Jim Cramer

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This article is about the television personality and host of Mad Money. For the champion Scrabble player, see Jim Kramer.
Jim Cramer

Born February 10, 1955 (1955-02-10) (age 53)[1]
Wyndmoor, Pennsylvania, U.S.
Occupation Television personality
Author

James J. "Jim" Cramer (born February 10, 1955[1]) is an American television personality, former hedge fund manager, and best-selling author. He currently resides in Summit, New Jersey.

Cramer is the host of CNBC's "Mad Money" and co-founder of TheStreet.com. Cramer has also been a contributor to New York magazine,[2] and an occasional contributor to Time magazine.

Contents

[edit] Early years

Cramer was born and raised in Wyndmoor, Pennsylvania (outside of Philadelphia) and comes from a Jewish family.[3] One of his first jobs was selling ice cream at Veterans Stadium during Philadelphia Phillies games. Cramer went to Springfield Township High School in Montgomery County.

Cramer graduated magna cum laude from Harvard College in 1977 where he was also president of the Harvard Crimson. At this point in his life, Cramer was a staunch leftist, naming his plan to revitalize the Crimson after Lenin's "What Is To Be Done?".[4] Today, an iconic painting of the Bolshevik leader can be seen in the background of the set of his show, "Mad Money."

[edit] Career

[edit] Journalist

After college, following a two-month tenure as the key operator at Congressional Quarterly, he worked as a journalist at the Tallahassee Democrat in Tallahassee, Florida. Living almost next door to the Chi Omega sorority house and Florida State University, he was one of the first on the scene after serial killer Ted Bundy attacked four women, killing two of them in 1978.[5] After Tallahassee, he worked at the Los Angeles Herald Examiner as a spot news reporter, covering "basically anyone who died violently in California."[4] While he was covering a shooting in San Diego for the Examiner, a burglar cleaned out both his bungalow in L.A., and his checking account. For the next nine months, he lived mostly out of his car, with a pistol and hatchet for protection.[6]

[edit] Lawyer

Following this experience, Cramer moved in with his sister in Greenwich Village[citation needed]. His sister was studying to be a lawyer and encouraged Cramer to become a prosecutor. Cramer was one of the earliest reporters at American Lawyer magazine, where he worked for founder Steven Brill.[7] Cramer later earned a Juris Doctor degree from Harvard Law School.[4]

During his years at Harvard, Cramer worked as a research assistant with Alan Dershowitz.

After graduating in 1984, Cramer's plans to become a prosecutor were dashed when he was denied employment with the Office of the United States Attorney for the Southern District of New York, headed at the time by Rudy Giuliani, because his law school grades were deemed not good enough.[4]

[edit] Investor

Cramer obtained employment in 1984 as a stock broker in Goldman Sachs' Sales & Trading department. Cramer's success in this position led him to fund his own hedge fund, Cramer & Co. (later Cramer, Berkowitz, & Co.) in 1987. The fund operated out of the offices of hedge fund pioneer Michael Steinhardt's Steinhardt, Fine, Berkowitz & Co., and early investors included Eliot Spitzer (a Harvard classmate and one of his oldest friends) [8], Steven Brill, and Martin Peretz.[1] Despite claims of high returns, Cramer's hedge fund has never produced audited proof of their stated returns.

A year later, Cramer married Karen Backfisch-Olufsen, who was a trader with Steinhardt's firm. More recently, Cramer has been a contributor to New York magazine since 2000.[9] He is also an occasional contributor to Time magazine.[10] Cramer retired from his hedge fund in 2001. It was taken over by his former partner Jeff Berkowitz.

