I Guess So Called Financial Experts Are Not

[38Chevy454]

I fear for he/she clients. In a dressed-up office, he/she is somewhat charming at first and knows very little about investing. The well-known company he/she represents is pushing annuities. These financial designation tests are like the SAT. Multiple choice and academic. There is no internship or training. It is set up in a way that he/she brings x # of possible interested investors. Could be your neighbor who wants to be polite and show interest. Then the big guns start making the calls and the relative gets a cut of the fees once the product is sold.

Maybe I'm naive, but I know some of these people this relative is trying to bring on as clients.

Reminds me of the old expression: "If you can't dazzle them with brilliance, baffle them with bulls#!t".

Your relative will put on a good show, answer questions per the script supplied and generally feed on the financial naivety of the potential customers.

 

[Koolau]

^^^^^^^^^

I have a friend (now retired) who was a bank manager. He had to obtain a "Series 7" license or certificate to talk with customers about things other than actual FDIC insured products. I have no idea what that entails but he swore (boy, did he) that it was difficult to study for and pass. My understanding is that Series 7 is sort of the "entry level" of such certifications. But, at least, there appears to be "some" rigor required in these matters. No expert here, but maybe others know about what is required to get beyond BS to actual knowledge and helpfulness.

 

[NW-Bound]

How to make 150 million? Start with 225 million.

"Investor Jim Cramer had a stake in the firm valued at $225 million during this time. As a result, Cramer lost a significant portion of his wealth when the dot-com bubble broke. Jim Cramer’s Net Worth is still $150 million."

https://traderlion.com/investors/jim-cramers-net-worth/

How did he get that $225M?

If I get to 1/10 of that $225M, I swear I would quit.

 

[marko]

How to make 150 million? Start with 225 million.

"Investor Jim Cramer had a stake in the firm valued at $225 million during this time. As a result, Cramer lost a significant portion of his wealth when the dot-com bubble broke. Jim Cramer’s Net Worth is still $150 million."

https://traderlion.com/investors/jim-cramers-net-worth/

Yes, but starting out he had to live in his car for a few months. He didn't start with $225 mil.,

 

[ls99]

Risking an article from motleyfool on how Cramer made $$$.
"How Cramer became a stock market genius

Cramer's growing love for stocks led him to devote hours studying them. He was so passionate about the market that he even started leaving stock tips on his answering machine. His tips were so compelling that one guy gave him a half-million dollars to invest. His success with that money eventually landed him a job at Goldman Sachs (GS -0.72%), and after three years at Goldman, Cramer started his own hedge fund.
Cramer spent countless hours researching stocks and became so good at it that it consistently found those that could beat the market. In fact, from 1988 to 2000 he just had one negative year as a stock picker and ended his career with average annual returns of 24% over 14 years. To put those returns into perspective, Cramer was actually a bit better than Warren Buffet at picking stocks: From 1965 to the end of 2012, Buffett's Berkshire Hathaway (BRK.A 0.07%) (BRK.B 0.18%) enjoyed a compound annual rate of return of 19.7% and two down years. That being said, Buffett's success was over a longer period of time and turned him into a multibillionaire with a fortune totaling $88.2 billion, whereas Cramer's net worth would be nothing more than a rounding error for Buffett."


https://www.fool.com/investing/general/2014/10/06/how-jim-cramer-made-his-millions.aspx


I still would not put money on anything he touts.

 

[jazz4cash]

I still would not put money on anything he touts.

So what are you saying? Is it impossible that you could have the same opinion as Cramer about a stock? If he touts a stock you own would you sell it just because?

 

[Koolau]

How did he get that $225M?

If I get to 1/10 of that $225M, I swear I would quit.

Yeah, when I got to 1/100th of that (roughly) I quit. Literally. I FIRED and put almost everything on autopilot. I'm still on autopilot for the most part. I have "enough" so why try for more? As usual, YMMV.

