Whether he was yelling something with his sleeves rolled up as you channel surfed or he was holding wads of cash in posters for a book signing at your local Borders, you’ve seen Jim Cramer. In the show “Mad Money” on CNBC, he enthusiastically gives stock tips to callers. He also has several books for sale, which give further tips and general financial advice (mutal funds, college tuition, etc).

But how legit is Cramer? He may have a history as a successful hedge fund manager and a position as “America’s #1 Financial Guru,” but how legit is his advice?

Fraud
Cramer’s recommendations generally do worse than the market. Several sources have researched and cited this, including Bill Alpert, yourmoneywatch.com, and Eric Tyson, among other critics. There is no database of his stock picks and how they did, therefore there is no real accountability.

His books do not actually help you make money. Unless you day trade, and do it only extra money you have set aside to do so, there is a big chance you could loose money just as easily as making it by reading Cramer’s advice. Plus, research you could do for free can prepare you to “speculate” just as well (or not) as Cramer does.

He has motive to say anything to make people buy books. Sad but true. The more people buy his books, then the more people watch his show, and then the more people go to his website, and then more people buy the stocks that he suggests, which he chooses based on who his friends are. He then can make market swings that will please his more wealthy followers. He has been investigated by the SEC but has yet to be tried for insider trading or “pumping and dumping.”

There is no proof he is actually good at picking stocks. He quotes some good returns, but go out and find some verification of this. Of course he says he’s good at it; otherwise people won’t believe him!

Bull Market v. Bear Market. When his speculations were good, it was during a bull market, a market in which investors have confidence and buy in anticipation of profit from stocks or real estate. But it’s a bear market right now, and investors are scared and trying to sell.

Fortune
There really isn’t much of a case for fortune here. If you have the amounts of money you’d need to do some of the trades Cramer says he does, you probably didn’t get it by listening to him. Every once in a while he gives some sound advice and the basic financial and savings advice in his books are fine, but they can be found other ways. Plus all his disclaimers should make you skeptical. Like most things, investing is something that can be researched easily by yourself on your own time; having one non-objective party giving you advice is never a good way to go.

Plus, he doesn’t know you. He doesn’t know your situation and shouldn’t be giving you advice. If you’re looking for stock tips don’t just use one source. Do your research before you sink all of your money into recommendations from a TV personality.

Bottom line: He might be worth a fortune but his advice: FRAUD.

What do you think? Is Jim Cramer a fraud?

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