First Name:
James
Last Name:
Handy
Major Department:
Accounting
Thesis Director:
Chris McNeil
Date of Thesis:
May 2009
Through the speed and breadth of our informational networks today (such as cable television, the Internet, and printed news), the individual investor has access to a plethora of investment gurus who promise above average returns on a variety of investments. It is difficult for the investor to wade through this information environment and determine whose investment picks to trust, if any. A number of media luminaries inevitably rise to the top of the collective investor conscience and gain a large following among individual investors. Much research has been done on high profile investment information sources in an effort to understand how these media figures influence market efficiency, asset price, and trading volume. This prior research has demonstrated that these media figures have frequently caused short-term abnormal returns through their predictions for individual securities. Despite positive short-term returns, there is little evidence that their investment advice outperforms the market long-term on a risk adjusted basis.
Jim Cramer (Cramer) is such a media luminary. Mr. Cramer hosts the Mad Money television show on CNBC, and uses the show as his primary platform to convey investment strategies to his audience. The average Mad Moneytelevision show commands an audience of over 400,000 viewers (Feinberg 2006). While impressive, this statistic fails to capture the multitudes who follow his picks on his website, TheStreet.com, and other popular unofficial Cramer tracking websites which record all his recommendations.
This paper is concerned with Jim Cramer's strongest buy recommendations, which are defined as the recommendations upon which he bestows the designations of Best of Breed or Pick of the Week.