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US advisory firm files ETF to trade inverse to Jim Cramer’s investment advice

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By Louis Allen - 

US-based advisory company Tuttle Capital Management plans to launch two exchange traded funds (ETFs) that trade on stock tips of the media personality Jim Cramer – with one that goes long and one that goes short.

The advisory company filed the proposed ETFs with the US Securities and Exchanges Commission earlier this week.

Tuttle Capital’s chief executive office and chief investment officer Matthew Tuttle came up with the idea of creating a short ETF security, the Inverse Cramer ETF, which will trade under the ticker SJIM, and a long ETF – Long Cramer ETF, under the ticker LJIM.

In the SEC filing, Tuttle Capital says the objective of SJIM is to “provide investment results that are approximately the opposite of the results of the investment recommended by television personality Jim Cramer”.

“The fund’s adviser monitors Cramer’s stock selection and overall market recommendations throughout the trading day as publicly announced on Twitter or his television programs broadcast on CNBC, and sells those recommendations short,” it said.

“Under normal circumstances, at least 80% of the fund’s investments is invested in the inverse of securities mentioned by Cramer.”

Meanwhile, LJIM will invest in way that tracks the results of the investments recommended by Cramer.

CNBC personality and Alphaville reader Cramer is most known for his investment advice show Mad Money which begun in 2005 and still runs today.

Cramer has become one of the most popular money managers and financial gurus on TV and in the media today, but has become a joke on social media as a result of many of his investment tips failing abysmally.

Bear Stearns

An example of this was when Cramer urged investors, on CNBC, not to pull their money out of Bear Stearns, just days before its collapse in March 2008, as a result of the global financial crisis.

In 2020, Cramer earned more notoriety when he released his “Magnificent Seven” recommendation, which included companies he thought investors should buy into regardless of performance, with any dip serving as another buy opportunity.

Making up the group of seven companies were Tesla, PayPal, Square, Roku, Zoom Video Communications, Peloton, and Netflix.

Since then, all of the companies have collapsed in value, with just Tesla making sizeable gains.

It doesn’t stop there, other examples show Cramer hasn’t always gotten it right, which has led to the call for an inverse ETF.

In August 2021, Cramer’s most popular tip was to purchase the Coinbase (NASDAQ: COIN) stock, trading at just US$248.

After his recommendation, Coinbase plunged.

In November 2021, social media users launched a @CramerTracker Twitter account, which posted Cramer’s stock recommendations “so you can do the opposite.”, which has since gained more than 100,000 followers.

Cathie Wood inverse ETF

Tuttle Capital has previously launched an inverse ETF against American Cathie Wood’s ARK Invest fund in November 2021 called SARK, which is up 83%.

The ETF goes against the ARK Innovation ETF (ARKK), Cathie Wood’s flagship investment vehicle.