Jim Cramer Throws In The Towel

Last week I wrote a blog on Jim Cramer's recessionary stock picks. This blog posting showed the five stocks that he thought would be recession proof and ones that he would suggest you buy. This was on the 8th of January, 2009.

I just happened to tune into Mr. Cramer's show on Thursday night. He basically announced that he was throwing in the towel and that it would be best to get out of these positions.

So let's see how he did with his picks. All of his hypothetical stocks purchases were made on the 8th of January using the closing price.

Caterpillar: Purchased at $44.08 - Sold at $31.58
Home Depot: Purchased at $24.38 - Sold at $22.12
Johnson & Johnson: Purchased at $59.02 - Sold at $58.18
Hewlett - Packard Co.: Purchased at $37.61 - Sold at $36.13
Verizon Communications: Purchased at $32.42 - Sold at $30.45

Here's what we are going to do... we'll take the closing price last  (1/08/09), and the opening of January 30th to see just how Mr. Cramer's recessionary  stock picks worked out. The good news is that Mr. Cramer was five for five. The bad news is, those five stock positions lost money.

I have often said that I am a fan of Mr.Cramer, as he is a very entertaining man. I've also have commented that he never places a stop loss on any position that I've seen. If you have other information to the contrary, please share it with me and the readers of this blog.

Here are the results:

Caterpillar (NYSE_CAT) lost: $12.50 / 28.35%
Home Depot (NYSE_HD) lost: $2.26 / 9.26%
Johnson & Johnson (NYSE_JNJ) lost: $0.84 / 1.42%
Hewlett-Packard Co. (NYSE_HPQ) lost: $1.48 / 3.93%
Verizon Communications (NYSE_VZ) lost: $1.97 / 6.07%

I have to say this is not an impressive lineup of stock picks. By using our "Trade Triangle" Technology, you would have avoided all of these stock picks that Mr. Cramer recommended. So here's my challenge to you: if you watch Mad Money, always check with our technology to see whether you should be purchasing a stock or just standing aside. I think you'll be amazed at the improved results.

Every success in the markets,

Adam Hewison
President, INO.com
Co-creator, MarketClub

30 thoughts on “Jim Cramer Throws In The Towel

  1. Tom,
    Mr. Cramer is a fundamental not technical trader and he recomends getting out of the position when the reason one got into it is no longer valid. This aproach is not quite clear for technical traders and I admit migt be a little dicy in volatile market.
    By the way Wall Street analysts almost never give "SELL" recomendations and they are not funny at all.

  2. Adam,

    My personal experience with stops... and why I think many traders don't use them. First, I'm not convinced beginners even know of such a thing. When I was starting out my big dream was to be retired by 30... well, 10 years after that, and still NOT retired, I still struggle with stop placements--even thought I've read a million justifications on where to place them. If I only had a dollar for every suggestion... anyway, the second problem when folks like Mr. Cramer give 'stock recommendations' the DON'T even talk about it. It's truly is just entertainment. Lot's of bells and screams and such. It would be nice if someone once with such a large audience said, "Oh, by the way, if this stock goes the other way by 1,2,3... % consider closing out the position and reevaluating this call. Whether it's long or short term... a loss is a loss.


  3. I think Jim Cramer is a good showman but also he's been dooing something well since he's a proven self made millionaire and his his track record
    as a hedge fund manager can support it.

    1. Rob,

      I think you're wrong, Jim Cramer it is an awesome showman. I'm not dishing his track record as a hedge fund manager, what I was saying is that I've never seen him put a stop a position. that to me is a big no-no.

      Thank you comment and all the best in trading.

  4. I just replayed your January 22 video "All Wound Up". Gold didn't get to $1000 did it? Another more recent alert concerning a "reliable" head and shoulders didn't either. I didn't get into that one because I remembered William Oniel stating that the right hand low must undercut the left hand low. In the case you presented it didn't. I am going to keep my Barrick even though it was downgraded by some clueless analysist. Funny though; I went ahead and bought Goldcorp when you said gold might go to $1000. TGhat was a recommendation by Stansberrys because they showed how it produces for a much lower cost per unit. That stock didn't move as much as the Barrick per day. However it is still up several percent and stays up. Technicals which I read the Sreet for (I eat up everything Helene Misler says)are working better but I suspect buyers bought Goldcorp for the same reason I did. Good old fashioned good business sense. I follow you and Cramer and many others for tips. Lot of stocks out there Hard to follwo them all. Actually Investors newspaper and daily movers give me the most tips. You can make money on the right side of forming bases but dont wait for anything much after the buy point. The sellers take a quick profit and most fail soon afterwards. Just sorry I forgot to follow AVAV after it was downgraded. I missed out on that $14 recovery. Thanks for the morning wake ups. Never sure how the 4 AM reports on the

    1. John,

      Thank you for your feedback. As for the positions we talked about gold and Barrick symbol ABX we just put those on and we are waiting for them to develop and move in the direction we expect them to move into.

