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Weekly column on investment/personal finance books and articles Date published: 8/26/2007 By Bill Freehling WITH MORE than 100,000 people watching his show every weeknight, Jim Cramer has in some respects become America's de facto investment adviser. But according to an article in the Aug. 20 edition of Barron's, the host of CNBC's "Mad Money" has lagged the overall market returns over the past two years. In "Shorting Cramer," Barron's writes that In other words, according to Barron's, people would do better investing in low-cost index funds than sticking with Cramer. The Barron's analysis was based on a list of stocks compiled by YourMoneyWatch.com, a site managed by a loyal Cramer viewer. CNBC didn't provide its own records of Cramer picks to Barron's. The network CNBC told Barron's that the show is supposed to be for educational purposes, and viewers are encouraged to wait a day before buying recommended stocks. That avoids buying into the short-term jump that occurs the day after Cramer's picks. Barron's concludes the article by urging Cramer and CNBC to provide a public database of "Mad Money" stock picks. "Even cheerleaders need to be accountable," Barron's writes. The article has been widely publicized. I read one response that said Cramer isn't trying to be your financial adviser any more than Dr. Phil is trying to be your psychologist. Yet Cramer has educated many Americans on the workings of the stock market and genuinely wants to make people money. Mixed opinionsTwo conflicting columns in the Sept. 3 issue of Forbes show why investors won't get far relying on the advice of financial publications. The bullish perspective comes in an article titled "Get Off the Ledge." It notes that despite the troubles in the U.S. mortgage market, the stock market doesn't appear poised for a collapse. The article reasons that strong gains in commercial construction have made up for weakness in housing starts. It says the overall stock market isn't expensive by historical standards, and that America's growing wealth and population should bring the housing market back in due time. The bearish point of view is in a column called "Hangover." The author writes that the five-year stock market rally is now over, doomed by tightening credit and the imploding mortgage market. Her advice is to sell all stocks and jump into six-month U.S. treasury bills yielding nearly 5 percent. So what is an investor supposed to do given these mixed messages? The only solution, as always, is to think for yourself. Free Lance-Star reporter Bill Freehling writes a weekly column on investment/personal finance books and articles. Contact him at 540/374-5405 or e-mailEmail: bfreehling@freelancestar.com.
Bill Freehling is right about thinking for yourself. As an amateur investor and blogger I emphasize the need for your own research, and responsibility for managing each of your stocks in your own portfolio. It is useful to listen to Cramer for ideas, take the initiative to determine whether those ideas fit your own investment strategy. And always know when you wish to sell a stock both on the upside and downside.
Stock Picks Bob's Advice
http://bobsadviceforstocks.tripod.com/bobsadviceforstocks/
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