The strategy logic is a bit different than the ETF is being rolled out - this one shorts all the tickers he is talking about the most (whether he is bearish or bullish) and hedges with a long position on the market.
Buying inverse funds is a bad idea. They suffer from exponential decay over long time periods.
Consider that the 1x (non-inverse fund) goes up 10% in a day. At the same time the inverse fund, which tracks it, falls 10%. Now consider the following day that the 1x fund falls 9%, to its original price. Consequently, the inverse fund goes back up 9%, but it's about 2% lower than its starting position. So you still lose money even though the original 1x fund is unchanged.
The better strategy is to buy puts or short the non-inverse, 1x version.
they mention it pretty early on in the article. The same firm created both
> An enterprising and clearly meme-savvy fund manager out there, Tuttle Capital Management has actually filed prospectuses for two Cramer-tracking funds:
The Inverse Cramer ETF (SJIM)
The Long Cramer ETF (LJIM)
> In retrospect, I'm not surprised. Tuttle Capital is known for its hilarious yet strangely effective ETF lineup. Case in point, their earlier Short Innovation Daily ETF (SARK) that bet against Cathie Wood and her funds is still up 73% year-to-date.
Ideally, that should net out to an expensive market-neutral fund with 0% expected returns minus the management fees and transaction costs, the latter of which could be really high.
There are actually ETFs that contain themselves (or rather, ETF X is e.g. 10% ETF Y which is 10% ETF X. So long as the total amount of X owned per unit of X is less than 1 (in absolute value), the arithmetic mostly works out. Though I don’t know if any ETFs directly contain themselves.
But at the same time it reminds me of a certain type of World Cup bet, where you win mega $$ if you correctly pick the winners of all 64 matches. But you also win the same mega $$ if every single one of your picks loses, which of course is just as hard to achieve. (I forget how they handle ties but you get the idea.)
All of which is to say, if Jim Cramer has no expertise in picking stocks, investing broadly in his picks is not much different from an index fund, you'll just roughly track the market. Whereas if he actively gets you to consistently and reliably lose money on high-volume publicly traded investments, then that's still (counterintuitively) a signal that somehow he knows something.
and/or his public predictions influence the markets
I'm pretty sure multiple data vendors compete to sell low-latency feeds of his picks, given his popularity.
If a Cramer-tracking ETF underperforms the market, it's entirely possible that the ETF enters the market late (after the market has mostly priced in the Cramer-bump) and holds during the reversion to the mean. Though, I haven't looked into it.
I haven't looked at him very closely, but I'm not sure how to read Jim Cramer.
Just observing his onscreen personality at face value: He's very loud and bold, erratic, yelling ridiculous things at the audience in a Philly accent (no offense to Philly on that ... it just lends itself to a particular stereotype, like he may as well be at a bar talking about the Eagles). When his investments are bad, you can just say oh, the guy is a blowhard, not basing his opinions on keen intellectual insight; it's all entertainment purposes and so on.
But there's another cynical angle that enters, maybe it's paranoid to say but I think it's plausible: Does he have personal stake in his advice? Does he have some connections at these companies telling him to boost the stocks on air? That would enter into the realm of fraud. I guess when people confidently urge others to make ruinous financial decisions, that kind of concern always enters into it.
There was an NLP based trading firm about 10 years ago that would run sentiment analysis over articles from industry analysts. According to someone that worked there, some of the most useful signal came from analysts that had strong negative correlations with future performance.
I think it works more like a law of thermodynamics, where no matter how you arrange the elements or what signs you flip, whether you follow his advice or inverse it, any stock betting system based on Jim Cramer is guaranteed to lose money.
He was essentially teaching algo trading, and also tracked wallstreet bets sentiment analysis. He went so far as to pitch his investment strategy to serious tech investors (it was ahead of the nasdaq at the time). His Wallstreet bets tracker had been tanking so he focused on the fish investing fund, but I was waiting for one of the investors to suggest he inverse wallstreet bets and make a lot of money.
Especially in the world of finance, I don't think you can possibly go on TV, in good faith, and make any recommendation other than "hire and expert" or "invest long term." It's fundamentally too late of someone is telling you about it on TV; could be a great company to invest in but not short term.
The problem I have with #4 is that you're picking a false expert. The word "expert" is supposed to mean something. Experts are usually not the people that do television for a living.
And with #3 above #4, you're essentially considering yourself as the top expert. Those should be flipped, and greater care taken to identify and qualify expertise.
#3 should be the best if you are actually knowledgeable. The problem is a lot of people are basically fooling themselves into being knowledgeable. There is a lot of dumb randomness in stocks but over a longer term stock prices tend to somehow follow underlying economic realities.
But, sadly, the stock market is a merciless test proctor. You may do all the work you think is necessary, you may research until the cows come home and you may still be wrong because you read things that were biased, you did not look at things in the proper perspective, there was some important discovery somewhere that changed the industry, geopolitics, etc.
