Jim Cramer’s Mad Money Charitable Trust Performance and Factor Attribution

Abstract

This article analyzes the complete historical performance of Jim Cramer’s Action Alerts PLUS portfolio from 2001 through 2017, which includes many of the stock recommendations made on Cramer’s TV show, Mad Money. Both since inception of the portfolio and since the start of Mad Money in 2005 (when the portfolio was converted into a charitable trust), Cramer’s portfolio has underperformed the S&P 500 total return index both on an overall returns basis and in Sharpe ratio. Being the first to analyze Cramer’s post-crisis return history, these findings contrast with previous studies, which analyzed Cramer’s outperformance in short windows before the 2008 financial crisis. Using factor analysis, we find that Cramer’s portfolio returns are primarily driven by underleveraged exposure to market returns and, in some specifications, tilting toward small-cap stocks, growth stocks, and stocks with poor earnings quality.