I was listening to episode #48 of the PlanetMoney podcast on the way into work this morning and was surprised to hear that my MBA M&A Professor, Emery Trahan, together with another NEU professor did a study on Cramer’s investment advice. They found that during the period from mid-2005 to 2007 following Cramer’s advice yielded an annualized return of 12 percent compared to an S&P return of 7.4 percent during the same period. However, they further concluded that when adjusted for risk, Cramer’s performance was in-line with the market’s thus making him neither a materially good or bad stock picker.
It’s important to note that their study doesn’t include the recent downturn so it’s possible that their conclusions would be much different if the study was carried forward. The podcast suggested that they are in the process of analyzing Cramer’s performance during the downturn.
Interesting, I look forward to reading the full paper.
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