Check out Jim Cramer Mad Money

By: Anne Durrell

Jim Cramer is crazy. On his show, Jim Cramer mad money, he jumps about and screams like a crazy guy. But the investments he picked last year earned 12% compared to 6% average for the market by some measures, so maybe he is not so crazy after all.

Hundreds of thousands of investors watch Jim Cramer mad money on CNBC each week. After the market took a nose dive in the fall of 2008, those viewers were glued to their televisions to find out what kind of advice Jim had for them and their money. Cramer made a real name for himself at the time because while other analysts were waffling, he came out and was funny and interesting and most of all - he was confident.

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While the world was spinning out of control, and the market was spinning straight down the toilet, investors were panicking and Cramer was one of the few voices who could be heard above the chaos and people listened to him.

A recent Baron's study says that Jim Cramer mad money picks from that period of 2008 have underperformed in comparison to the market. This means you would have been better off just putting all of your money into an index fund instead of into his hand picked stocks. So should you follow Jim's advice or not.

Well, that depends on what historical period you are looking at because he has times he has done better than others. Last year the market lost a full 30%. Cramer's stocks lost 35%. Not a great payoff if you had followed his advice just as he laid it out.

Jim Cramer mad money picks end to be aggressive. They plan for the market to keep doing what it is doing. In other words, if a stock has started going up, Cramer wants to buy and ride it up. Conversely, if a stock starts to fall, Cramer wants to dump it before it falls further. This is not a bad technique when the market is less volatile and the swings are slower and more predictable. But when things are going badly, they go badly quickly and stocks can reverse direction in a hurry.

One big problem Cramer has is when he interviews executives; he will normally recommend that you buy their stock. And over the past year, those stocks have dropped 6 percent. Cramer also does not do well in his own Jim Cramer mad money lightening round stock picks. These tend to do no better and sometimes slightly worse than the market.

The best advice on what stocks to pick can actually be gained from the show Jim Cramer made money, but not as Cramer intended. It is clear that after he recommends it, people will run out and buy these stocks so there will be a short term jump in price. So if you are quick on the draw and do just the opposite, ready to buy when he says "sell" and ready to sell on the margin when he says "buy" then you can expect to do quite well.

You may want to check out my other guide on stock trading sites and emini day trading

Jim Cramer Mad Money

mad money with jim cramer

Check out Jim Cramer Mad Money

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