term horizon allows you to essentially negate the risk and enjoy a better return.
I have no clue what he is saying whatsoever 
Finance and investment people: which books do you recommend to build a solid understanding ? (the whole gamut of the market, stocks, hedge funds, mutual funds, and all the bits and pieces)
Finance and investment people: which books do you recommend to build a solid understanding ? (the whole gamut of the market, stocks, hedge funds, mutual funds, and all the bits and pieces)
That was my point. With even something like a 3:1 return you could make money being wrong most of the time. People undermine the value of risk management.
hes no idiot, but hes no genius. he struck it good, now hes making money with shows and books off of his name and personality.
hes definitely for entertainment, and not much more
hes definitely for entertainment, and not much more
My question is this...DO YOU READ?
He is not only wrong more than 50% of the time, but when he gets it wrong he gets it REALLY wrong. The monkey, which is random and still gets it wrong more than 50% of the time, STILL has a better return.
You could do two things to improve your return. Listen to Cramer, see every stock he pimps (or not), flip a coin whether to invest or not, otherwise completely discard what he says.
No wonder people defend him, if they can't read a simple website that shows *EXACTLY* his performance, then they probably should be having a moron like him pick their stocks.
Miramonti
Lifer
- Aug 26, 2000
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He's a tool, but it takes gall to prove it to everyone on TV like he does here.
None of what he says is a surprise to anyone on the inside, its just damn surprising hearing him say it. I hope cnbc cans him for admitting that he uses his contacts there for manipulating his positions (even tho its nothing new either, no one is ever so narcissistic to gloat about it.)
Hedge funds have a ton of money, but what he's talking about gives money back in an attempt to manipulate sentiment. I think it can work in the shortrun, but in the longrun it will fail due to the even deeper arbritrage pockets and valuation models that professional firms use to price a stock and its change over time.
None of what he says is a surprise to anyone on the inside, its just damn surprising hearing him say it. I hope cnbc cans him for admitting that he uses his contacts there for manipulating his positions (even tho its nothing new either, no one is ever so narcissistic to gloat about it.)
Hedge funds have a ton of money, but what he's talking about gives money back in an attempt to manipulate sentiment. I think it can work in the shortrun, but in the longrun it will fail due to the even deeper arbritrage pockets and valuation models that professional firms use to price a stock and its change over time.
I wish that site would use a longer period than 30 days to evaluate the pick. I remember reading somewhere that Cramer aims for 6-12 months, so they aren't even evaluating in the proper context. I also vaguely recall something about Cramer not trading any stocks he recommends for a long period of time after he mentions them, so that he can't be accused of taking advantage. Along with that came another mention of how he aims for longer periods than days/weeks anyway.
iversonyin
Diamond Member
- Aug 12, 2004
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Not every funds have one. And if you under perform your peers, your fund is likely going under within a year. Either way, the managers still make the management fees. 1-2% management fees are charge either way most of the time. Its the 20% profit split that is tie to the provision. 1-2 % of a lot of money is a lot of money. That's how Cramer got rich- part of it anyway.
I did the homework - he was the second largest partner in his fund so he was not only working other people's money he was using his.
Lets do the math.
$500 million = 10 million @ 2% management fee
With a high watermark provision, and picking up 20% of the profit of the fund at the end of the year while owning a large share would be impressive. I'm under the impression that where he made his real money was the share in the fund which averaged 24% year over year that was compounded every year with his management fee and profit bonus.
iversonyin
Diamond Member
- Aug 12, 2004
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I never doubt that he didn't make money for his investors. I'm just saying ANYONE that can start a hedge fund can get rich off the fee.
Lets for argument sake...Cramer's investors don't like the return of his fund and cash out after 1 year. He keep the fees. 10 Million is still a lot of money for 1 year pay- I don't know how much you make last year, but I sure as hell know most Americans don't make 10 mil in their lifetime.
Many of the shadier hedge funds (or even mutual funds but its harder there) make a ton of money in the short term. They do this by actively seeking highly risky investment, which they know they can replicate for 2-3 years, whether it be Forex, options strategies, banking a hot emerging sector, futures/forwards, or some other speculative issue.
They utilize contacts to bring in a ton of money at first, bank a lot themselves, and since most strategies that yield a lot will also attract more money, their alpha source goes down. Since they usually can't switch over to another investment pattern immediately, they fold.
By that time they have made millions. Some times they can just start a new fund.
Overall, he isn't great. I see him on and I equate him to nothing more than a Jerry Springer of investments and I'd trust him about as much as Springer to guide me in my investment plans.
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