Market: An ETF that plays the advice of CNBC anchor Jim Cramer will lower the curtain

(BFM Bourse) – This index fund, which plays on the convictions of Jim Cramer, will close on September 11 before being liquidated ten days later. This ETF had been launched anyway to soften the tone with the presenter, since it had been created at the same time as another index fund betting this time against the advice of the CNBC star.

He is perhaps the best-known host in the world (after of course all those of BFM Business and BFM Bourse) in the world of financial markets: Jim Cramer, the star presenter of the program “Mad Money” from the specialty channel CNBC, which has existed since 2005.

The journalist and ex-fund manager is known for his enthusiasm as well as his energetic propensity to dispense his convictions and advice on the markets. To the point of being often mocked on social networks – which, of course, often have a hard tooth – for his not always enlightened recommendations.

The most scathing will recall that Jim Cramer had advised to buy the title Silicon Valley Bank last February. That was some time before the Californian bank went bankrupt and triggered a mini-banking crisis on the market, which had forced the American authorities to pull out heavy artillery to stem the contagion. Even though reputable financial intermediaries also advised the bank on the purchase (this was the case of JPMorgan), Internet users again mocked the “anchorman” of “Mad Money”.

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Barely six months old

On X (ex-Twitter) the humorous account “Inverse Cramer” takes pleasure in pointing out the missteps of the journalist (but not only). Recently, this account highlighted the plunge in the number of users of Threads, Meta’s service supposed to compete with X, while Jim Cramer had declared at the beginning of July that “no matter what Twitter does, Zuck (Mark Zuckerberg, the boss of Meta , Editor’s note) can do it better”.

To surf on the propensity of the web to make fun of Jim Cramer, the company Tuttle Capital Management, founded by Matthew Tuttle, had last October registered documents with the American stock market policeman, the SEC, to launch an ETF (an index fund) allowing to bet against the presenter’s beliefs. Mirroring this, another ETF, this time following its recommendations, was also to see the light of day. Both funds were finally launched in early March.

Barely six months later, the “Long Cramer Tracker ETF”, the one following the presenter’s convictions, will be stopped, since it will be closed on September 11 and then liquidated on September 21, Tuttle Capital Management announced this week. This ETF only has $1.27 million in assets and its value has not grown significantly, with a share of this ETF currently worth $25.51 compared to $25 when it was launched last March. That’s a 2% increase

hardly impressive when you consider that over the same period the S&P 500 gained 8%.

But it’s not necessarily (only) the ETF’s performance that seems to have spurred Tuttle Capital Management to stop the fee.

This fund had been launched “in order to facilitate dialogue with Jim Cramer, with the Short Cramer ETF opposite (the ETF which bets against Jim Cramer, editor’s note)”, explains Matthew Tuttle in a press release.

In other words, the ETF “Long Cramer Tracker ETF” seemed above all to have been implemented to spare Jim Cramer and CNBC somewhat.

The “short” fund is maintained

“Unfortunately, Mr. Cramer and CNBC were unwilling to engage in dialogue and instead chose to ignore the funds. Therefore, there is no reason to maintain” the ETF buying Jim Cramer’s positions, a- he added.

The ETF which allows betting against the advice of Jim Cramer is well and truly maintained. Currently one of its shares is worth only 24.08 dollars against 25 dollars at its launch, a decline of 3.7%. But it has so far collected $3.37 million in assets, nearly three times more than the ETF following Jim Cramer’s advice.

Remember that this is not Tuttle Capital Management’s first attempt since it had set up an ETF allowing bets against the positions of the ETF Ark Innovation, the flagship fund of the “high priestess” of tech. Cathie Wood, whose aura has been tarnished. This especially since it left Nvidia at the beginning of the year, before the American company experienced its great stock market rally, driven by demand for its products linked to the explosion of generative artificial intelligence. As for Jim Cramer, the FinancialTimespointed out in the fall that his advice has surprisingly been the subject of a fairly dense literature in financial research. For example, in 2021, American researchers had published a study (“TV Financial Analyst Predictive Power: The Case of Jim Cramer and Mad Money”

) on the accuracy of its recommendations, concluding that the results were generally “mixed”.Which somewhat corroborated the outline of a previous study from 2009, “Investing in Mad Money: price and style effects”

. “While Cramer may be entertaining and mesmerizing to many of his viewers, his overall or average stock recommendations are neither extraordinarily good nor exceptionally bad,” she concluded.

Classes were stopped early Friday afternoon.Julien Marion – ©2023 BFM Bourse

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