Learn From the Cramer Kerfuffle

I am no fan of Jim Cramer. While I fully understand his persona is a carefully crafted schtick designed to entertain, his Mad Money program harms Main Street investors. His stock-picking recommendations are no more likely to be accurate than the flip of a coin.

The myth that Cramer has some special insight into the market leads some investors to rely on his predictive powers, often to their detriment. His focus on short-term information misleads investors into believing they must tune-in daily to get his latest “insights.” This wrong-headed approach to investing obscures the irrefutable fact that investors who follow Cramer’s rants are likely to significantly underperform broad market benchmarks over the long term.

I have no doubt that in his private life Cramer is a highly intelligent and thoughtful person. However, he views his own show as a farce, and has expressed shock that it is successful. In a May 2007 article he authored in New York Magazine, he stated: “God knows why, but there seems to be a market for this kind of idiocy.”

Read the rest of the article at The Huffington Post.