This topic I’m about to discuss bothers the hell out of me. My friend’s dad is in the stock market and we often have arguments about what to invest in and what not to invest in. What angers me a lot is all his information comes from CNBC and he only listens to those puppets and their picks. Their most notorious puppet is Jim Cramer who loves to say what stocks he believes are hot and which ones are not.
What you should know about Jim Cramer’s show and the network: it’s all about ratings! Even before the show, they tell you that it’s for entertainment purposes and not advice on which stocks to pick. It’s essentially a legal way of preventing them from being accused for pumping and dumping. So how good are Jim Cramer stock picks anyways? Well, they’ll spike up the next day, but soon enough, they’ll come crashing down from short sellers. This is known as the Jim Cramer Effect or the CNBC Effect and some do make money by doing the opposite of what Jim tells you.
Rule number one, if you are going to get in on the hype, get in early. If you’re watching it on television, chances are you are going to be too late. This is how penny stock promoters work, they are paid to pump the value of stocks and then dump them when they’ve got their money’s worth. Television programs work much in the same way except they’re not paid by stock companies to advertise, they just promote in ways to increase their ratings so that they may profit from it.
Be smart about the market. If almost everyone in the stock market loses money, then doing what most people are doing is the wrong thing to do. People will try to get in on the hype, but eventually it all comes crashing down. With the ability to short stocks, you can actually profit from this crash that has been created by the hype. I would also recommend checking out a penny stock promoters list and seeing which list produces the biggest increase in price and see whether or not they come crashing down. I learned to do this watching Timothy Syke’s DVDs over and over again, making me a lot of money early on in my investing career.