[edit] TheStreet.com

In 1996 Cramer co-founded TheStreet.com with The New Republic editor Martin Peretz, one of his hedge fund's original clients. Cramer later had a falling out with Peretz over business matters. Cramer is currently a market commentator and adviser to the TheStreet.com, as well as its largest shareholder. Cramer also manages a charitable trust stock portfolio which is tied to TheStreet.com through a subscription service called the Action Alerts PLUS Portfolio. Cramer currently works on a new project, Thestreet.com, in an effort to bring stock savyness to Main Street.[citation needed]

[edit] Mad Money

Main article: Mad Money

Cramer now has his own television show on CNBC, Mad Money with Jim Cramer, which features his rapid-fire opinions on stocks suggested by callers. Mad Money is also well known for over-the-top antics such as Cramer throwing chairs, throwing his latest book whenever a caller mentions it, humorous sound effects, and for the catch-phrase "Booyah".

Logo for the Mad Money television show.
Logo for the Mad Money television show.

Cramer frequently takes the show on the road to various U.S. colleges. The name of the show is a play on Cramer's, portrayed for the audience, mental condition.

[edit] Other television and radio shows

After being a frequent guest commentator on CNBC in the late 1990s, Cramer co-hosted CNBC shows America Now and Kudlow & Cramer with Lawrence Kudlow in the early 2000s. Kudlow and Cramer split when Kudlow called Cramer 'sweet potato bull macho' on the air on October 17, 2002.

Cramer hosted a one-hour radio show, "Jim Cramer's Real Money," until December 2006. The show was similar to his Mad Money TV show. He also guest hosted in the slot caused by the cancellation of Imus in the Morning (MSNBC and WFAN/Westwood One) in May 2007.

[edit] Cameos and Other Appearances

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  • 60 Minutes interview

On November 13, 2005, Dan Rather did a sit-down interview with Cramer on 60 Minutes. Among the topics of discussion were Cramer's past at his fund (including footage of Cramer trading during the 90s at his New York offices), his violent temper while at the fund, and what finally led him to come to his senses and "calm down". Footage of Cramer at his family home with his daughters and wife was also included. On November 15, 2005, Jim mentioned on his program that he received hundreds and hundreds of e-mails after his 60 Minutes interview. This report was taped before Cramer's radio show, Smart Money with Jim Cramer moved to WOR and became syndicated under the CBS Radio banner.

  • Arrested Development

In 2005, Cramer appeared as himself in two episodes of the now-defunct FOX TV series Arrested Development. He appeared to first announce that he had upgraded Bluth Company stock to a "Don't Buy" from a "Triple Sell", and then to say that the stock was not a "Don't Buy" anymore, but a "Risky".

Cramer has also made appearances on NBC's Today, NBC Nightly News, Live with Regis and Kelly, ESPN Classic's Cheap Seats, NBC's Late Night With Conan O'Brien, Comedy Central's The Colbert Report, The Tonight Show with Jay Leno, ABC's Jimmy Kimmel Live and NBC's The Apprentice (U.S. Season 7) called The Celebrity Apprentice.

He was a guest on the Howard Stern Show on Sirius Satellite Radio on February 4, 2008.

Jim also appears in 2008 motion picture Iron Man spoofing Stark Industries on his show Mad Money.

[edit] Controversy

[edit] Fox News Channel Lawsuit

In 2000, Cramer settled a lawsuit with Fox News Channel in which Fox had claimed Cramer reneged on a deal to produce a show for them. Their conflict began when Fox complained that Cramer promoted TheStreet.com's stock on the air.[11]

[edit] Trading With The Enemy

In 2002, Nicholas Maier, a former trader at Cramer's hedge fund, released the book, Trading With The Enemy, about his time at Cramer, Berkowitz & Co. In the book, Maier alleged that Cramer and the hedge fund engaged in illegal trading practices. Maier also stated that Cramer was the subject of an SEC investigation. Cramer denied the allegations and threatened to sue the publisher for libel. The publisher of the book quickly destroyed 4000 copies of the original release, and re-released it after editing out 4 pages that were possibly libelous.[12]

