After reading the Comments and a spate of private e-mails coming off of my appearance Traderinterviews I wanted to make one very important point, the single most important "take-away" from the interview.
To me, trading is a series of mostly successful trades that when added together, daily, weekly, monthly, annually, results in a six or seven figure income. A trading "system" that accomplishes this is what we are all after here. After four years of real time, real money trading, I am convinced that I have attained this result.
A guy like Cramer, who buys Google at 450 because he thinks its worth 650 based on earnings momentum, or sales, or chart patterns, or whatever, is just a gambler making a series of coin-tosses and hoping, albeit praying, he wins more often then he loses. This is not trading, this is not a trading system, this isn't even investing.
Let me illustrate what I mean. For the entire calendar year of 2007, Cramer's Action Alerts portfolio, his "charitable trust" as he calls it, is up 8.68%. This compares to an S&P 500 which is also up for the year, 4.26%.
On the other hand, consider a day-trading system that grabs 1% for every winning trade, trades five times a day and wins 4 out of 5 trades. If you do the math assuming no pyramiding and allocating the same amount for each trade, this trading system averages 0.6% per day, or about 12% per month which is 144% per year.
Throw in conservative pyramiding of profits and tighter stops then 1%, and that 144% a year is about a quarter of what is realistic.
Compare Cramer's real life, no-lying-cheating-nor-stealing returns to 144% a year, or four times 144% a year.
Cramer says, "Listen to me and lets get rich."
The Anti-Cramer says, "Find something that works and trade it."