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Breaking Equity let's you build, backtest, and trade with Algos.
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What happens if you follow Jim Cramer exactly: a multi-year study of Mad Money picks
Mad Money is an American finance television program at @cnbc hosted by Jim Cramer. Its main focus is investment and speculation, particularly in public company stocks.

Cramer gets a lot of attention - both positive and negative. Some people even say that you should do the opposite of what he says and you would make money. I sticked with a simpler approach trust no-one but numbers.

Below you can find the statistics for executing LONG positions for all the Mad Money "buy mentions", SHORT for "sell mentions". Opening positions every morning at 9:30am on the day after the show, holding until 9:30am next day and repeating the same.

The Setup
I ran 2 Strategies: SHORT and LONG. Below is the setup. Each Strategy tracks all the historical Mad Money calls and updates with new every night. $10K distributed daily equally among all stocks on each side.


The Results
I was a bit skeptical at first. Thinking that it would be mimicking the overall market performance at best or even losing money. I was pleasantly surprised with 2022 performance first
  • +11.86% on the LONG side YTD
  • +28.53% on the SHORT side YTD

Then I decided to backtest it since 2016 and here is what I got.
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What was the reasoning behind holding each position for just one day? Subjectively I’d think I’d want to look at a longer holding period since Mad money is probably recommending buys for longer time frames? Could be wrong about that though.
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Is it better to buy before stock split or after the split: a quick study
A stock split is a corporate action that companies take to increase the number of outstanding shares and decrease the value of each share. In other words, as a company's stock price increases, investors are rewarded with higher returns.

A stock split attracts a lot of attention, media writes about it, people talk about it. It may be a sign that a company is doing well because its share price has increased, and it also could bring in new investors who are attracted to the more affordable share price. On the other hand, it also could cause some volatility in the stock, so you may want to be prepared for changes in the price. In this quick study I'm trying to quantify if it's better to buy the stock before the split of after the split.
The Setup
  • Buying and holding $10K worth of shares 1 month before the split and 1 month after the split
  • No stop loss (holding for 1month no matter what)
  • Only buying if the split was 2 for 1 or more

Strategy Setup in http://breakingequity.com/ ^

Note: There was about 200 splits since 2016. There were some very low trading volume stocks which register like 1 trade per day or even 0 trades - I'm ignoring these in the calculations. Also here I'm assuming that you know about the split 1month in advance which may not always be the case.

The Results
Seems like it's way better to buy before the split. At least it has been like that since 2016.

Return in $ ^
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Most traders underperform to a coin flip day trading bot
A trader eventually comes across the statistic that 90% of traders fail to make money when trading the stock market. This statistic deems that over time 80% lose, 10% break even and 10% make money consistently. Still trading attracts millions of people in the attempt to beat the market and make money.

To quantify how bad the fact of 90% losing money is I compared it to a coin flip trading bot which makes a trading decision based on a virtual coin flip random(0,1) 🤖

I setup a strategy in http://breakingequity.com/
  • Trading $QQQ
  • Random enter and exit on 30min intervals
  • No stop loss
  • Always exit EOD (no hold over night)
  • 100 simulations per year to smooth it out

The results
Year over year performance.
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That would not surprise me at all. I have not been exposed to many actual investors because I came from poverty and nobody in my social circle has any type of financial education or background. However, I started a new job last year and dozens of people here are investing. After speaking with all of them, I realized that I am literally the only one who does due diligence. They all get their information from YouTube influencers and similar social media platforms. I have been preaching & teaching for a year, sharing whatever knowledge I can about researching investments and how to learn to get the edge. Now they just say, “hey, I bought some of this (insert random stock/crypto I mentioned in prior 30 days)”. So now, they just follow me instead of a YouTuber, which is flattering, but still ignorant. You shouldn’t follow ANYBODY when investing. Read others for insight or wisdom, another perspective, etc., but don’t blindly follow. Unfortunately, it seems that’s what the average do. Whether it’s a TV show, podcast, or social media platform, people think these “experts” know more than they do. People go their whole life without realizing they can crush the markets with 3-5 $0.50 books from Goodwill🤷‍♂️. I’m reading a contrarian book by David Dreman that might be the most under rated investing book I’ve ever read. Mostly about psychology so far and why humans fall into crowd psychology. Explains a lot that’s gone on in America recently, markets and otherwise. Great book if you want to avoid the heard mentality and massive losses that come with following the crowd. “The New Contrarian Investment Strategy”, by David Dreman.
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Shorting Into the Rate Hikes, $SPY and $QQQ, Historical Study
We live in the world of anticipated rate hikes. The stock market does not seem to like that at all. Although there are many other factors such as war, unprecedented inflation, maybe even echos of pandemic I wanted to see how $SPY and $QQQ performed historically in the short term after the rate hikes.
To do so I have backtested Rate Hikes back from 2015-2018. Overall there were 9 hikes (I took data from bankrate website)
  • 1 x 0.25 in 2015
  • 1 x 0.25 in 2016
  • 3 x 0.25 in 2017
  • 4 x 0.25 in 2018

