Here's why Expert Stock Pickers are (usually) a scam
What do you think of Jim Cramer’s stock picks?
The host of Mad Money (on CNBC) is known for his stock picks, but often accused of choosing stocks that have topped out.
He’s made some notorious mistakes (as have other stock pickers). It’s easy to find Cramer critics. In general, I’m suspicious of stock market “experts” who confidently predict the market's direction, assuring you which stocks are likely to become “winners.”
Some investors rely on these predictions. Occasionally the “experts” are correct, are more frequently nothing more than random chance. When they get it right, they can call themselves stick gurus. When they’re wrong, you probably won’t hear about it. Their overall record? It’s ugly.
One study looked at the track record of stock market “experts” who predicted the market's direction. Their findings were eye-opening. Overall their accuracy rate was only 47%, less than random chance. Which is really bad since the market normally goes up.
Jim Cramer had an accuracy rating of 46.8% based on 62 forecasts. For this month, he’s picking a lot of currently “winning” stocks.
I’d say “buyer beware”.
