The Next Dogecoin?

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In this edition of the Alpha Letter, we cover:

  • Stocks: Jim Cramer makes a lot of stock picks - one Reddit user analyzed them all and calculated the returns

  • Crypto: Crypto fans are buzzing about a new token that rewards users for holding

Stocks

One r/WallStreetBets users analyzed all 725 of Jim Cramer’s stock recommendations for 2021 in a detailed post. Of the 725 picks, 651 were buys and 74 were sells. The analysis found that Cramer has done extremely well in picking stocks in 2021. 

While the timeframe is fairly limited, as every single pick in the study was made within the last four and a half months, it’s interesting to see how Cramer’s recommendations do in the short-term.

The most shocking finding is that Cramer’s Buy picks returned a cumulative 555.2% within 24 hours of Cramer recommending the stock. While this is impressive no matter how you spin it, Cramer’s prominence and large audience definitely drive buying activity in any stock that he recommends.

His sell recommendations did really well, also. Stocks Cramer told his audience to sell in 2021 have returned a cumulative -206.8% to-date.

A few Redditors commented that a lot of Cramer’s success can be attributed to the pump & dump he creates by recommending a stock.It’s impossible to prove, but many suspect that Cramer’s one-day returns are strong because his large audience pumps the price of stocks when they all place buy orders at the same time.

In other words, maybe Cramer isn’t a genius who can predict which stock will shoot up tomorrow. Instead, maybe he can recommend virtually any stock and it’ll go up the next day because his large audience influences the price.

To really get a sense of how good Cramer is at picking stocks, he’d have to make his picks without sharing them publicly to millions of CNBC viewers or his Twitter followers. Given the nature of his business, that probably won’t happen anytime soon.

Last week, Cramer said he likes Coinbase and gave it a $475 price target. As we know, Coinbase struggled after popping initially, and traded down to the low $300’s on day one of being public. 

Many took the chance to mock Cramer after he told his viewers to buy the stock, but we should remember that no analysts would put a 24 hour time limit on their price target. Cramer maintained his buy recommendation through the week and tweeted Friday that he is still building a position.

Coinbase closed Friday’s trading session at $342, up from a low of $310 but down from a peak of $429.54 from Wednesday.

Crypto 

We’ve been hearing a lot of chatter on Twitter lately about a new crypto project called SafeMoon.

The founding team of SafeMoon has raised $700k so far to build an exchange based on their idea that investors who hold should be rewarded. The SafeMoon token is only trading at $0.000003979 as of this writing, but has gained 67% today.

While the token is already live and tradeable, the fundraiser aims to raise enough money for the team to build an exchange that can help expand upon the idea that holders should be rewarded. 

According to SafeMoon’s whitepaper, the “secret sauce” is the liquidity pool (LP). The LP is a pool created by taxing users who sell their SafeMoon holdings. The LP “tax” is used to provide liquidity to the market for SafeMoon, or any other coin hosted on a SafeMoon exchange in the future, which should help to prevent large decreases in price. This LP concept penalizes those who sell by charging them an extra transaction fee while rewarding users who continue to hold by providing more price stability. 

SafeMoon is currently being sold on Trust Wallet, WhiteBit, and other places. Check out SafeMoon’s “Where to Buy” page here.

Alpha Thoughts

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