Lynn O'Shaughnessy

Most television shows that devote themselves to stock picking are fairly staid. I'm thinking back to the old financial show hosted by Louis Ruckeyser, who chatted with his guests as if they were sitting in a drawing room sharing brandy and cigars after the dinner plates had been whisked away.

That's not what you get if you tune into "Mad Money" on CNBC. Mad is a good word to describe the show, since its host, Jim Cramer, is the sort of guy who could make Godzilla look sedated. During the weeknight show, the former hedge fund manager bites the heads off toy bulls and bears, and he barks out orders on whether to buy or dump stocks while studio lights flash and heavy metal music pulses in the background.

After watching this guy pacing for an hour, I was exhausted. I couldn't help wondering how he could keep going without ever collapsing into a chair. But the question that viewers should be asking is this: Can you make money by chasing Cramer's hyperkinetic stock picks?

Three doctoral students at the Kellogg School of Management at Northwestern University recently took a stab at that question. In a paper entitled, "Is the Market Mad? Evidence from 'Mad Money,'" the trio concluded that the profits Cramer's viewers enjoy typically sour quicker than the carton of milk in your refrigerator.

It's understandable why the televised circus should attract the attention of the students. "Mad Money" is CNBC's most popular show, attracting more than 380,000 viewers every weeknight. Within that audience are a lot of investors who are eager to throw cash at blue chips as well as obscure companies that may sell swimming pool supplies, pave toll roads or make money doing stuff we couldn't even imagine. These viewers presumably have concluded that taking their cues from Cramer beats flipping coins, consulting tea leaves or throwing darts at the newspaper stock listings.

The researchers, Joseph Engelberg, Caroline Sasseville and Jared Williams, recorded the 246 initial stock recommendations that Cramer made between July 28, 2005, and Oct. 14, 2005. The three acknowledged that divining just what constituted a buy recommendation wasn't easy. They had to grapple with how to pigeonhole Cramer's pronouncements.

When I watched an episode last week, for instance, Cramer expressed his enthusiasm for a defense stock by blurting out - "I would back up the truck on this." When discussing a medical software company, he proclaimed, "I think it's time to ring the register. ... I'm feeling too hoggish." Not sure, how to decipher that one.

Lynn O'Shaughnessy

Lynn O'Shaughnessy is the author of Retirement Bible.

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