This article looks at a volatile market proving to be very tough for the average investor. After the end-of-year 2008 crash, investors fell into mostly two camps. One that got out in October when Jim Cramer told people who need their money in the next five years to get out. The rest listened to their investment firm and rode through the tough time, with a long-term strategy – well known as, buy and hold.

Buy and hold was a devastating strategy for the 50 plus or so investors who had a life’s savings in their 401k, IRA’s and children’s college plans.  A life time of hard to come by savings got washed away in a few months. While Rome was burning, Charles Schwab, Vanguard, and Fidelity said to ride the course- that if you had a well planned investment plan you would come back. Unfortunately for the 50 plus crowd it may be very hard if not impossible to come back any time soon. 

Energy stocks took a beating off the $155. barrel oil the previous summer, after the Lehman and Bear Sterns failures the banking stocks unraveled quickly. GM, Chrysler, Ford all started to look shaky.

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To Jim Cramer’s credit, in August of 2007, Jim started saying, “They know nothing.” speaking of Bernanke’s policies.  In October of 2008 he made a plea on the Today Show to get out, which at the time he was very criticized for.

For months every night on Jim’s Mad Money show he kept advising to go to the high dividend paying stocks, and initiated the “get paid to wait” strategy. This was backed up by Dave Pelletier’s Dividend recommendation. So the investors who did not bail ran into the safety of the drug stocks, household names like PG, Clorox, General Mills and some recession resistant stocks like McDonalds and Wal-Mart.

The March 2009 Bottom

Then after the bottom around March 9th, Jim Cramer started to unwind his strategy and see some brightness in the rather dramatic rise up. He started back on his horseman of technology Apple, Rim, Google, and moved into Morgan Stanley, JPM, and Goldman Sachs which also took a run up. On the dip there was a lot of talk on the Street.com about moving into gold and maybe silver. Investors saw a good run in Freeport McMorran a copper and gold miner. Jim made some great calls and a few clunckers like saying GIS was going to have a great quarter, but it took a dive upon announcement of its quarterly results.

In Jim’s defense he has always – even back to his radio show spoken of the merits of stock diversification. Each Wednesday on his Mad Money show he does his “are you diversified” segment.

But the last few weeks the market has been going through rapid sector rotations- so many of Jim’s strategies he was wed to get thrown out the window, he and Stephanie Link from the Street.com are trading in and out of the market daily like Jim was a trader again. This is what opens Jim up to the criticisms from Jim Stewart on Comedy Central that Jim is all over the place on his recommendations. Most of the folks that watch Jim’s show are not stock traders and may be uncomfortable with his trader’s style during these volatile times.

Jim is brave he declared a housing bottom, when most experts see the housing market far from the bottom particular in some hard hit regions.  

Mostly an Educator

Jim is mostly an educator and some what of an entertainer. He works very hard to give his viewers the best knowledge he has at the time. Perhaps it is unwise to be touting so many speculative stocks in this very volatile market. People who may not have the stock sense may get in over their head and lose a lot of money they can not afford to. 

This market is a challenge for everyone, and it looks like the firms that specialize in short selling maybe back destroying good stocks again. So it’s a time of let the buyer beware.

Image by allisoncooke via Flickr