TV Cramer is Full of Crap

This chalks one up for the I was right even when I was wrong category.

In my Stock Shaming - It's Bad to be the King post I opined on succumbing to my irrational contrarian view to Jim Cramer's condescension on the morning of the King Digital Entertainment IPO (KING). But then it was brought to my attention that two weeks prior Jim Cramer had wholly endorsed the IPO and encouraged his "Cramericans" to get a piece of the IPO if they could.  On his show on 3/14 Cramer with his sleeves rolled up was enthusiastically recommending the King Digital IPO as long as it didn't price "way above" the high-end of the anticipated range ($24).

Cut to the morning of the IPO where he is on CNBC's market coverage in his business suit. Outside the gated walls of Cramerica and in front of real business people he tempers his position.

"There's a bull case and a bear case, but it is certainly not $ZNGA" - @jimcramer, on $KING @CNBC
— Carl Quintanilla (@carlquintanilla) March 26, 2014

And then as the numbers start to roll in and prove him undeniably on the wrong side of the trade he starts to walk back his original position.

'@jimcramer likes $KING at the IPO price, but adds: "Ppl will say [the IPO boom] had to end .. and it ended with King Digital'". @CNBC
— Carl Quintanilla (@carlquintanilla) March 26, 2014

By the end of the day ending with language sounding like he had called it all along. Oh and he's too good for the Candy Crush festivities.

Those little Candy Crush "animals" are egging me on. They want a beatdown and they may get it. Stay of my zone you beasts
— Jim Cramer (@jimcramer) March 26, 2014

I agree it was a circus; but it's a bit pot-calling-kettle for the man biting foam bears and banging a gong every time he says China during his stock picking show to be so above a cartoony gaming company trying to drum up some atmosphere.

And did he do a mea culpa and dissect his "error" on the show to his adoring fans?  Did the boo-yiddiots call him out?

Nope.

Hardly a peep is ever uttered about KING again other then to use it as an example of how we may be at a frothy top of the market on a bad market day (or qualified as "in some sectors" on a good market day) which is his new flip-floppy mantra; or if he's railing about investment bankers and how ridiculous it was to allow the King IPO (because he's such a rebel and outsider).  Oh really, two weeks ago you were crowing about how sane it was and that the market had learned it's lesson.

Maybe you are the problem, Jim. You are coming close to sounding like Kevin Trudeau wailing about the "stock cures they don't want you to know about".*1

Jim Cramer doesn't go back and address most of his daily bad calls.  The ones he does are usually done specifically to promote some new book or article on his paid sites. Much like the way you use a negtive that actually makes you look good in an interview. "My biggest flaw is that sometimes I just work too hard, 12 hours go by and I don't even realize I need to eat."

Mad Money is little more than a hype machine for the CEOs he brings on to hawk their snake oil and pop their companies, or for Cramer's own money-making schemes (books, Mexican Restaurant, paid subscriptions). The Street is a terrible website, blaring ads from every crevice and white space. I've never seen a busier page with no real information since my AOL days. It's basically an entire website teasing his other pay properties: Action Alerts Plus, Real Money, and there a probably even more things to sign up for but I gave up looking for content.

Incidentally, his cloud and biotech IPO picks the show after his KING call, QTWO/PCTY/MDWD ("If you can get a pieces of these IPOs I want you in...) went nowhere but down after their one day pop as well. (THNX was actually withdrawn!). 

Edit: I have just started Jim Cramer's most recent book - Get Rich Carefully, and it seems that in his writing he continues to deliver a clear and insightful view of trading. I am impressed with his explanations for the newbies, covering futures & sector ETFs and the danger they have posed to the stock market and retail investor; the interplay of stocks & bonds and the power of the Fed. This is what gets me about "TV Cramer," he knows better. Cramer, by his own admission, gets emotional and swept up with market fever easily and maybe the fever pitch schedule of a daily show and appearances doesn't give him enough perpective. When he takes the time to really think it through, when he sits down to write a book he does know a lot about the market.

*1 Television informercial guru Kevin Truedau sentenced to 10 years

Stock Shaming - It's Bad to be the King

It had been a few years since I bought a stock that I regretted (maybe someday I'll be able to speak of buying GM on the way down, all the way down /sigh).  That said, I don't usually have ideal timing, it's excessively difficult to consistently pick a top or bottom in the best of markets and the current market has been only slightly more rational than a Texas Hold-em river card.

But as I sit here today, I am racked with buyer's remorse.  This week I clearly made a frivolous trade, (definitely not an investment) which I knew was a mistake almost the minute it posted.  And I doubt very much that anyone out there will argue that it's not a stupid trade.  So I'm hoping that deconstructing this debacle publicly will cleanse my mo-jo and maybe we can learn something.

Hi.  My name is Cat, and I'm a King Digital Entertainment PLC shareholder

Everyone: Hi Cat

#1 I'm admitting I'm a momentum addict 

I have a bad habit of getting over-confident and overly risk-seeking after success. I have a history of playing a low entry fee hold-em tournament, ending in the money and then I get all sure of myself.  Next, I enter a mid-level entry tourney and flame out before the first break. I play very differently after I've ended in the money once, even though I know it was my normal play-style that led me to finish in the money in the first place!    

