It’s Cramerica. We Just Live in It.

This comment from an interview with Jim “Mad Money” Cramer will infuriate many people, but you have to concede it’s thought-provoking:

Commissions are incredibly low. The information is all available on the
Web. Taxes are outrageously low versus what they should be. … Anybody
who set up a philosophy that says trading is bad is not looking at the
fundamental structural changes in both the tax code and the technology
behind the industry. I think they’re being reckless with ‘buy and
hold.’ They think that I’m being reckless. I think that I’m being

[obDisclaimer: I write a weekly column for the Cramer-founded]


  1. Nah. The only thought it provokes is how easy it is to shoot down. For the “average citizen”:
    Trading Is A Negative-Sum Game
    Trading Is A Negative-Sum Game
    Trading Is A Negative-Sum Game
    Not “Zero-Sum”. Negative Sum. The efficiency improvements just mean that the negative is becoming much less than it used to be. Therefore, some marginal strategies will be more available. But that’s a far cry from turning into a positive-sum game.
    Or, in a nutshell: Where are the *client’s* yachts?

  2. I agree, mostly.
    But if you spend much time in the finance literature you’ll fairly quickly discover that there are a fair number of interesting trading strategies that fail for the same reason: transaction costs.
    When you make trading cheaper it’s always going to make a few of those strategies viable, at least for a while, which is (perhaps academically) interesting, at least to me.

  3. Oh, certainly. For professional finance people, who have jobs or even serious hobbies in researching and making use of market anomalies, there will be some opportunities. But that’s not what Cramer was talking about:
    He says he’s trying to help the average citizen living with a government that’s “of, by and for the corporation” make a boatload of money from the stock market.
    That boatload is still going to be someone else’s yacht. Or maybe the brokers will have to settle for a smaller yacht.
    I was checking out, and it’s actually a reasonable business model. Turns out it’s free to the extent of “40 trades a month, up to 10 trades a day”, and then $3.50 a trade. I doubt that’s enough to make any sort of serious money in a high-powered trading strategy. It is enough to be an interesting loss-leader in terms of drawing people in so as to sell them other things.

  4. Spectator says:

    Hard to fathom why anyone gives this raving lunatic with the track record of a stopped clock any credence.
    There are a some industries built on the gullibility of the American public, and he’s the promoter of one of the largest.