5 ms·

Building the Inverse Jim Cramer Index

60 points by vampiretooth1 4y ago

chii 4y ago
The idea of an inverse cramer index assumes that cramer is always telling the "wrong" thing - that is, his predictions are inversely correlated with the truth (or outcome). That's not what cramer's predictions are though - his predictions are likely not far off from a random flip of the coin. So an inverse is likely to perform just as well (or poorly) as the real prediction!
- kjs3 4y ago
  I'd always assumed his trader-buffoon shtick was to push the proles to trade a particular way so that his trader buddies could profit from the herd. But coin toss is probably as accurate and more charitable.
  - geemsr 4y ago
    [dead]
leobg 4y ago
My tongue-in-cheek heuristic for the last couple of years has actually been the Inverse Gates Index.
tjs8rj 4y ago
Very interesting and Quantbase looks neat (as well as the other investing strategies you link to: Pelosi Tracker, leveraged long run investing, etc). Is there a case for this as an actual investment or primarily novelty?
- deleted 4y ago
  [deleted]
- deleted 4y ago
  [deleted]
- myvoiceismypass 4y ago
  I am running into website issues galore with quantbase today and it is turning me off. Like: window alert usage for "logging", pages rendering the following as text "Application error: a client-side exception has occurred (see the browser console for more information)." General session wonkiness. Lovely console errors: "Uncaught (in promise) SyntaxError: JSON.parse: unexpected character at line 2 column 1 of the JSON data" Seems neat, though, I don't see why or how I should trust them with bank account access.
calderwoodra 4y ago
Is there any reason to believe that Jim Cramer (or the inverse of Jim Cramer) would do particularly well in the stock market? I imagine following a cat picking random stocks works about as well. https://www.npr.org/sections/money/2013/01/14/169326326/housecat-beats-investors-in-stock-market-challenge https://www.npr.org/sections/money/2013/01/14/169326326/hous...
- deleted 4y ago
  [deleted]
- tomc1985 4y ago
  WallStreetBets had something that was like a fish in a fishtank somehow directing stock purchases, versus WSB, and WSB lost.
  - eggbert12 4y ago
  - asperous 4y ago
    It was a YouTuber, possibly inspired by a 2012 stunt [1] https://www.youtube.com/watch?v=USKD3vPD6ZA https://www.youtube.com/watch?v=USKD3vPD6ZA [2] https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/?sh=79c0c2a4630a https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey...
  - tjs8rj 4y ago
    OP's linked site Quantbase shows a WallStreetBets tracking portfolio with detailed performance history: https://www.getquantbase.com/details?fund=r/WallStreetBets%20Sentiment https://www.getquantbase.com/details?fund=r/WallStreetBets%2...
- cuteboy19 4y ago
  Inversing a pump and dump operation, provided it is well timed, can easily beat the market. Assuming that Cramer is a paid actor, this could probably be the case here
pavlov 4y ago
For taking a position against another growth stock hype luminary, there exists an inverse Cathie Wood index you can trade: an ETF with the ticker SARK (“short ARK”). It has done quite well since its inception last year.
- dominotw 4y ago
  >done quite well since its inception last year. that probably doesnt say much though. what happens if its run since ark's inception?
  - dehrmann 4y ago
    This is also a problematic metric because of survivorship bias and as part of that, most investors showed up late to the game. Despite the fund having done well, it still could have a negative return over its life when weighted by AUM.
  - pavlov 4y ago
    A short fund like this is a trading instrument. I don’t imagine anyone holds it for years. The fund makes its money on fees, not on price appreciation.
robonerd 4y ago
But what happens when Jim Cramer starts promoting the Inverse Jim Cramer Index?
- marginalia_nu 4y ago
  The Hofstadter crash of 2023.
- SomeBoolshit 4y ago
  The moon explodes.
ProjectArcturis 4y ago
So, they tried a whole bunch of things, and even with the benefit of that lookforward bias, their final strategy still underperformed the S&P? Color me unimpressed. Edit: I looked at their site and it's clear that their business model is just to gather assets to charge fees on. Which is why they've developed strategies like Inverse Cramer, Pelosi Tracker, WallStreetBets -- these strategies don't have any alpha, they're just designed to catch the eye of retail traders. Also this scumbaggery, from their website: "$70M+ Assets Committed*" Then way at the bottom: "* = "Assets committed" refers to captured user behavior in attempted investments and not to assets being actively managed."
- vampiretooth1 4y ago
  I'd familiarize myself with overfitting (https://www.investopedia.com/terms/o/overfitting.asp https://www.investopedia.com/terms/o/overfitting.asp). That's optimizing your portfolio to historical data so much so that it is no longer generalizable to the future.
  - ProjectArcturis 4y ago
    I'm well aware of overfitting, but it seems that these folks are not.
- tstewart314 4y ago
  Hey! One of the founders here. We're a recently launched roboadvisor explicitly for "high risk investing" and we develop these portfolios to make it easy to take advantage of more exotic strategies for those without the financial or technical knowledge to do it themselves (while providing tons of data, transparency, and recommendations). This blog post is a fun strategy poking fun at the recent popularity of "Inversing Cramer" and our own spin on it. Note that this isn't a live portfolio on our site. For these more fun ones (WallStreetBets, Nancy Pelosi) - these are specifically requested from our clients and we provide extensive data and recommendations to suggest portfolios to clients based on their situation. You can see for yourself: the WallStreetBets portfolio is down nearly 40%. Nancy Pelosi is flat - we don't hide that at all and instead make it very clear with large font. Our most popular strategy (pulls the most AUM) is the Quantbase Leverage Flagship, a portfolio based on this paper[0] with nearly 100 years of performance history. Yes we charge a fee on AUM. All robo-advisors do. This aligns incentives: we make (more) money only when you do. We're not for everyone, and even for those we are for we recommend on our front page to limit investment to a fraction of your total portfolio, but the thesis we believe in is solid: you can improve your absolute returns by taking a higher level of risk. We make it easier to do that intelligently, with proper data, and with the proper risk management. Happy to answer any other questions. [0]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701 Edit: added "more" to clarify the AUM fee incentives alignment.