[edit] SEC Subpoena

In February 2006, an SEC investigation into allegations of collusion between short-sellers and a stock research firm led to the serving of subpoenas to TheStreet.com and Cramer, as well as journalists for Dow Jones and Marketwatch.com. Cramer disclosed the subpoena on his Mad Money television show, holding it up to the camera with the word "Bull" handwritten on it.[13] Both Cramer and TheStreet.com refused to comply with the SEC's demands for communications between journalists and their sources, and First Amendment advocates publicly criticized the SEC move. Soon after, the SEC stated it would not enforce the subpoena, and the investigation of the stock research firm was dropped a year later. In April 2006, the SEC announced a new policy on subpoenaing journalists, saying it would avoid issuing subpoenas "that might impair the news gathering and reporting functions." Any subpoena issued to a journalist must now be approved by the SEC's enforcement director.[14]

The allegations had been raised publicly and in a lawsuit against Gradient by Overstock.com chief executive Patrick M. Byrne. In May 2007, it was revealed that the SEC had subpoenaed Byrne in May 2006, in connection with an investigation of the company.[15]

[edit] Market Manipulation: TheStreet.com Interview

In March 2007, a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal.[16] He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: " ...it's important to create a new truth, to develop a fiction."[17] Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article.[18] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."[19][20]

[edit] Bear Stearns recommendations

On the Tuesday, March 11, 2008, episode of Cramer's show Mad Money, a viewer named Peter submitted the question "Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?" Cramer responded "No, no, no! Bear Stearns is fine! Do not take your money out. If there's one takeaway... Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear! That's just being silly."[21]

There is some disagreement over what Cramer meant by these comments. Some say that the viewer was asking whether he should keep his investment in Bear Stearns common stock (NYSE: BSC), and Cramer was advising him not to sell the stock in the belief that a company would pay a premium to acquire Bear Stearns.[22][23] If this is the case, it was a disastrous recommendation, since BSC stock fell 92% over the next few days, on news of a Fed bailout and $2/share takeover by JPMorgan. Historically, Cramer had been bullish on Bear Stearns, making open recommendations of the stock until the price hit the $30 range on March 14, 2008. It was at this point that Cramer finally called the stock "worthless". Additionally, Cramer defines "mad money" as the money one "can use to invest in stocks ... not retirement money, which you want in 401K or an IRA, a savings account, bonds, or the most conservative of dividend-paying stocks."[24]

Others think the viewer was asking whether he should withdraw money he had in a brokerage account at Bear Stearns. In other words, is it possible that the liquidity crisis at Bear is so bad, the viewer will not be able to get his money out of his Bear Stearns account?[25] On March 17, 2008, Cramer claimed he meant the latter explanation, rather than the previous one.[26] However, Cramer would not have known at the time that he was making his comments that the Federal Reserve would assume the risk of Bear Stearn's less liquid assets. Had the Fed not guaranteed the JP Morgan Chase transaction, Bear Stearns would have gone bankrupt and brokerage account holders might have lost money except for the amounts guaranteed by the FDIC ($100,000 in deposit accounts) and the SIPC ($500,000 in brokerage accounts). The Fed cannot bail out banks that are not threatened by the prospect of immediate bankruptcy.

However on a later Mad Money episode the original caller was interviewed briefly by Cramer over the phone and was asked to clarify his original question, which was indeed related to his money held in his Bear Sterns account.[citation needed]

[edit] Criticism

  • In February 2000, Cramer proclaimed that Internet-related companies "are the only ones worth owning right now." These "winners of the new world," as he called them, "are the only ones that are going higher consistently in good days and bad".[27]
  • In February 2007, Henry Blodget -- himself indicted for civil securities fraud in 2002 and banned for life from the securities industry -- criticized Cramer for overstating his abilities as a market forecaster, noting that in 2006 Cramer's suggested portfolio lost money "despite nearly every major equity market on earth being up between about 15 percent and 30 percent."[28]
  • In March 2007, a review by CXO Advisory showed that Cramer's stock picks have done worse than the market averages.[29]
  • In March 2007, Joseph Parnes, a noted short seller featured in Barron's, refuted positions by Cramer on CNBC, and has shown to his audience in his publication, Shortex, that using positions contrary to Cramer's recommendations is actually more advantageous.
  • In April 2007, Credit Bubble Stocks criticized Cramer because of a speech he gave on February 29, 2000, at the height of the dot-com bubble, recommending a number of speculative stocks that ultimately fell in value substantially with some even becoming worthless.[30]
  • In August 2007, Cramer called for the Federal Reserve to support hedge funds that were losing money in the Subprime mortgage financial crisis, prompting Martin Wolf, the chief economics commentator for the Financial Times, to accuse Cramer of advocating an offensive and catastrophic "socialism for capitalists".[31]
  • Two weeks before his well-known speech against the Federal Reserve, Cramer appeared in a segment of TheStreet.com's Wall Street Confidential stating that the subprime crisis wasn't all that bad.[32] Itulip.com features a video showing Cramer's contradictory statements about the Subprime crisis over the past year.[33]. The video could also be found on YouTube before it was removed on the request of TheStreet.com for alleged copyright infringements.
  • On January 22, 2008, Jim Cramer was confronted by Rick Santelli on CNBC for Cramer's bullish perspective over the preceding several months and how this contradicted Cramer's recent forecasting of a bear market (after significant market drops) and "how things were incredibly dangerous."[34]

