The Investment Scientist

Tracking the performance of Jim Cramer’s Jan 2007 stock picks

Posted on: March 6, 2008

Jim Cramer:

What I’m saying is that there are bargains right now, there are stocks right now that if you’re shrewd enough, you will be able to buy them at the opening today and you’ll make money in a year from now.

It has been a year since Jim Cramer made his many picks in Mad Money Lighting Round last January. Undoubtedly, many people followed his advice buying his stock picks. To get an idea of how much money they made, I decided to do a little research.

The research is straightforward enough. I looked up the recap of Mad Money Lighting Round at SeekingAlpha.com and tabulated Jim Cramer’s bullish and bearish calls. I then calculated one-year returns from the second (market) day he made the calls.

    Bullish: If a bullish call has a one year return higher than that of the S&P 500, it is a right call. If not, it’s a wrong call.
    Bearish: If a bearish call has a one year return lower than the S&P 500, it is a right call. Otherwise it’s a wrong call.

I calculated the accuracy of his calls by this formula: Accuracy = right call/all calls. I also determined what return a loyal Cramer follower would have made if he/she had bought all of his bullish calls and sold all of his bearish calls.

In January of 2007, Jim Cramer made a total of 194 bullish calls and 123 bearish calls. Out of the 194 bullish calls, 60 are right calls. Out of the 123 bearish calls, 53 are right calls. The accuracy of Jim Cramer’s bullish calls is 30.93% and that of his bearish calls is 43.1%. The combined accuracy is 35.6%.

During the one-year period after Jim Cramer made his calls, the S&P 500 fell an average of 3.72%, his bullish calls on average fell by 3.33% but his bearish calls actually increased by 3.11%.

The table below shows Jim Cramer’s calls on 1/3/2007 and their subsequent one year returns. You may request a complete report of all of his January 2007 calls from MZ Capital.

Date Bullish Calls 1y return   Bearish Calls 1y return
1/3/2007 CVX 38.46%   XOM 31.17%
  MPEL -50.53%   MOT -20.97%
  NYX -11.22%   NOK 86.41%
  EBAY 3.96%   HSY -20.94%
  SPG -14.71%      
  NXG -1.89%      
  AUY 25.53%      
  KRY -32.88%      
  DELL -9.64%      
  WFC -17.58%      

Data source: SeekingAlpha.com
Research assistance: Ivy Cui

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1 Response to "Tracking the performance of Jim Cramer’s Jan 2007 stock picks"

[…] to check up (one exception is Jim Cramer, whose predictions are tracked rather thoroughly; see here and […]

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Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



You may also get his monthly newsletter, or join his Facebook page for regular wealth management insights. Michael's email is info[at]mzcap.com.

Twitter: @mzhuang

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