Being smart with $$ -- Do you really want to trade like Cramer?

Financial planning is often best kept simple.  I regularly meet doctors, plumbers and lawyers who tell me they actively trade stocks for their own account. Often I hear they follow Jim Cramer's recommendations on CNBC. So how does Cramer actually do? In a May 2016 paper by Hartley & Olson of the Wharton School, Cramer trailed the S&P 500 over the prior 15 years. So if the doctor had bought and held an S&P 500 index fund rather than trading he would have been richer. And if he used all that time researching stocks to instead see more patients he would have been far richer! But many people find it fun to listen to Cramer (and others) to try to beat the market, so go have your fun.  But if history is a guide, don't be shocked if the cost of that fun is underperformance vs. a buy-and-hold index fund strategy, especially after the tax bill from all that active trading. 

Larry Pike, CFA

www.clientpriority.com