I have setup 2 strategies with http://breakingequity.com/. Each one trades/invests $10K every rate hike.
  • Strategy 1: SHORT on the announcement date and hold 1 week
  • Strategy 2: SHORT on the announcement date, exit EOD, repeat for 1 week

Strategy Setup ^

The Results
Shorting every day and closing the position EOD came out a bit better overall. It also protects you from sudden spikes overnight.
  • SPY: $1,658.7 total gain vs. $1,626.9 for 2015-2018
  • QQQ: $1,634.0 total gain vs. $1,353.3 for 2015-2018

Below is a breakdown by each year
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Following Jim Cramer's sell recommendations
Shorting Jim Cramer's sell recommendations made daily.
Data sourced from MAD MONEY STOCK SCREENER and goes back to 2016-04-18.

Created a very simple strategy in BreakingEquity.com
  • Open SHORT position for every "sell" recommendation made daily
  • Hold for 1 trading day
  • Exit EOD same day
Backtested since 2016-04-18 till today with $10K of capital invested every day

Once you are above $10K you basically have excessive cash that can be put into the same strategy or elsewhere.
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If you missed a backtest on "buy" recommendations take a look at https://commonstock.com/post/8b1d681b-aa87-4b4e-8e31-ddd24c8039c6
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What happened to $SPY and $QQQ on the days after 2% intraday pop, historical view. What you think we are going to see tomorrow?
When SPY / QQQ move 2% or more it's always the question - what to expect tomorrow.
Here is a quick study on SPY and QQQ since 2017. SHORT at open the day after 2%+ pop from intraday low to close. So we buy at open and sell at close the next day after 2%+ green day.

The Result
In terms of win/loss. It's ~50/50 but the moves are larger on the downside (shorted in the backtest). What you think we are going to see tomorrow?

Results since 2017

Timeline View for $QQQ
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Most gains for $SPY happen overnight
There is an article back from 2018 that says that most gains for $SPY happen overnight stating that you could have done overnight hold since 1993 and be more profitable than running the same by marker hours.
I thought why not to review this thesis in a bit more detailed way. I set a simple backtest that is not going back to 1993 but rather just to Jan 1, 2010, holds overnight and sells in the morning.

Below are the result of backtesting with http://breakingequity.com/
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Can you follow Jim Cramer Mad Money Recommendations? A study of 13K Mad Money stock picks
Jim Cramer is a controversial person. Nearly every day he's recommending a dozen or so stocks with unshakable confidence as if he knows the future. Many of those recommendations, if followed directly, do not end up very well, to say the least.
We took all the data from MAD MONEY STOCK SCREENER, a website that tracks all the recommendations made since 2016-04-18. Every day after the show they update it with a new set of stocks mentioned in the show.

Created a very simple strategy in BreakingEquity.com
  • Open LONG position for every "buy" recommendation made (Jim Cramer recommends 11-12 daily)
  • Hold for 1 trading day + overnight
  • Sell in the morning
Backtested since 2016-04-18 till today with $10K of capital

The results are pretty good for the "controversial" person. Once you are above $10K you basically have excessive cash that can be put into the same strategy or elsewhere.
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Would you trade like that?
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