The Investment Scientist

Checking Jim Cramer’s 2008 Top Ten predictions

Posted on: March 14, 2009

Jim Cramer: “Watch TV, Get Rich!”

If you watch his show, you certainly would not forget the Top Ten predictions he made in January 2nd, 2008. Now that we are well into 2009, it’s about time to check the accuracy of his predictions.

On Goldman Sachs (GS)

Goldman Sachs (GS) makes more money than every other brokerage firm in New York combined and finishes the year at $300 a share. Not a prediction—an inevitability. In fact, it’s only January, and I think it’s already come true.

GS lost 59.06% last year, 22% more than the S&P 500 Index.

On oil and Transocean (RIG)

Oil goes much higher, maybe as much as $125 a barrel… We are running out of oil more quickly than people can imagine, and that means great returns for oil companies. Just buy the stock of the company you filled up at today or buy a driller (Transocean (RIG) is my favorite), then sit back and make money.

RIG lost a total of 67.64% last year, 29% more than the S&P 500 Index.

On Arabic bailout of Citigroup (C)

The Fed arranges an Arabic Heimlich maneuver on Citigroup (C), so the banking giant doesn’t choke on the worst mortgage portfolio in the country.

Was it supposed to be a bullish or bearish prediction? It’s not clear, so let’s give it to him.

On Verizon (VZ)

Verizon (VZ) becomes your cable provider. … Comcast (CMCSA) will be hit hard.

Camcast ended the year outperforming Verizon by 16%!

On Google (GOOG)

Google stock reaches $1,000. The company becomes one of the top three companies in the U.S. in market capitalization… and succesfully challenges Microsoft (MSFT) for operating-system dominance.

GOOG lost 56.21%, 18% more than the S&P 500 Index and 13% more than MSFT.

On Merrill Lynch, JP Morgan, Colgate, Clorox, Whirlpool and Black & Decker

With the dollar weak, European companies swooping in to buy up the likes of Merrill Lynch (MER), JPMorgan (JPM), Colgate (CL), Clorox (CLX), Whirlpool (WHR), and Black & Decker (BDK), which will all see their stocks rise as a result.

These were all bullish calls. MER lost 78%, JPM lost 27%, CL lost 13%, CLX lost 15.25%, WHR lost 48.89%, BDK lost 39.84%. None of them are bought by European companies. Three of them lost more than the S&P 500 Index.

On Apple and Warner Music Group

Apple (AAPL) will reach $300. …Warner Music Group (WMG) will file for bankruptcy.

Clearly this was a bullish call on AAPL and a bearish one on WMG. AAPL lost 57.28%, WMG lost 50.49%. Both lost more than the S&P 500 Index, but WMG outperformed AAPL.

On New York Time (NYT)

New York Times (NYT) will accept a buy-out offer from Mayor Michael Bloomberg at $20 a share.

It’s not happened yet. NYT ended the year at $7.33.

On Fed rate cut

… if Bernanke or a future Fed chair does cut rates meaningfully, here’s a sure bet: That’s the time to start buying.

Since the fed first cut its rate, the market has lost fallen more than 40%.

You can draw your own conclusion, enough said.

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4 Responses to "Checking Jim Cramer’s 2008 Top Ten predictions"

[…] Comment! Never underestimate what a bull market could do to Jim Cramer. After shying from making any top picks for 2009, presumably because he didn’t see any stocks worthy of buying at the beginning of 2009, he is back to his own game this year. We will see if his 2010 picks will turnout as dismal as his 2008 ones. […]

[…] you.  I can’t imagine a professional money manager keeping his job after results like this: …more info David Swenson, who may be history’s greatest long term endowment fund manager refers to Cramer as […]

[…] 1)prudent allocation, 2)discipline rebalancing. One does not need Harry Dent’s prescience nor Jim Cramer’s encyclopedic knowledge to be successful in […]

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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.



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