 

[ls99]

So what are you saying? Is it impossible that you could have the same opinion as Cramer about a stock? If he touts a stock you own would you sell it just because?

Yes! It is impossible. I do not follow individual stocks.
While my net worth is but a rounding error compared to his, I do have far more than enough.

 

[NW-Bound]

Obviously, Jim Cramer was able to make loads of money before he landed at CNBC as a talking head. Yet, many people present evidence that his stock touts often turn out to be duds. What gives?

Back to my earlier thesis that perhaps as a skilled trader, Cramer is quick to recognize his mistakes and reverses his bets in time, while his followers are not privy to his daily trades. Along that vein is an anecdote told by Taleb in his popular "Black Swan" book.

You may know that the billionaire Soros is famously known as the trader who shorted the British pound and made $1.5 billion in 1992. Taleb met Soros one day, and the two discussed a certain market prognostication. Taleb and Soros disagreed.

Later, things evolved the way Taleb predicted. Feeling righteous, the next time Taleb saw Soros, Taleb brought up the previous discussion, and asked how Soros's investment worked out. Soros said he did OK. Taleb was surprised and reminded Soros that the latter was wrong. Soros said, "Ah, but I later realized that I was wrong and you were right, so reversed my trade and made money".

 

[NW-Bound]

Yeah, when I got to 1/100th of that (roughly) I quit. Literally. I FIRED and put almost everything on autopilot. I'm still on autopilot for the most part. I have "enough" so why try for more? As usual, YMMV.

Well, I have enough too, but still have fun being an active investor, so do not want to quit yet.

If I start to lose money consistently, it will no longer be fun and I will quit.

 

[Koolau]

Well, I have enough too, but still have fun being an active investor, so do not want to quit yet.

If I start to lose money consistently, it will no longer be fun and I will quit.

Not my idea of fun, but neither is sky diving Sounds very wise to know your limitations. Carry on and keep us posted. We live vicariously thorough member experiences.

 

[NW-Bound]

^^^ The chance of me reaching 1/10 of Cramer's past networth is zilch (I say "past" because he's still making a lot of money). Just wishful thinking.

There are not enough years in my life for the above to happen. And who knows how many of those years will be spent in senility.

 

[Closet_Gamer]

Education and certifications can have zero correlation to personal financial responsibility. Years ago I watched the repo guy haul off our company CFO's Mercedes from the parking garage.

That is fantastic.

Our company NQDC for execs is amazingly generous, offering a high fixed rate of return while you're with the company and a less generous but still appealing rate after you leave the company. All you need is a very simple spreadsheet to understand the upside. Really just a calculator.

A number of us call it an intelligence test. If you're not smart enough to use it, we really shouldn't hire you as an executive.

Many years ago we discovered our CFO did not participate.

 

[Closet_Gamer]

Agree. I watch him every night, not for stock information as I'm not a trader, but every few days he offers up some general market insights that I've learned from. I only need his first 6 minutes of market monologue and then I'm done.

He kept me sane during the '08 debacle. He's also worth about $100MM so he's done something right.

I listen to Cramer most nights on the way home from work.

He's hilarious. Even after all these years the big red buttons and the sound effects sometimes make me laugh out loud. I should really get the The-houses-of-pain and pleasure sounds as ringtones for my phone. He's interesting to listen to (though his CEO interviews are cringe worthy and when he brings the chart readers on, I usually turn him off.)

Alton Brown is/was one of the top people on the Food Network. He also has OCD. He combined his OCD with his passion for food. When he tells you the BEST way to make scrambled eggs, he knows because he made them 1000 ways and kept track of how they tasted. (Sadly his wife divorced him over these obsessions but supposedly they are friends.) He is also a genuinely funny guy and after decades I still like to see him on TV.

I think of Cramer a bit like Alton Brown. His obsession may even make him better at picking stocks ... but only when he was paying such close attention to them with his hedge fund money. I'm dubious that he can do it and spend 4 hours/day on TV.

I don't try to cook eggs 1000 ways or rapidly trade in/out of stocks. But both those guys make me smile.