      Patience is a virtue in the trading business.

      Every success in the future.

      Best regards,

  5. I think the only investments worth looking at on the long side right now are healthcare REITS. Old age and disease are not affected by the financial markets. These companies can only grow.

    1. Robert,

      You're right, we're all getting older. What do they say, you can't escape death or taxes?

      Thank you for your comments and your view on the markets. I appreciate it.


    1. Vi,

      Thanks for your feedback. As I said in my reply above, everyone is entitled to an opinion and I respect yours.


  6. It's a shame that everyone shows their results against Cramer, putting him down and his picks.
    Why not judge results vs a successful trader.
    I realize that Cramer's going Long style is not conducive to a Bear Market.....
    But come on bolstering your ego by negativity, does no one any good.

    1. Jim the point of the piece was to illustrate that you must use stops on positions. We certainly didn't put our results against Jim Cramers because of ego. We have a successful track record in the marketplace and we were simply showing that because someone's on TV doesn't mean to say there right or wrong it was a point of view. As you know in America everybody has a point of view.

      I think Jim Cramer is an absolute genius when it comes to entertaining television. He has truly found his medium and he revels in it. In all the years I've been involved in the markets I do not ever remember anyone who can come up with recommendations everyday for trading or investing.

      That's my take.

      All the best to you.


  7. I get a kick how writers, who should know better, are telling the readers to wait until the bottom of the market to buy. It is impossible to follow such naive advice. There is no way of telling the bottom. Now we are in the very beginning of a bear market. To attempt to look forward to the bottom is like buying lightweight clothing in November. 90% of investors are losing money because they are ignorant of alternatives. Instead of the blog conversations, there are a few investors who are quietly making money. Turn your readers on to their techniques. That would be doing your public worthy advice.

    1. Dick,

      I appreciate your feedback and I agree with you. At MarketClub we produce a tremendous number of educational training videos to show how to be successful in the marketplace. I have a serious background in trading having been a member of several major exchanges both here in the States and in Europe. I do feel I know what I'm talking about. We have been negative on the equity markets for quite some time and we see no reversal to this trend anytime soon.

      Our mission at MarketClub is to educate traders into learning how the markets really work and how to take advantage of such moves

      All the best to you.

  8. market is controlled by short time speculators. Then, any signal changes several times over the week! 😉 Difficult market weather Adam!

    1. Zanti,

      Thanks for taking the time to comment, Yes, these are difficult markets and difficult times but there is always a bull market somewhere. On the other hand, there is always a bear market somewhere. Why limit to your self to just one direction in any market.


  9. Dear Adam

    As a former stockbroker and a presumed study of trends and techical data, I have NOT essentially analyzed Jim Kramer from his stock picks or positions he has taken.In this market I would be surprised in 9 out of 10 Stock gurus were alo losing money in this enviroment. My 410k is now a 101 K ..hahhah 🙂

    I shall say that I greatly admire the man for taking what would be most characterized as a unpopular stand and asked why the SEC goes after
    "little fish" like Mark Cuban and Martha Stewart and yet people like Maldoff go and get bonded out of jail, when he allegedly embezzeled some 1.3 billion dollars. Perhaps Moldoff and his cronies were and have some of the elite socialites in NYC in his pocket verses Mark Cuban and Martha Stewart are more Mavericks and are not accustomed to spreading themselves around the Elite NYC social circles.

    I think that Jim Kramer is a "stand up " guy for saying what he did about Maldoff and also chastising the SEC.From my perspsective the SEC needs many more critics and has some serious accountability issues with this banking/financial debacle . Maybe someone should ask what the SEC was doing when these financial instituitions unraveled and where were the "stop measures" and why were they not in place to preclude such a Financial disaster? This has NOT only affected America but all but killed many foreign countries. We "burp" here in America and it is heard around the world.I travel internationally and Wall Street has given itself a huge "black eye " and marred its image tremendously and also tainted Americans. Should you not believe me then talk go to other countries and find out this very damaging image that we have recently spun.