So even if you are planning on doing your own research you should be well diversified.
Also, do not listen to experts! The stock market is one of the few fields where "experts" will intentionally try to mislead you. Always try to get primary material, or as close to primary material as possible. And do not fool yourself into thinking that reading a bunch of secondary expert articles, or listening to Cramer or other experts is doing research. That's like hoping to become a paleontologist by watching friends.
Until you realize we're entering uncharted territory as the index funds no longer represent external indices but a huge portion of money flows and are becoming feedback loops.
> their earlier Short Innovation Daily ETF (SARK) that bet against Cathie Wood and her funds is still up 73% year-to-date.
Only because this article was written in October of last year. Since then SARK is down 30% (along with the rest of the market).
You can tell that the entire investment services industry is totally fucked up simply by the form of the information they put out. Investment returns calculated over a single time period is a case in point. What you really want to know is the expected value of the return given random entry and exit dates, but no one publishes that information. Another example: investment recommendations are published as buy and sell recommendations, but that is totally wrong. For any stock, there is a price at which it is advantageous to buy it, and a price at which is it advantageous to sell it, and a range in between where you should hold. But no one publishes those price ranges, they just say "buy", "sell" and "hold" as if the price is irrelevant, or on the obviously false assumption that the price when you act on the advice will be more or less the same as the price when they produced the advice. The whole thing is a colossal scam from start to finish.
The fact that he still had a job after his 2008 mistake of insisting that Bear Stearns was fine and a safe place to keep your cash, is astounding. That should've been an unrecoverable mistake, especially with how strongly he was certain.
"Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? No, NO, NO!!!" (Afterwards... 90% loss in the next 6 days.)
This is nothing more than a money grab to the chat groups that made it popular to note in hindsight that Cramer was wrong.
Picking against Cramer is no more different than picking against a random person with random picks, which is like 50/50 except you will pay some ETF fees to do so but you will at least have fun losing money like in casinos
The inverse Cramer analyses on WSB are some of my favorite posts there (although it's a cesspool today so that's not much praise). But yeah, there are actual data-driven strategies to make money by inversing Cramer.
I get the joke and I do think Cramer is wrong a lot but its kind of mean. Imagine your entire identity is wrapped up in being the stock picker guy and someone comes along and invents an ETF that just counter trades you and it outperforms you by a ton. Thats got to be pretty devastating and lead to some serious self doubt. Probably the end of his career too if the ETF consistently outperforms him. He's a public figure making financial advice so more power to whoever invented the ETF, i just see the other side as well.
If you're bored and into financial "stuff" look up the returns of the typical ESG sector fund, then compare the return to the "YALL" ETF. I still laugh at the ticker symbol for "YALL". Sometimes you just can't make this stuff up.
The analogy with the inverse cramer fund is pretty obvious as YALL is pretty much a reverse ESG fund "more or less much hand waving here".
The SEC will allow joke and meme ETFs, and triple leverage commodity ETFs, but a normal, non-leveraged Bitcoin ETF? No, we have to protect investors from that.
This seems to be misrepresenting the "blindfolded monkeys" thing. Assuming that equity prices are an unbiased random walk, a blindfolded monkey will on average do exactly as well as anything else. The reason the professional stock picker is a worse choice is they charge you more for their services, and this is where you lose money on choosing them. It seems that unbiased random walk is a fairly good model of short-term equity returns.
So no, I don't think "do the inverse of a stockpicker" would on average do any better than just following their advice. Additionally, if the fund charges for their service of maintaining that inverse exposure, it will perform worse in end-user returns.
There was an Inverse Galloway Index (although not an actual fund I think) that saw some fat returns when there was a seemingly unlimited money supply, but if you had invested in it a year and a half ago you would be deep in red.
Over a period of a year or two nobody knows anything, possibly even in general. So can't blame Cramer too much. On the other hand there's no reason to listen to him either.
If you want to bet on the inverse of the strategy working, you would want buy puts or short the non-inverse fund, NOT buy the inverse fund .
The reason has to do with the mathematics of inverse fund decay. inverse funds of indexes will decay exponentially long term. It has a quadratic decay factor relative to volatility.
e^(-at) which a is the volatility and t is the time.
This is just an illustration that any stock market "system" contains within it the seeds of its own destruction. This is because if the "system" says "buy", then it must find people willing to sell. If everybody instead rushes to use the "system", then the price of the stock rises to negate the value of the "system".
The only way to create a working system is to keep it a secret, and keep your trading volume low enough so that nobody notices what you're doing.
Bernie Madoff's "system" worked only because he back dated the trades. Oops.
