To Derek Lowe:
I sent a copy of my post on Biocryst (BCRX) to Jim Cramer at his CNBC e-mail address, even though I'd said some unkind things about his pick, and he was kind enough to respond. His take was exactly that of a man who used to trade stocks for a living. He pointed out to me that the stock opened between 13 and 14 after he recommended it, then climbed to 17. If I'd bought a thousand shares, he went on to say, I'd have "the down payment on a decent car", and if I'd bought 5000 shares I'd be looking at tuition money.
As he put it, he's not asking for any praise from me, but feels that I "should at least accept the fact that the trade was money good." Well, I can't deny it: I do accept that anyone who ran out and loaded up on BCRX after he boosted it made money on the trade, and that's what that a stock transaction should do for you. But as I said to him in my reply, 5000 shares at $13 is a bit more "mad money" (to use the title of his CNBC segment) than I happen to have sitting around, so that may not be a very realistic example.
I should add that anyone who opens up a $70,000 position in a small NASDAQ stock because someone on TV said it was a good idea had better have a lot of money to lose. Most people who can afford to drop that kind of money probably aren't acting on tips they hear on investment shows, though, or at least I hope they aren't. This kind of thing can actually turn a profit on a majority of your individual trades, but the whacking losses that show up every so often will more than make up for those.
Whoa. What a startling admission. It's always been plainly obvious that most of the positions he recommends are only good because he's recommending them, but has he ever come out and said as such before? Derek Lowe needs to get more attention for this so if you have a blog you should link to it, or perhaps email the link to anyone who is interested. I don't expect it'll do much to expose St. Cramer, but perhaps it'll chip of some of the facade.
You can read Derek's first piece questioning Biocryst as a good Avain-Flu play here.
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