The Performance and Impact of Stock Picks Mentioned on 'Mad Money'

29 Pages Posted: 28 Sep 2007 Last revised: 21 Feb 2008

See all articles by Bryan Lim

Bryan Lim

University of Melbourne - Department of Finance

Joao Rosario

ISCTE-IUL

Date Written: February 18, 2008

Abstract

We analyze both the market reaction and long-term returns of stock picks mentioned on the CNBC program Mad Money, hosted by former hedge fund manager Jim Cramer. We find that Cramer's stock-picking style is consistent with a positive-feedback trading strategy, favoring stocks which have outperformed over an interval prior to the pick date. Subsequent to a pick, Cramer's immediate effect on a stock appears inversely proportional to the corresponding firm's market capitalization. The returns over a six-month horizon provide some evidence in favor of Cramer's stock-picking ability. In particular, his recommendations on small-cap stocks accurately predict the long-run trends.

Keywords: mad money, CNBC, Jim Cramer

JEL Classification: G14

Suggested Citation

Lim, Bryan and Rosario, Joao, The Performance and Impact of Stock Picks Mentioned on 'Mad Money' (February 18, 2008). Available at SSRN: https://ssrn.com/abstract=1017353 or http://dx.doi.org/10.2139/ssrn.1017353

Bryan Lim (Contact Author)

University of Melbourne - Department of Finance ( email )

Faculty of Economics and Commerce
Parkville, Victoria 3010 3010
Australia

Joao Rosario

ISCTE-IUL ( email )

Av. das For├žas Armadas
Lisboa, 1649-026
Portugal

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