The Rise and Fall of Inverse Cramer: How Magnificent 7 Stocks Derailed A Contrarian ETF Strategy

When Tuttle Capital launched the inverse cramer investment vehicle back in 2022, it captured the imagination of retail investors eager to bet against Jim Cramer’s television stock recommendations. Now, just a few years later, the Northern Lights Fund Trust IV Inverse Cramer ETF (BATS: SJIM) is shutting its doors, marking the end of an experiment in contrarian investing.

The closure represents more than just another failed ETF; it reflects deeper truths about market timing, the power of mega-cap stocks, and why even well-intentioned investment theses can crumble when reality diverges from expectation.

Why An Inverse Cramer Bet Looked Smart But Market Timing Failed

The concept behind the inverse cramer strategy was straightforward: If Cramer’s stock recommendations had a poor track record, then investors could profit by taking the opposite position. Tuttle Capital created two products in October 2022—one betting on Cramer’s picks and another betting against them. The long version shut down in 2023, and now the inverse vehicle follows suit.

The final trading day for SJIM is scheduled for February 13, 2024, with proceeds distributed to shareholders on February 23. According to board trustees, liquidation was determined to be in shareholders’ best interest. Matthew Tuttle, CEO of Tuttle Capital, explained the reasoning: “We started the fund to point out the dangers of following TV stock pickers and the total lack of accountability. That mission was accomplished, but retail investors are more focused on volatile products.”

What initially seemed like a clever arbitrage opportunity—shorting an analyst with a questionable track record—simply didn’t capture investor interest at the scale needed to sustain operations. The fund’s assets never grew to economically viable levels, despite the conceptual appeal of the strategy.

Magnificent 7 Success Made The Inverse Cramer Thesis Impossible

The real story behind the inverse cramer shutdown lies in an unfortunate coincidence: Cramer’s recommendations happened to align perfectly with the market’s biggest winners. His picks of the Magnificent 7 stocks—Apple, Amazon, Alphabet, Microsoft, NVIDIA, Meta Platforms, and Tesla—became the dominant force in market returns from 2023 onward.

“A lot of the success or failure of an ETF is timing, and the timing with what happened with the Magnificent 7 didn’t work out,” Tuttle told analysts. This was no small matter. Given how dramatically the Magnificent 7 stocks outperformed the broader market, the inverse cramer ETF should theoretically have suffered catastrophic losses exceeding 75%.

The fact that SJIM didn’t collapse entirely reveals something counterintuitive: Cramer was right enough, often enough, that the portfolio survived. “With how the Mag 7 have done, SJIM should be down like 75%. The fact that it isn’t is testament to Jim’s stock picking ability,” Tuttle acknowledged. Using the metaphor of “a broken clock is right twice a day,” Tuttle conceded that Cramer’s Magnificent 7 recommendations happened to be among those moments.

This unwanted success actually accelerated the fund’s closure. When your contrarian bet against someone actually fails due to that person’s surprising competence in picking mega-cap growth stocks, the philosophical foundation crumbles.

From Inverse Cramer To T-REX: How Tuttle Capital Evolved Its Strategy

Rather than disappearing, Tuttle Capital has redirected its energy and expertise toward other opportunities. The company continues publishing the Cramer Tracker newsletter, maintaining its focus on accountability in investment recommendations, but without the burden of running an underperforming ETF.

More significantly, Tuttle Capital has found explosive growth through its T-REX product line, which now manages over $200 million in assets under management. This portfolio of leveraged and inverse ETFs has become the company’s primary focus, offering investors more nimble tools for volatile and contrarian bets.

The 2X Inverse Regional Banks ETF (SKRE) exemplifies the evolution. When Cramer recommended buying Silicon Valley Bank just one month before the institution collapsed, the incident highlighted the value of inverse positioning. SKRE allows investors to make leveraged bets against regional banking stocks—a position that would have proven highly profitable during banking sector weakness.

“When Jim Cramer recommended buying Silicon Valley Bank, there wasn’t an ETF that allowed you to short regional banks. Now there is. SKRE provides 2x the inverse return of the SPDR S&P Regional Banking ETF,” Tuttle noted in subsequent communications. The lesson from Silicon Valley Bank’s failure, paired with the SVB recommendation, reinforced Tuttle’s conviction that demand exists for sophisticated inverse products—just not necessarily an inverse cramer-specific fund.

The Broader Inverse ETF Landscape: Regional Banks And Leveraged Bets

Beyond regional banking, Tuttle Capital has expanded aggressively into individual stock inverse bets. In late 2023, the company launched a suite of leveraged ETFs tracking Tesla and NVIDIA:

• T-Rex 2X Long Tesla Daily Target ETF (TSLT)
• T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ)
• T-Rex 2X Long NVIDIA Daily Target ETF (NVDX)
• T-Rex 2X Inverse NVIDIA Daily Target ETF (NVDQ)

This diversified product line reveals the true opportunity: rather than betting against one analyst’s picks, investors increasingly want granular control over directional bets on specific mega-cap stocks. The company has also filed for leveraged Bitcoin ETFs and indicated that additional products could launch by April.

The inverse cramer experiment taught Tuttle Capital valuable lessons about product-market fit. While the contrarian premise was intellectually sound, the execution and timing proved incompatible with market realities. The shutdown doesn’t represent failure so much as strategic reallocation—redirecting resources from a niche product toward a broader ecosystem of leveraged and inverse investment vehicles that have resonated far more successfully with the retail investor base.

Sometimes the best portfolio adjustment involves knowing when to pivot.