This week, The Simple Dollar takes a look at the new investing book from Jim Cramer, Mad Money. This book is surprisingly different from its predecessor, Real Money, in a number of ways. I quite enjoyed the first one; will I enjoy this one, too? Let’s find out!
The remainder of the book is focused on supplemental material to the television series, which felt to me like a bit of good investment advice padded with a lot of shilling for Mad Money on CNBC. Basically, Cramer spends four chapters in the book highlighting segments from the show. Here’s what I found that was actually worthwhile in those chapters.
The “Lightning Round” segment boils down to pretty much nothing but sector analysis. Cramer knows about 200 sectors in his head and he can pretty quickly match companies to sectors, so if he thinks a sector is bad, he usually says “sell,” and if he thinks a sector is hot he’ll say “buy.” If a sector is lukewarm, he’ll say “buy” on the best of breed in the sector and “sell” on everything else. This basically covers 95% of the stocks that come through on his show.
The CEO/CFO interviews are actually worthwhile. Basically, what you should look for are CEOs and CFOs that can carefully and deliberately deconstruct criticism levied at their company. If they lose patience or argue with Jim, you should be thinking “sell sell sell.”
The picks on the show have one big thing in common. Most of them are stocks that recently pulled back a bit from their 52 week high. If you know a stock that’s at a 52 week high, wait a week and if it pulls back a bit, there’s a good chance Jim will cover it.
The show only covers large and mid cap stocks. Jim legally can’t interfere with small cap stocks, for understandable market-manipulation reasons.
Sadly enough, those were the only really interesting tidbits I pulled from this portion of the book, which was a serious disappointment. I was especially bored by the chapter in which he highlights every. single. sound effect used on the show, even though he usually explains them on air.
Tomorrow, I’ll give a final buy or don’t buy recommendation.
Jim Cramer’s Mad Money is the fifteenth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.