    I personally have 2 positions in stocks and it is my postion that Investors take a look at 2 or 3 areas. Those areas would be commodity stocks like Gold shares, Utilities and also Oil & Gas companies or service related industries in the Oil & Gas sector, that I believe are poised to come back in a year or so.

    I believe that Gold is still a great value and I personally bought Gold shares ( GLD sym) in March of 2006 when it was announced that Iran the second largest producer of Oil was going to stop trading the oil for dollars and start trading their oil for Euros. This was the EXACT time that I bought Gold.Why does NO Investor or "Talking Head" ask the US Government why they do not publish M3 reports? NOW this is a proverbial 10 million dollar question...don't you think?

    I wanted to buy Euros and short the dollar back in Mrach of 2006 and since I had NO experience in this area nor did I have the time, I just bought Gold Shares.

    Generally speaking in a down market commodities are a good hedge against inflationary markets . I also like utilities as they are not as effected as are other types of stocks.

    Adam if you think that you can do better in this market then perhaps you should contact Jim Kramer and challenge him to "The Masters of the Market "

    As for me, personally, should you wish to challenge me, I shall also accept such a challenge.

    Brian D. Carr
    a small business owner and former stockbroker

    1. Brian,

      Thanks for your feedback.

      No problem challenging Mr.Cramer. If you can arrange it, we are more than willing on this end.


  10. Cramer subscribes to an "averaging in" philosophy. You don't buy all of the stock at once. As the price goes down, you purchase more shares in small increments.
    The reason he featured the five stocks was for their dividends (You get paid while you are waiting for the stock to bounce back).
    He doesn't tell you to go out and buy any stock. He tells you to do your own homework and make your own decisions. He merely tries to keep his listeners informed to opportunities and pitfalls.

    1. John,

      Thank you for your feedback. As I said before I like Mr. Cramer, I think he's very entertaining. However when he suggests five stocks there are an awful lot of people out there that take him at his word and don't do their homework.

      Regardless, what I was pointing out to readers of this blog was that Mr. Cramer does not seem to use stop losses on any of his positions. These were specific recession proof recommendations that he made on January 8th. I thought it would be fun to track this. There are a lot of sites on the Internet the track Mr. Cramer's recommendations. We are not one of them, we have our own approach that works well.


  11. There are always more risks buying stocks in a bear market, but towards the bottom their also more potential huge rewards. Where else can you buy a stock one day, sell it the next, and buy it back the third.... and make 10% return a day on that same stock as people panic buy and sell following the major indexes.

    1. EcoMike,

      You're right!

      These are trading markets and not buy-and-hold markets. I believe the buy-and-hold strategy is over with and that strategy is not coming back anytime soon.


    1. King,

      I'm not sure if you're a member of MarketClub.com website but using there SmartScan technology we can pick up quite a few markets that are actually doing well on the upside.

      You can take a 30 day risk free trial to MarketClub here:


      Thank you for your comment.


    1. Smacktie,

      I feel the same way, but a lot of people watch the show and obviously take heed of his calls. He seems to do okay in bullish markets but he has been woefully poor in this downturn. He has tried to pick bottoms which I don't think it's ever a successful way to trade.

      That's my opinion.

      Thank you for commenting on a blog and all the best in 2009.


  12. Seems to me that if you're buying anything right now, you have to be prepared to take losses. You're basically buying on the way down. If you're buying for the long term, you'll see the falling prices as an opportunity. Resist the temptation to panic sell.

    1. Homer,

      You nailed it!

      The trend is down and you should resist buying in a bear market. I do not believe in this type of strategy. I believe you should buy when the market makes a bottom, and you only know that after the fact not when a market is actually making a bottom.

      Thank you for your comment.

  13. Adam,
    you said "Mr.Cramer, as he is a very entertaining man." and that he. For a good laugh I always tune into CNBC, as a matter of fact it is even better than the Comedy channel listening to them clueless talking heads.


    1. Bruce,

      Thank you for your feedback. You're right it's always good to have a good laugh and certainly Cramer provides its on a nightly basis.

      I always think it's very healthy to have a good belly laugh every once and a while.

      Every success in the markets.


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