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Should you listen to Jim Cramer? A study of 13K Mad Money stock picks

min read

There have been 13,314 buy recommendations made by Cramer since 2016-04-18. Are they worth following?

Jim Cramer is a controversial person. Nearly every day he's recommending a dozen or so stocks with unshakable confidence as if he knows the future. Many of those recommendations, if followed directly, do not end up very well, to say the least.

We wanted to do a performance study for his recommendations to see how bad/good they are. We figured that holding for just one day may be as much as you can afford.

We took all the data from MAD MONEY STOCK SCREENER, a website that tracks all the recommendations made since 2016-04-18. Every day after the show they update it with a new set of stocks mentioned in the show.

The Setup

There have been 13,314 buy recommendations made by Cramer since 2016-04-18. Every day we're taking $10,000 and putting them into all the buy recommendations distributing the amount equally among all the stocks recommended. Buying at 9:30 am the next day after the show and selling by EOD.

To make it a more complete assessment, we ran a couple of different variations:

  • No Stop Loss
  • 10% Trailing Stop Loss
  • 5% Trailing Stop Loss
  • 4% Trailing Stop Loss
  • 3% Trailing Stop Loss
  • 2% Trailing Stop Loss
Example Setup of a Backtest

The Results

Up in a good year and down in a bad year - looks pretty average... Note that 2016 only has data starting from the end of April so it's not complete, similar to 2022 it's up to March.

2016 - 2022 Results

Beyond the Results

Since the results were not impressive, we decided to do one more test and hold a bit longer until the next day open. Buying at 9:30 am the next day after the show and selling at 9:30 am on the next trading day. A much better play this time.

Holding 1 day + overnight (until the next day open)

We're not affiliated with CNBC or Jim Cramer in any way and this study is just a quantitative analysis of the recommendations.

Breaking Equity is neither a broker, nor provides investment advice. Breaking Equity is a platform designed and built for user generated trade testing and algorithms. It is not intended to be trading or investing advice. Breaking Equity does not recommend stocks, equities, or any other vehicle to buy or sell. Breaking Equity is a platform to enable you to make your own investment decisions. All data, analysis, tests, metrics, transactions, signals, and platform are presented ‘AS-IS’ and without warranty. Breaking Equity does not guarantee performance and holds no liability for your trading, algorithms or executions via broker services. Please invest wisely. Please do your own research and due diligence before trading or investing.