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Aside from spending his weekends drinking cheap scotch and reading transcripts of conference calls on a linoleum floor as he likes to say on Mad Money, Jim Cramer would probably like to spend more time as a gentleman farmer, replacing thoughts of stocks with those of crops while at his Summit, NJ residence. So that's why when I heard Cramer defending himself from the critics of his Jones Soda (JSDA) calls in response to a Mad Mail emailer on August 16, I decided to set the record straight. Jim, get up off that linoleum floor! I propose to save the scotch!
Here's JC's response to that email on August 16, 2007: "I recommended that stock in the single digits, then I re-recommended it in the teens. Then it got to the 20s, and I still liked it. When it got to the 30s, did I say to take it off the table? No, I got that wrong. I did not call the exact top. Then it went back down to the low 20s, and I said I'd like to sell the stock. It got to the teens...I could not pull the trigger again. I do not like the stock... That's the history of it. The journalists who follow that story think that that's a bad record. On Wall Street, that's called 'how to make a million'..."
Cramer first recommended Jones Soda (JSDA) after the stock had already gained a significant amount of interest on Wall Street, noted by a rising stock price and trading volume, on December 21, 2006 as a regional to national retail story. After Peter Van Stolk appeared on the show for the first time on January 29, 2007, Cramer advised viewers not to buy, as the stock had already run up nearly 5 dollars from his first recommendation. The call didn't last long, as on the next day Cramer advised a caller to buy JSDA down at 14, a small dip from the then current price.
Peter Van Stolk appeared on Mad Money again in March 2007, and Cramer proclaimed "This is one of the greatest quarters I've ever seen!" The stock quickly doubled as it ran into the low 30s in nearly a month.
It's true that Jim Cramer missed the exact top of Jones Soda, but his first bearish call came on April 4, 2007 with the stock down 8 points from a high of 32.60 to 24.60, saving viewers a drop to 10 smackers where the stock sits today.
So how might the avid "Mad Money" watcher have performed if they followed every Cramer recommendation. For greater accuracy, I'm using next day open prices to calculate performance and nullify the after hours "Cramer effect." Let's see - 12/22/2006 buy at 11.99/ 1/30/2007 sell at 14.59 (+21.68%), 2/1/2007 buy at 14.00 / 5/1/2007 sell at 23.50 (+67.86). Without even trying to catch an after hours price, the viewer may have captured a gain of nearly 90% in six months (not to mention a great short opportunity after May 2007)!
Sorry "Leonard the Monkey," this one's for Cramer.
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2 comments:
Whoa.
Now wait just a minute. That article is right AND wrong.
First off, I think that Cramer is in fact a great trader, fun to watch and a great resource for ideas, HOWEVER, that articles actually proves how erroneous his calls were about the stock as easily as it proves he was right.
It all depends on when you tuned into the show or when Jones got on your radar.
If, like so many other investors, you tuned into Mad Money in April while Jones was going through the roof, you would have seen Jim recommend the stock three times AFTER it topped out at $32. Which means if someone took his advice and bought each time he reco-ed it after the stock's $32 peak, they bought between $27 and $25. Then "took profit" by selling some their position at about $24. (Wait! That's not a profit!) And then started selling on his recommendation at around $22.
Hmm...guess what savvy Cramerians...you just lost at least 20%. And if you missed the show where he reco-ed a sell, you're down a hell of a lot more than that.
Whatever. Jim is great. But he can't be right, and self-admittedly he just plain old isn't right about everything, all the time.
Which is why you MUST do your own research as well. It's what Jim would want you to do.
Yes, absolutely do your own research. That includes having the sense not to jump all into a stock that has doubled in the past month.
Of course if you invested on the three buy recommendations that are above the first sell (profit, I consider that to be a negative call) recommendation at 23.50, you would have lost money. But if you want to get technical, the average trade from any buy to the first sell after it resulted in an overall gain.
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