In this market there have been very few long-term losers since the financial crisis (when I first got into stock picking), so I should know better than to think I am an expert stock picker just because I have had gains. A positive outcome doesn't mean it was a good bet!

#2 I have a strategy that works when I follow it 

I have been quite successful when I stick to the fundamentals of value investing (as touched on in the Investing Manifesto).  I can't think of a single stock pick that was not profitable when I followed my principals.  I get into trouble when I have compromised my better judgement for some fad of the moment, or use an alternative strategy. 

#3 If timing is relevant I'm investing for the wrong reasons 

Using Sharebuilder.com*1 early in my investing history set me up with a good mindset, and I need to return to that.  If a day-to-day or hourly or *gasp* minute-to-minute change will have a significant impact on my decision to invest in a stock it's not an investment it's a trade.  See #1 & #2: I am not a trader, I am prone to stock market motion sickness even when it pays off. 

My danger sign (which I was aware of but still ignored) was the level of excitement and desperation I felt to get in quickly. When I have gotten this anxious in the past it has not worked out, it's never been the bottom and it's never been the top. And, most importantly, it means I am trading on emotion rather than fundamentals.

This doesn't mean I should lose my sense of urgency and drop the ball on keeping up on my investment research.  If I invest, I have to understand the company and keep an eye on the chicken coop.  It's amazing how quickly the foxes sneak in when you turn your back.   

#4 Only you are looking out for you 

Cynical perhaps, but absolutely accurate; listening to investment talking-heads is a fools-errand. Everyone has an agenda, whether it's bolstering their own position or causing controversy to drum up publicity. You cannot count on CNN or CNBC or whoever to have vetted and validated their analysts. They aren't focused on accuracy, they aren't focused on your strategy, they are focused in drumming up more investors to throw their money into the market for the smarter people in the room to get a crack at. 

You have to know your sources. If you don't personally know your source you need to do your research before you dare "trust" them.  And even then it should always be trust, and verify. 

There really is no one's advice I should take blindly, even Buffet's moves can't be taken at face value. Look at the position he is in, he is not just one of us.  He controls enough power to manipulate boards and markets and he uses it. Look at the sweetheart deals he made during the financial crisis. Going in with Buffet generally has benefits (if only from the media frenzy) and he isn't a short-term move maker, but you have to beware when he exits a position and whether he is investing with special circumstances. 

#5 Contrarian isn't any more of a safe point-of-view than the one from the bandwagon 

There is no foolproof way to look at the market.  No one is 100% right and no one is 100% wrong. My irrational desire to take the opposition side to a smug Jim Cramer*2 was definitely a proximate cause of my ill-advised move.   

I am a natural skeptic which often holds me in good stead since the media seems to be perennially focused on the last move rather than really anticipating the next.  But that doesn't mean going against the grain always works. It has to go back to the fundamentals of the investment not a "system" or gimmick. If you always bet against the broken clock you are still wrong twice a day.   

#6 Never gamble with anything you can't afford to lose 

My (financially) conservative nature has consistently protected me from complete disaster. The one thing I have consistently done right, is that only 25% of my portfolio is set aside for stock picking and at risk to my day-to-day irrationality and of that only a small % is in any one investment.  So even though this ill-advised trade is embarrassing and foolish, all I am doing is eating into a bit of my already realized gains and even if it went to zero it is not a significant loss.   

It's going to be OK. 

So as I lick my wounds and fight the urge to just as irrationally dump the stock just so don't have to stare at its sunk cost in my portfolio, I will take a few deep cleansing breaths. I vow to stop the bleeding and make the next move intentionally and not out of excitement or fear.

*1 - Sharebuilder's original business model was to offer a regular scheduled investment that commanded a much lower commission price than the standard trade commission (at one point $4 scheduled, vs $19.95 market order).  This incentivized regular contributions and long-term strategy. The company has since switched hands and online investment commissions have dropped drastically across the industry ($6.95 market order) reducing this gap and therefore reducing the incentive.

*2 - Jim Cramer, CNBC's clown prince of investing has become a larger and larger contributor to their business coverage which, in my opinion, is dangerous. Anytime your investment information is coming from a less eclectic mix, bad things happen. I don't have a fundamental objection to him, he has provided valuable information and frankly has been pretty entertaining.  But now that I see him show up multiple times through the day, and CEOs and analysts on their coverage mention something he has said as evidence, I think his investment strategy has permeated CNBC's coverage too fully and it's starting to sound like an infomercial. He has been a successful investor, but even by his own admission in his early books (especially Confessions of a Street Addict), he has made some very stupid moves. I enjoyed his early books and felt they were quite honest and good cautionary tales. I have to shake my head when now it seems he feeds into exactly what he rails against in his books.  

Investing Manifesto

Well recent events have proved to me exactly what kind of investor I really am.  Every time I step out of my comfort zone it ends badly.  So time to get back to what works.

• I am a value investor, and if there is no value I do not invest; and I will not buy a company I do not want to own.
• I am not a momentum investor, I cannot base a valuation on how long people will continue to drink the kool-aid.
• I am not a growth investor, I can't buy purely based on someone else's crystal ball.
• I am not a trader, watching the intraday ticker gives me an ulcer.
• I don't buy (or sell) based on "tips," if it doesn't fundamentally make sense I don't do it.