Blog entry about Cramer's show

I admit it. I love the show Mad Money hosted by Jim Cramer. Cramer is high energy, takes definitive positions on stocks, is tough in interviews of CEOs, reveals his strategies and logic on stock picking with disarming candor, and admits to his winners and losers (although we do not get a total). He also is genuine in his efforts to "make you money."

Here's the rub. The show undoubtly will encourage the home stock pickers to become day traders and lose their shirts. Empricial research by Terrance Odean at the Haas Business School has shown what pros in the brokerage business all know -- individual traders are suckers. ("All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors") They inevitably lose money to the pros. The best play for home traders is holding some form of investment indexed to a major market index -- an indexed mutual fund or an exchange traded fund (ETF). They minimize trading costs and hold a diversified claim on the market itself.

So the pros will applaud the success of Mad Money hoping that it encourages the marks to trade. Recent callers to the show, tauting gains ("I made 140,000 on your call on Google") should raise red flags. The testimonials (I assume -- hope-- are not stage by the show itself) mimic classic huckerterism. Listen to Cramer and enjoy his show. Do not select a few trades (urged on by the callers that tout big gains) and lose your money. Invest 60 to 85 percent of your money (depending on your abiltiy to take risks) in an indexed fund and put the rest in US Treasuries.

My work day ends at 6:00 PM usually. By that time, I've been in front of my computer and on the phone for nine hours. I spend my day researching, analyzing, writing, talking and bullshitting about stocks, the economy and business in general. Come 6:00 PM, I want to crack a beer and forget about EBITDA, inflation and insider stock transactions. Unfortunately, Jim Cramer won't let me.

Cramer's new show, Mad Money (CNBC, weekdays at 6:00 PM ET), has quickly turned into must-see TV for me (ok, I usually listen to the simulcast on XM Satellite Radio while I'm making dinner). Mad Money is an investor's delight - a solid hour of stock picking and commentary from one of the investing world's brightest personalities. It's also an amazing showcase for Cramer, who without Larry Kudlow by his side, can concentrate solely on stocks (I love Kudlow, but he's better suited to dealing with broader subjects and not individual stocks).