Thread regarding Arista Networks Inc. layoffs


Now let's see how this one plays out.

| 1816 views | | 1 reply (October 18, 2019)
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A statistical look at Jim Cramer's skill level

(MoneyWatch) There have been many pieces written by others as to whether Mad Money's Jim Cramer's stock picks outperform markets as a whole, and some of them by me. In one such column, I examined two strong sell recommendations Cramer made about six months ago and assigned a statistical probability to the accuracy of these predictions.

Specifically, on Nov. 20, 2012, Jim Cramer's urgent message was to exit two stocks immediately – Hewlett Packard (HPQ) and Best Buy (BBY). Fast forward six months and three days through May 23, 2013, and how did these two stocks do? Well, considering Hewlett Packard was up 115.62 percent, while Best Buy gained 124.64 percent in total return, you be the judge.

Of the 749 stocks in the Wilshire U.S. Large-Cap Index, since Cramer's urgent sell message, Best Buy ranked the 3rd best performer while Hewlett Packard came in 4th. I ran some numbers and the probability of being wrong enough to get two of the four best performers was 1 in 35,062.

As a side note, in Cramer's book "Getting Back to Even," Hewlett Packard was one of 12 stocks highlighted in his chapter on how to invest for the recovery. Between the Oct. 13, 2009, publish date of his book recommending Hewlett Packard, and his Nov. 20, 2012, sell immediately recommendation, Hewlett Packard's total return was a loss of 73.83 percent. In other words, investors who listened to Cramer, and acted upon his advice, would have first lost nearly three quarters of their investment and then missed out on more than doubling it.

By any measure of statistics I can think of, these four awful stock calls are telling of Cramer's incredibly poor ability to call stock sells. It not only surpassed my wildest imagination of just how bad anyone could be, it gave me an idea. I'm going to launch a new long-short hedge fund called Remarc (REMC). It's the reverse spelling of Cramer's name and the reverse of his advice as well, buying long positions in stocks Cramer says to sell and shorting any stocks Cramer calls a buy. If the odds also reverse, this fund will make the Powerball jackpot look like spare change I found between my couch cushions. So forget about "Mad Money" and jump on Remarc, it would be mad to miss out on this action.

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