60 points by vampiretooth1 4y ago

chii 4y ago

The idea of an inverse cramer index assumes that cramer is always telling the "wrong" thing - that is, his predictions are inversely correlated with the truth (or outcome). That's not what cramer's predictions are though - his predictions are likely not far off from a random flip of the coin. So an inverse is likely to perform just as well (or poorly) as the real prediction!

kjs3 4y ago
I'd always assumed his trader-buffoon shtick was to push the proles to trade a particular way so that his trader buddies could profit from the herd. But coin toss is probably as accurate and more charitable.
- geemsr 4y ago
  [dead]

leobg 4y ago

My tongue-in-cheek heuristic for the last couple of years has actually been the Inverse Gates Index.

tjs8rj 4y ago

Very interesting and Quantbase looks neat (as well as the other investing strategies you link to: Pelosi Tracker, leveraged long run investing, etc). Is there a case for this as an actual investment or primarily novelty?

deleted 4y ago
[deleted]
deleted 4y ago
[deleted]
myvoiceismypass 4y ago
I am running into website issues galore with quantbase today and it is turning me off. Like: window alert usage for "logging", pages rendering the following as text "Application error: a client-side exception has occurred (see the browser console for more information)." General session wonkiness. Lovely console errors: "Uncaught (in promise) SyntaxError: JSON.parse: unexpected character at line 2 column 1 of the JSON data" Seems neat, though, I don't see why or how I should trust them with bank account access.

calderwoodra 4y ago

Is there any reason to believe that Jim Cramer (or the inverse of Jim Cramer) would do particularly well in the stock market? I imagine following a cat picking random stocks works about as well. https://www.npr.org/sections/money/2013/01/14/169326326/housecat-beats-investors-in-stock-market-challenge https://www.npr.org/sections/money/2013/01/14/169326326/hous...

