Laws of physics dictate that a gravy train can’t continue in perpetuity. Even so, the Cramer curse has been a veritable fount of market-beating alpha for well over a decade. Now, though, with the imminent launch of a dedicated Inverse Cramer ETF (SJIM), Wall Street is finally paying homage to the potential of inversing the stock recommendations by the CNBC host Jim Cramer. We have been consistently hammering home the point that Jim Cramer represents the consensus view in the market, representing a perspective that rarely – if ever – generates returns in excess of the market. Such is the potential of flipping Cramer’s voluble stock recommendations – espoused with an admirable air of confidence – that a number of Twitter accounts have propped up to keep track of the CNBC host’s stock picks. Our favorite, of course, is @CramerTracker. This Twitter account, incidentally, forms the basis for IndexOne’s virtual inverse Cramer index – dubbed the i1 Inverse Cramer. Even though this index is not an actual ETF, it does demonstrate the market-beating potential of flipping Cramer’s recommendations. As an illustration, the index is currently up 15.96 percent on a year-to-date basis, thereby beating the broader market by a whopping 37 percent, given that the benchmark S&P 500 index is down 21 percent so far this year.
Inverse Cramer ETF $SJIMLong Cramer ETF $LJIMEff Dec 19 20-25 equal-weighted stocks/ETFs based on Cramer’s Twitter & TV recommendations and market views. Positions exited if Cramer has no view & once profit targets met.https://t.co/ZvA5G2zoTX pic.twitter.com/tY9yBMt15s — ETF Hearsay by Henry Jim (@ETFhearsay) October 5, 2022 Coming to the topic at hand, Tuttle Capital Management has now applied to the SEC in order to secure approval for two ETFs: Inverse Cramer ETF (SJIM) and Long Cramer ETF (LJIM). Tuttle is targeting a 2022 launch for these investment vehicles. Of course, given the dynamics involved, we would hazard an educated guess that the only offering with substantial utility here is the Inverse Cramer ETF. However, the Long Cramer ETF can provide an effective indexation of Cramer’s stock-picking prowess – a herculean task given that the eccentric CNBC host sometimes gives contradictory recommendations within the span of a few hours.
Watch him beat the $SPY… Sorry, being a contrarian doesn’t always work, couldn’t continue this bullsh*t tweet 😅 pic.twitter.com/ohl0x2KfkY — Special Situations 🌐 Research Newsletter (Jay) (@SpecialSitsNews) October 6, 2022 As to the specifics, the advisors behind the Inverse Cramer ETF (SJIM) will monitor Jim Cramer’s recommendations throughout a given day, reversing those recommendations either via outright shorts or by entering into derivative transactions via futures, options, or swaps so as to generate a negative correlation to Cramer’s stock picks.
— Wook Capital (@WookCapital) October 5, 2022 On the flip side, now that Wall Street is about to start capturing the alpha from reversing Cramer’s recommendations, as is now being done via the Inverse Cramer ETF (SJIM) offered by Tuttle Capital Management, the gravy train might well be about to end. Do you think this is a worthy initiative? Let us know your thoughts in the comments section below.
