The performance and impact of stock picks mentioned on 'Mad Money'

Bryan Lim and Joao Rosario

Applied Financial Economics, 2010, vol. 20, issue 14, 1113-1124

Abstract: We analyse both the market reaction and the long-term returns of stock picks mentioned on the Consumer News and Business Channel (CNBC) programme '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, favouring 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 6-month horizon provide some evidence in favour of Cramer's stock-picking ability. In particular, his recommendations on small-cap stocks accurately predict the long-run trends.

Date: 2010
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DOI: 10.1080/09603101003761887

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