Following hedge fund gurus is silly
Don't buy or sell a stock by mimicking the moves of major fund managers without knowing the rationale behind their decisions.
I don't know about you, but I am beginning to tire of the cottage industry that is seeing what funds own and what they are selling and buying, particularly if they are hedge funds. Let's see, Paulson still likes gold. Hmm, hold on to Novagold (NG). But wait a second, Soros sold his Novagold. In fact, he sold every gold. Maybe sell Novagold? Maybe short the SPDR Gold (GLD)?
But there's one thing I know I don't know: the rationale behind the move. Will Steve Cohen be gone tomorrow? Is Paulson just a believer in gold no matter the price? Is Soros just taking profits?
There was a time when we didn't care about these holdings, except those of Warren Buffett. Now we scrutinize them all and try to divine moves from them. People actually sell stocks based on the changes they see in these filings, which often aren't even current and are definitely not current when someone is a high-frequency trader.
Oh, and by the way, did anyone make any money in the past decade following Buffett? Was that rewarding?
Here's my take. You want to own a stock? Do the work, get comfortable with it, know the fundamentals, decide whether you can deal with the sector and, most of all, decide whether you would still want to own it if your guru decided to sell it and you don't see the position in the next 13F filings.
Stocks and companies are fluid. Motivations are unclear. Reasonings are unstated. Frankly, I can't think of a stupider way to buy or sell a stock. In fact, I am relegating it to the dustbin of news stories that come under the category of "something to talk about."
And nothing more.
At the time of publication, Cramer was long Novagold.
Follow Cramer's trades for his Charitable Trust.
Copyright © 2014 Microsoft. All rights reserved.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.