Mad Money Machine

Get your $100,000 and join the Portfolio Smackdown 2007

So thanks to some feedback from you guys, I got the idea to combine the Investment Guru Challenge and the Portfolio Smackdown into one thing for 2007. I have created a game at MarketWatch’s Virtual Stock Exchange (VSE) in 2007 for our Investment Guru Challenge and for the Portfolio Smackdown. The Game ID is MadMoneyMachine.com. Details are below, go join up, get your $100,000 and get it to work on 2 January 2007.

On 2 January, I will fill out (at least) two portfolios: a BUY AND HOLD INDEX portfolio and a CRAMER portfolio. Then we can track their performance over the course of the year.

I WILL CONTINUE TO PROVIDE DETAILS ON THE PORTFOLIOS PAGE.

I HAVE MORE DETAILS ABOUT THIS COMING SOON. Go ahead and get your account registered and started so you will be ready at the starting line on 2 January.

How To Join:

Use the information and directions below to join the game.

Game ID: MadMoneyMachine.com

• Open this link and read the competition summary:
  http://vse.marketwatch.com/Game/StartViewGame.aspx?id=MadMoneyMachine.com
• Click on the ‘Join Game‘ link.
• If you are an existing Virtual Stock Exchange member, enter your Email address and Password in the login panel and get set to trade. If you are a new user, follow the link to register – it’s easy!
• Follow the instructions and start trading!

Join now, and see if you can win my Mad Money Machine Portfolio Smackdown competition! The more participants the higher the level of competition. Can you master the market?

Simple Portfolios

I count PAUL B. FARRELL among the good guys in investing. His most recent article at MarketWatch.com is called
ETF flood calls for portfolio ark and it is worth a look.

I also got from the library yesterday the new book The Smartest Investment Book You’ll Ever Read by Daniel Solin. He also says buy the Vanguard US Total Stock Market Index and the Vanguard Total International Stock Market Index funds.

MMM-048: Trouble

I ENCOURAGE YOU TO Download this show thru iTunes!

but, if you just can’t possibly deal with that then go ahead and
Play show 48, right now 

Standard Podcast [ 34:21 ] Play Now | Play in Popup | Download

What are your ideas for the Portfolio Smackdown in 2007 and the Investment Guru Challenge?

Email me, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

As long as you keep listening, I’ll keep doing…. the Mad Money Machine!

Download the show directly MMM-048.mp3

Music from music.podshow.com

Dead Not Quick – X-RAY Dogs

Breath of Heaven – Ayla Brown

Hot potato. Sell BAC

Jim said today on Mad Money that he was bearish on Bank of America (BAC). That means sell. We held it for, what, seven days? I don’t know what financial to buy, but tomorrow night I’ll look through his rantings and see what he’d say to buy. He did like the New York Stock Exchange (NYX) yesterday. Does that qualify? Should we buy it? Jim, tell us tomorrow on Mad Money what Financial to buy. I’ll sell BAC at 10:30’s price and rest in cash for a day or so.

Cramer’s lack of diversifcation costs charities nearly half a million?

Too bad Jim invests for charity in individual stocks. His portfolio is probably up, what, 7% for the year? Give or take a few percentage. On three million dollars that would be $210,000. If instead he had invested in Portfolio 100 at ifa.com, he would be up 21.23% or $636,900. In other words, due to his lack of diversfication, he is costing his favorite charities $426,000 this year. Nearly half a million dollars could go a long way for these charities!

swap NOK for GOOG

I forgot that on 1 Dec, Cramer blessed selling Nokia (NOK) saying while it was inexpensive, he didn’t like the cellphone sector. And since he has been a perpetual Google fanboy, (GOOG) how can we not buy it as the tech play in the Portfolio Smackdown? I will sell/buy today at 2:30.

Cramer on Imus

Here’s the link where you can listen/download/get the podcast of the Don Imus show this morning on which Jim Cramer talks about losing 30 pounds on the stress diet, talks about the new book, etc. Runs about 17 minutes.

http://wfan.com/pages/119251.php?contentType=34&contentId=1506

Says not all the stocks he recommends are good for everybody. Says the show needs augmentation. Cliff Mason the book’s coauthor is the head writer of the show and is Cramer’s nephew. I figured as much when I saw in the book that it is dedicated to their two mothers; Louise Cramer and Nan Cramer Mason.

Says half the callers to his show are in college. They very much want to make money.

He throws his book against the wall on every show. (I wonder if that is how it is kept on the best seller list?)

Feels people have abused the show by buying after hours. The book is cautionary to not be too excited about the market. Gives the lowdown on how to buy stocks. Meant as a companion to the show.

The web has answered the problem of financial info for people who are already knowledgeable.

Talks about hedge funds. Says he was miserable at the hedge fund. Instead of going to work at a quarter to four now goes to work at a quarter to five.

Says living in his car was a wakeup call. Now he gives away everything he makes. Says we are taught to work hard, but working hard after you’ve made a lot of money is kind of a bogus thing.

Takes [limectil] that cuts off the highs (feelings of invincibility). Imus asked if he has ever thought about Jesus. Says only historically. The show gives him some sustenance. His relationships are now a 6 out of 10, up from the 3 out of 10 it was the last time he was on Imus.

ETF Portfolio Crosses 20%!

Wow, the ETF Portfolio crossed the 20% gain mark for the first time today. It is time to take a step back and talk about this some.

