Over the past few months, as always, Jim Cramer has made thousands of market calls. As always, some have been right, and some have been wrong (a predictable feature of having 50/50 odds).
Over those same few months, not surprisingly, Jim Cramer’s ratings have soared. (Everyone’s ratings have soared, including ours–a predictable, if unsettling, feature of a global stock market crash). In Jim’s case, we just hope viewers are watching because they are as astounded as we are by his mesmerizing ability to opine on any topic under the sun–rather than because they are looking for smart investment advice.
Along with others, we blasted Jim for going on the Today Show two weeks ago and telling America to sell stocks immediately. The market is currently lower than where it was when he said this, so Jim has since declared victory and called it one of the best calls of his career. The reason Jim’s Today Show advice was lousy, though, wasn’t that the market might drop further (we thought it would, too). It was that he was encouraging millions of casual American investors to pursue an investment strategy that decades of academic research has shown is one of the stupidest available: market timing.
If Jim believes, as he should, that “money you will need in five years” should never be invested in stocks, then we are blasting him unfairly. Stocks are a risky asset class, and five-year money should indeed never be in the stock market (professional traders excepted, of course). In all the years we’ve been listening to Jim, though, we’ve never heard him say anything like that before. So, at this point, we’re assuming that he really thinks ordinary Americans should be playing the market-timing game.