deleted 4y ago
[deleted]
tomc1985 4y ago
WallStreetBets had something that was like a fish in a fishtank somehow directing stock purchases, versus WSB, and WSB lost.
- eggbert12 4y ago
- asperous 4y ago
  It was a YouTuber, possibly inspired by a 2012 stunt [1] https://www.youtube.com/watch?v=USKD3vPD6ZA https://www.youtube.com/watch?v=USKD3vPD6ZA [2] https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/?sh=79c0c2a4630a https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey...
- tjs8rj 4y ago
  OP's linked site Quantbase shows a WallStreetBets tracking portfolio with detailed performance history: https://www.getquantbase.com/details?fund=r/WallStreetBets%20Sentiment https://www.getquantbase.com/details?fund=r/WallStreetBets%2...
cuteboy19 4y ago
Inversing a pump and dump operation, provided it is well timed, can easily beat the market. Assuming that Cramer is a paid actor, this could probably be the case here

pavlov 4y ago

For taking a position against another growth stock hype luminary, there exists an inverse Cathie Wood index you can trade: an ETF with the ticker SARK (“short ARK”). It has done quite well since its inception last year.

dominotw 4y ago
>done quite well since its inception last year. that probably doesnt say much though. what happens if its run since ark's inception?
- dehrmann 4y ago
  This is also a problematic metric because of survivorship bias and as part of that, most investors showed up late to the game. Despite the fund having done well, it still could have a negative return over its life when weighted by AUM.
- pavlov 4y ago
  A short fund like this is a trading instrument. I don’t imagine anyone holds it for years. The fund makes its money on fees, not on price appreciation.

robonerd 4y ago

But what happens when Jim Cramer starts promoting the Inverse Jim Cramer Index?

marginalia_nu 4y ago
The Hofstadter crash of 2023.
SomeBoolshit 4y ago
The moon explodes.

ProjectArcturis 4y ago

So, they tried a whole bunch of things, and even with the benefit of that lookforward bias, their final strategy still underperformed the S&P? Color me unimpressed. Edit: I looked at their site and it's clear that their business model is just to gather assets to charge fees on. Which is why they've developed strategies like Inverse Cramer, Pelosi Tracker, WallStreetBets -- these strategies don't have any alpha, they're just designed to catch the eye of retail traders. Also this scumbaggery, from their website: "$70M+ Assets Committed*" Then way at the bottom: "* = "Assets committed" refers to captured user behavior in attempted investments and not to assets being actively managed."

vampiretooth1 4y ago
I'd familiarize myself with overfitting (https://www.investopedia.com/terms/o/overfitting.asp https://www.investopedia.com/terms/o/overfitting.asp). That's optimizing your portfolio to historical data so much so that it is no longer generalizable to the future.
- ProjectArcturis 4y ago
  I'm well aware of overfitting, but it seems that these folks are not.
tstewart314 4y ago
Hey! One of the founders here. We're a recently launched roboadvisor explicitly for "high risk investing" and we develop these portfolios to make it easy to take advantage of more exotic strategies for those without the financial or technical knowledge to do it themselves (while providing tons of data, transparency, and recommendations). This blog post is a fun strategy poking fun at the recent popularity of "Inversing Cramer" and our own spin on it. Note that this isn't a live portfolio on our site. For these more fun ones (WallStreetBets, Nancy Pelosi) - these are specifically requested from our clients and we provide extensive data and recommendations to suggest portfolios to clients based on their situation. You can see for yourself: the WallStreetBets portfolio is down nearly 40%. Nancy Pelosi is flat - we don't hide that at all and instead make it very clear with large font. Our most popular strategy (pulls the most AUM) is the Quantbase Leverage Flagship, a portfolio based on this paper[0] with nearly 100 years of performance history. Yes we charge a fee on AUM. All robo-advisors do. This aligns incentives: we make (more) money only when you do. We're not for everyone, and even for those we are for we recommend on our front page to limit investment to a fraction of your total portfolio, but the thesis we believe in is solid: you can improve your absolute returns by taking a higher level of risk. We make it easier to do that intelligently, with proper data, and with the proper risk management. Happy to answer any other questions. [0]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701 Edit: added "more" to clarify the AUM fee incentives alignment.