 

[COcheesehead]

Obviously, Jim Cramer was able to make loads of money before he landed at CNBC as a talking head. Yet, many people present evidence that his stock touts often turn out to be duds. What gives?

Back to my earlier thesis that perhaps as a skilled trader, Cramer is quick to recognize his mistakes and reverses his bets in time, while his followers are not privy to his daily trades. Along that vein is an anecdote told by Taleb in his popular "Black Swan" book.

You may know that the billionaire Soros is famously known as the trader who shorted the British pound and made $1.5 billion in 1992. Taleb met Soros one day, and the two discussed a certain market prognostication. Taleb and Soros disagreed.

Later, things evolved the way Taleb predicted. Feeling righteous, the next time Taleb saw Soros, Taleb brought up the previous discussion, and asked how Soros's investment worked out. Soros said he did OK. Taleb was surprised and reminded Soros that the latter was wrong. Soros said, "Ah, but I later realized that I was wrong and you were right, so reversed my trade and made money".

If you know Cramer’s story, it was actually his wife that made them their millions at the hedge fund. Cramer was also censured for front running stocks on CNBC and that was one of the things that contributed to fund managers appearing on CNBC now having to disclose via on air graphics whether own or their family owns the stocks being discussed.

 

[NW-Bound]

It's been perhaps 15 years since I stopped watching CNBC.

But at the time I watched it, I noticed that when a stock I owned was mentioned a lot on TV, not by Cramer but any reporter, that stock was topping out and soon headed for a decline.

Perhaps I should keep watching TV as another tool to use in my contrarian plays.

 

[Koolau]

It's been perhaps 15 years since I stopped watching CNBC.

But at the time I watched it, I noticed that when a stock I owned was mentioned a lot on TV, not by Cramer but any reporter, that stock was topping out and soon headed for a decline.

Perhaps I should keep watching TV as another tool to use in my contrarian plays.

At lest of late, it would seem you might do well to watch Cramer and do the opposite of what he suggests.

 

[NW-Bound]

At lest of late, it would seem you might do well to watch Cramer and do the opposite of what he suggests.

Well, what if Cramer also does the opposite of what Cramer says?

 

[ls99]

Well, what if Cramer also does the opposite of what Cramer says?

You pays your money and take your chances.

 

[NW-Bound]

Because I don't know if Cramer does what he says or does the reverse, I don't listen to him.

Actually, I don't really listen to anyone in making my trades. I do listen to economic news, and try to picture things out from raw info.

 

[Koolau]

Well, what if Cramer also does the opposite of what Cramer says?

I guess if he does the opposite of what he says, he's smarter than I give him credit for.

 

[NW-Bound]

I guess if he does the opposite of what he says, he's smarter than I give him credit for.

Eh, I have always said, if a guy makes more money than me, he knows something I don't.

Whether I want or care to try to do the same is another matter.

 

[indiajust]

Morgan Housel has a chapter on the Seduction of Pessimism in Psychology of Money. He covers why pessimists come across as experts.

Experts are the social trust side of money, a social shortcut to dealing with complexity.

Unfortunately, the shortcut can leave you following a Bernie Madoff, or a Cramer. The temptation is to subsume your own intelligence to the herd. Much like a stock bubble, it is only obvious retrospectively.

Reality is always the cure, eventually.

 

[rtroxel]

Jim Cramer is a carnival barker, and anyone who takes him seriously after 2008...I can't even. And that holds true for most any pundit, they are there for entertainment and viewer ratings, not accuracy.

I haven't watched him for years, and I'm amazed he's still on the air.

Roy

 

[rtroxel]

Eh, I have always said, if a guy makes more money than me, he knows something I don't.

Whether I want or care to try to do the same is another matter.

Unfortunately, many investors think like this:

"If you make less money than I do, it's because you're stupid. If you make more money than I do, it's because you're crooked."

That's their form of pessimistic expertise.


Roy