[+] [-] dublinben|3 years ago|reply
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
[+] [-] bryanlarsen|3 years ago|reply
[+] [-] ckardat123|3 years ago|reply
https://www.quiverquant.com/cramertracker/
The strategy logic is a bit different than the ETF is being rolled out - this one shorts all the tickers he is talking about the most (whether he is bearish or bullish) and hedges with a long position on the market.
[+] [-] paulpauper|3 years ago|reply
Consider that the 1x (non-inverse fund) goes up 10% in a day. At the same time the inverse fund, which tracks it, falls 10%. Now consider the following day that the 1x fund falls 9%, to its original price. Consequently, the inverse fund goes back up 9%, but it's about 2% lower than its starting position. So you still lose money even though the original 1x fund is unchanged.
The better strategy is to buy puts or short the non-inverse, 1x version.
[+] [-] flanbiscuit|3 years ago|reply
> An enterprising and clearly meme-savvy fund manager out there, Tuttle Capital Management has actually filed prospectuses for two Cramer-tracking funds:
> In retrospect, I'm not surprised. Tuttle Capital is known for its hilarious yet strangely effective ETF lineup. Case in point, their earlier Short Innovation Daily ETF (SARK) that bet against Cathie Wood and her funds is still up 73% year-to-date.[+] [-] deltree7|3 years ago|reply
Yet another ETF created for gullible meme-driven investors
[+] [-] make3|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] idlewords|3 years ago|reply
[+] [-] __derek__|3 years ago|reply
[+] [-] CalChris|3 years ago|reply
[+] [-] frob|3 years ago|reply
[+] [-] dan-robertson|3 years ago|reply
[+] [-] kingTug|3 years ago|reply
[+] [-] pphysch|3 years ago|reply
[+] [-] jeron|3 years ago|reply
[+] [-] make3|3 years ago|reply
[+] [-] crazygringo|3 years ago|reply
But at the same time it reminds me of a certain type of World Cup bet, where you win mega $$ if you correctly pick the winners of all 64 matches. But you also win the same mega $$ if every single one of your picks loses, which of course is just as hard to achieve. (I forget how they handle ties but you get the idea.)
All of which is to say, if Jim Cramer has no expertise in picking stocks, investing broadly in his picks is not much different from an index fund, you'll just roughly track the market. Whereas if he actively gets you to consistently and reliably lose money on high-volume publicly traded investments, then that's still (counterintuitively) a signal that somehow he knows something.
[+] [-] KMag|3 years ago|reply
and/or his public predictions influence the markets
I'm pretty sure multiple data vendors compete to sell low-latency feeds of his picks, given his popularity.
If a Cramer-tracking ETF underperforms the market, it's entirely possible that the ETF enters the market late (after the market has mostly priced in the Cramer-bump) and holds during the reversion to the mean. Though, I haven't looked into it.
This is not investment advice.
[+] [-] asveikau|3 years ago|reply
Just observing his onscreen personality at face value: He's very loud and bold, erratic, yelling ridiculous things at the audience in a Philly accent (no offense to Philly on that ... it just lends itself to a particular stereotype, like he may as well be at a bar talking about the Eagles). When his investments are bad, you can just say oh, the guy is a blowhard, not basing his opinions on keen intellectual insight; it's all entertainment purposes and so on.
But there's another cynical angle that enters, maybe it's paranoid to say but I think it's plausible: Does he have personal stake in his advice? Does he have some connections at these companies telling him to boost the stocks on air? That would enter into the realm of fraud. I guess when people confidently urge others to make ruinous financial decisions, that kind of concern always enters into it.
[+] [-] hedora|3 years ago|reply
[+] [-] idlewords|3 years ago|reply
[+] [-] danicriss|3 years ago|reply
[+] [-] SuoDuanDao|3 years ago|reply
He was essentially teaching algo trading, and also tracked wallstreet bets sentiment analysis. He went so far as to pitch his investment strategy to serious tech investors (it was ahead of the nasdaq at the time). His Wallstreet bets tracker had been tanking so he focused on the fish investing fund, but I was waiting for one of the investors to suggest he inverse wallstreet bets and make a lot of money.
[+] [-] voytec|3 years ago|reply
[1] https://www.npr.org/2021/09/25/1040683057/crypto-trading-ham...
[+] [-] paxys|3 years ago|reply
1. Buy and hold broad index funds
2. Throw darts at a board to pick individual stocks
3. Be knowledgeable, do your own research, read financial reports, custom build a portfolio
4. Listen to expert advice (Cramer, anti-Cramer and everything else)
[+] [-] rom-antics|3 years ago|reply
0. Get elected to Congress
[+] [-] TheCondor|3 years ago|reply
Especially in the world of finance, I don't think you can possibly go on TV, in good faith, and make any recommendation other than "hire and expert" or "invest long term." It's fundamentally too late of someone is telling you about it on TV; could be a great company to invest in but not short term.
