Jim Cramer Vs. S&P 500: Who Wins?

Market efficiency theory has claimed another high-profile victim. According to research by the Wharton School’s Jonathan Hartley and Matthew Olson, CNBC personality and "Mad Money" host Jim Cramer has underperformed the S&P 500 with his stock picks over the past 15 years.

It’s difficult to quantify the performance of most TV stock pickers because they don’t mention exact timing and size of trades. However, Cramer’s Action Alerts PLUS portfolio, which was established in August of 2001, provides clear, definitive data on Cramer’s stock-picking prowess.

Related Link: Just How Much Money Did Bill Ackman Lose In Q1?

The Wharton study revealed that, from 8/1/2001 to 3/31/2016, Cramer’s portfolio generated a 64.5 percent return. In that same time, the S&P 500 returned 70.0 percent.

“Unlike previous papers which find outperformance in pre-crisis years, adding post-crisis years we find that Cramer has underperformed the S&P 500 since the inception of his portfolio and the inception of Mad Money even when controlling for leverage and other academic factors, [which] arguably has certain implications for star performance and market efficiency theory,” the authors concluded.

Cramer is far from the only high-profile stock expert that has struggled to beat the market. After a brutal 25.6 percent hit in Q1, Bill Ackman’s Pershing Square Capital has produced a 0.2 percent overall return for investors (including fees) since its inception in late 2012. In that same time, the SPDR S&P 500 ETF Trust SPY was up 45.6 percent.

Disclosure: The author holds no position in the stocks mentioned.