If you don’t know, Jim Cramer is the host of “Mad Money” on CNBC. He was a Wall Street hedge fund manager. He’s extremely well connected. He’s brilliant. On his show he breaks down the intricacies of thousands of stocks and gives buy, hold, or sell recommendations. (Fun fact, he mentioned RentLinx, the company I founded on his show once). He’s also full of it.

One of my favorite investing articles of all times comes from the satire newspaper, The Onion. It’s titled “Everyone Who Started Watching ‘Mad Money’ In 2005 Now Billionaires”. Only a satire headline can so accurately put a point on the absurdity of getting stock picks from TV show speculators.

The more I learn about investing, the more I see this massive dividing line between these two different activities:

1.) Investing. Investing is how future millionaires build wealth. It’s the simple act of identifying assets that provide income and are likely to go up in value over long periods of time, then simply buying and holding them. (Hint: Those assets are index funds and real estate)
2.) Speculating. Speculating is everything else. It’s gambling. It’s guessing if the market is about to crash. It’s guessing if crypto is the next big thing. It’s guessing if Cathie Wood’s ARK ETFs are the real deal. It’s tweeting “Netflix! Buy !”. It’s nonsense.

Jim Cramer isn’t an investor. (At least in his public persona). He’s a speculator. It makes for great TV, but it also makes for a great way to underperform the stock market or at worst stay broke!

It’s tempting to want to heed his advice. This smart connected guy is saying to buy Netflix! But he doesn’t know. Nobody knows the future. The market is efficient. So don’t fall for the trap of trying to guess what’s going to happen in the future. Focus on building wealth by buying and holding.

Are you a speculator or an investor?

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy

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