[+] [-] epgui|3 years ago|reply
And with #3 above #4, you're essentially considering yourself as the top expert. Those should be flipped, and greater care taken to identify and qualify expertise.
[+] [-] senttoschool|3 years ago|reply
If every single stock investor bought index funds, investing in stocks would be pointless because it would not reward companies that perform better.
[+] [-] hristov|3 years ago|reply
But, sadly, the stock market is a merciless test proctor. You may do all the work you think is necessary, you may research until the cows come home and you may still be wrong because you read things that were biased, you did not look at things in the proper perspective, there was some important discovery somewhere that changed the industry, geopolitics, etc.
So even if you are planning on doing your own research you should be well diversified.
Also, do not listen to experts! The stock market is one of the few fields where "experts" will intentionally try to mislead you. Always try to get primary material, or as close to primary material as possible. And do not fool yourself into thinking that reading a bunch of secondary expert articles, or listening to Cramer or other experts is doing research. That's like hoping to become a paleontologist by watching friends.
[+] [-] berkle4455|3 years ago|reply
Until you realize we're entering uncharted territory as the index funds no longer represent external indices but a huge portion of money flows and are becoming feedback loops.
[+] [-] lisper|3 years ago|reply
Only because this article was written in October of last year. Since then SARK is down 30% (along with the rest of the market).
You can tell that the entire investment services industry is totally fucked up simply by the form of the information they put out. Investment returns calculated over a single time period is a case in point. What you really want to know is the expected value of the return given random entry and exit dates, but no one publishes that information. Another example: investment recommendations are published as buy and sell recommendations, but that is totally wrong. For any stock, there is a price at which it is advantageous to buy it, and a price at which is it advantageous to sell it, and a range in between where you should hold. But no one publishes those price ranges, they just say "buy", "sell" and "hold" as if the price is irrelevant, or on the obviously false assumption that the price when you act on the advice will be more or less the same as the price when they produced the advice. The whole thing is a colossal scam from start to finish.
[+] [-] gjsman-1000|3 years ago|reply
"Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? No, NO, NO!!!" (Afterwards... 90% loss in the next 6 days.)
https://www.youtube.com/watch?v=gUkbdjetlY8
[+] [-] m3kw9|3 years ago|reply
Picking against Cramer is no more different than picking against a random person with random picks, which is like 50/50 except you will pay some ETF fees to do so but you will at least have fun losing money like in casinos
[+] [-] OnlineGladiator|3 years ago|reply
The inverse Cramer analyses on WSB are some of my favorite posts there (although it's a cesspool today so that's not much praise). But yeah, there are actual data-driven strategies to make money by inversing Cramer.
[+] [-] digianarchist|3 years ago|reply
Updated story https://www.etftrends.com/2-etfs-offer-inverse-and-long-expo...
[+] [-] wonderwonder|3 years ago|reply
[+] [-] VLM|3 years ago|reply
The analogy with the inverse cramer fund is pretty obvious as YALL is pretty much a reverse ESG fund "more or less much hand waving here".
[+] [-] BenSahar|3 years ago|reply
An inverse ESG fund would be to use the inverse weighting of an ESG fund.
Also, 25%+ of YALL is TSLA + NVDA + BA.
[+] [-] esaym|3 years ago|reply
[+] [-] wnevets|3 years ago|reply
[+] [-] ursuscamp|3 years ago|reply
[+] [-] kqr|3 years ago|reply
So no, I don't think "do the inverse of a stockpicker" would on average do any better than just following their advice. Additionally, if the fund charges for their service of maintaining that inverse exposure, it will perform worse in end-user returns.
[+] [-] canucker2016|3 years ago|reply
https://twitter.com/CramerTracker/status/1634237672997699602
"I think the fears are not justified SIVB and it's a very compelling situation" about 0:25 into the video
Last trade in SIVB before the markets opened on Friday were around $40 so that's about 87.5% down from where Cramer was touting the stock.
[+] [-] locallost|3 years ago|reply
Over a period of a year or two nobody knows anything, possibly even in general. So can't blame Cramer too much. On the other hand there's no reason to listen to him either.
[+] [-] paulpauper|3 years ago|reply
The reason has to do with the mathematics of inverse fund decay. inverse funds of indexes will decay exponentially long term. It has a quadratic decay factor relative to volatility.
e^(-at) which a is the volatility and t is the time.
to get an idea of what this looks like long-term:
https://api.wsj.net/api/kaavio/charts/big.chart?nosettings=1...
[+] [-] ckardat123|3 years ago|reply
https://www.quiverquant.com/cramertracker/
[+] [-] WalterBright|3 years ago|reply
The only way to create a working system is to keep it a secret, and keep your trading volume low enough so that nobody notices what you're doing.
Bernie Madoff's "system" worked only because he back dated the trades. Oops.
[+] [-] unknown|3 years ago|reply
[deleted]