As of today, the ETF Portfolio is up 20.1% and the 2006 Portfolio of Select Jim Cramer Featured Stocks (Cramer Portfolio) is up a sickly 1.1%. Why? There are many reasons for the downfall of the Cramer Portfolio. First, they were most all US companies. As you can see from the returns of the ETF portfolio, the European and Emerging Market countries were the places to be for big big returns. Next, the Cramer Portfolio didn’t have REIT exposure. Holy cow, who would have thought the REITs would have put in yet another fantastic year? A 35.6% gain as of today is phenomenal, astonishing, miraculous.

Next, some of the stocks in the Cramer Portfolio had gains, but only after we sold it. Like Crocs (CROX). We bought it on the Cramer hype at $29.21. Sold it on his call for $21.48. And it currently rests at $42.12. Nobody can time the markets or individual stocks, not even Cramer. I’m convinced that if we look at the aggregate of Cramer’s calls, we would find that he is correct no more often than the market itself; his picks don’t beat index funds. (You can have a look at cramerwatch.org, or yourmoneywatch.com, or caps.fool.com search for trackjimcramer, for detailed tracking of all of his picks). Also, I have a feeling that his ActionAlertsPlus account is trailing the S&P 500 this year. If he can’t pick them, what chance do we have?

Yourmoneywatch.com has the results like this so far:
Cramer’s Total Portfolio Performance: +8.77%
DOW +13.92%
S&P 500 +12.37%
NASDAQ +10.84%
Russell 3000 +13.34%

I realize that if you took 1000 people and had them pick some stocks that Cramer suggests, that we’d get 1000 different results. But take a look at the Investment Guru Challenge. Since the beginning of the 2nd quarter people have been playing with $100,000 in play money. Out of 233 entries, the ETF Portfolio is currently in 24th place. That is the top 10 percentile. Said another way, 90% of the other stock pickers did worse than the simple asset allocation buy and hold plan.

If you were skeptical of me, you may say that I have picked poor performing stocks for the Cramer Portfolio on purpose to make this point. No, these were Cramer’s featured stocks! I started out the year wanting to show how much MORE the Cramer Portfolio would make than the ETF Portfolio. Along the way I read Index Funds: the 12 Step Program for Active Investors and lots of other books and realize that nobody can pick stocks to beat the market. To minimize risk, you need to own everything. Live on the Efficient Frontier.

I got interested in investing because I wanted to make sure I could get on a path to financial independence (some call it retirement). I thought that to make the most of my money I had to be smart, do an hour of homework per week per stock, and listen to conference calls, read annual reports, calculate PE ratios, on and on. How ridiculous is it that the best way to invest is the one that takes the least amount of work?

Having said that, I do have a real chore ahead of me in trying to get all of my accounts properly allocated across assets. Two 401Ks, four IRAs, accounts at four investment firms, stupid investments in individual stocks that have gone up and now I’d have to pay the gobmint capital gains taxes if I sell them. Good problem to have in a bull market I guess. I think in the long term, it is better to pay the tax and get into the right asset allocation portfolio than risk my money on a single company. And if I buy something like an index ETF, I won’t need to sell it until I need the money, and therefore won’t be paying taxes until then. I like keeping my own money, do you?

I’m going to get rich watching my 46″ LCD TV

I just got my advance copy of Jim Cramer’s Mad Money: Watch TV, Get Rich and the first thing I’m going to do is set the book down beside the couch and turn on the TV so I can start getting rich. Next, during commercials (except the excellent IFA commercials) I will read the Table of Contents. 11 chapters, 198 pages. First three chapters on how to buy a stock. Next chapter on how to sell a stock. Then some chapters about things on the TV show.

Here’s the first line of the Introduction:

“Investing well isn’t easy, but it is possible.”

To which I say, investing should be easy, or you’re doing it wrong! Maybe he means, “Gambling in the stock market to make money isn’t easy, but it is very slightly possible.”

Next sentence…

“My goal in life is to make it easier for you to make money.”

If you were to actually focus on the “easier” part, you’d tell people to buy index funds according to this breakdown:

Large cap stocks : 40% (half growth and half value)
Small cap stocks: 10%
Micro cap stocks: 10%
REIT: 10%
International Large: 10%
International Small: 10%
Emerging Markets: 10%

Then you don’t even need to watch TV to make money.

I’m just saying, I’m hoping as I get into the book I hear words like, “this book is to be used for your 5% speculative money only,” or, “pick stocks to have fun, not to make money.”

I’ll read and give you the full lowdown.

Gotta swap another one

Just when we had the Portfolio Smackdown complete with stocks once again, today Jim Cramer on his Real Money radio show (which may not be is not long for this world) said to sell Citigroup (C). So we will sell it tomorrow morning at 10:30 price and swap into Bank of America (BAC) which he said on Mad Money on 29 Nov is the “annointed financial.”

More info on the end of Real Money.

Free Cramer Book and Get Your Booyah on on Dec 5th

OK hardcore Cramericans, now is your chance to get a free book and be seen on the Today Show.

I’ve just gotten word from Simon and Schuster that goes like this:

He has a new investing book coming out in December, titled Jim Cramer’s Mad Money: Watch TV, Get Rich.

We have a very fun opportunity for you and your readers. We have made “Booyah” Jim Cramer face masks and will be distributing them to the crowd at NBC’s “The Today Show” on Tuesday, December 5th at 7 AM—Jim will be appearing on the show that morning. We are also going to offer 10 free copies away to the first 10 people to show up.

So, come on down to Rockefeller Center—and don’t forget your Booyah signs!

Ask for Leah Wasielewski at the Today Show

I will be reviewing his book here and on the podcast, so stay subscribed!