[edit] Bibliography

[edit] References

  1. ^ a b Jim Cramer's Stop Trading! 11/14/07: Don't Nix NYX - Seeking Alpha
  2. ^ "Archives: James J. Cramer". nymag.com. Retrieved on 2007-04-13.
  3. ^ Feinberg, Andrew. "Cover Boy Cramer", The Money Monster Web Log, The Kiplinger Washington Editors, Inc., 2005-10-24. Retrieved on 2007-06-14. 
  4. ^ a b c d Tim Russert Show, July 14, 2007.
  5. ^ "The Mad Man of Wall Street." BusinessWeek. October 31, 2005.
  6. ^ Cramer, James J. (2002). Confessions of a Street Addict. New York, NY: Simon & Schuster, pp. 4-6. ISBN 0-7432-2487-6. 
  7. ^ THE LAW; At the Bar - New York Times
  8. ^ A Rather Sedate Jim Cramer Reacts to Spitzer Prostitution Revelation | NewsBusters.org
  9. ^ "Archives: James J. Cramer". nymag.com. Retrieved on 2007-04-13.
  10. ^ "Archives: James J. Cramer". time.com. Retrieved on 2007-04-17.
  11. ^ Associated Press/USA Today (December 4, 2000). Jim Cramer Quits Hedge Fund.
  12. ^ Joyce, Erin. "TheStreet.com's Cramer vs. Maier, Round II", internetnews.com, Jupitermedia Corporation, 2002-05-13. Retrieved on 2007-02-18. 
  13. ^ Matthew Goldstein, TheStreet.com (February 27, 2006). TheStreet.com, Cramer Get Subpoenas in Gradient Probe.
  14. ^ Marcy Gordon, Associated Press (February 14, 2007). SEC Ends Probe of Gradient.
  15. ^ New York Post (May 11,2007). Company Byrne-d on Probe Report.
  16. ^ Henry Bloget, Slate (March 22, 2007). Cramer vs. Cramer: Will his crazy confession destroy his career?.
  17. ^ Thomas Kostigen, MarketWatch.com (March 23, 2007). Jim Cramer's big mouth: His revelations only confirm what dupes average investors are.
  18. ^ Roddy Boyd, The New York Post (March 21, 2007). Cramer's Big Mouth: Clip Could Run Afoul of CNBC.
  19. ^ Matt Krantz, USA Today (March 24,2007). CNBC's Cramer boasts of manipulating markets.
  20. ^ Hamilton, Dane (2007-03-20). Jim Cramer draws fire over manipulation comments. Retrieved on 2007-03-20.
  21. ^ LiveLeak.com - Jim Cramer Last Week: Don't Sell Bear Stearns!
  22. ^ Jeff Poor. "Oops - CNBC's Cramer Said 'Don't Move' From Bear a Week Before Collapse", Business & Media Institute, 2008-03-17. Retrieved on 2008-03-17. 
  23. ^ "Jim Cramer More Than Bear-ly Wrong", Media Bistro, 2008-03-17. Retrieved on 2008-03-17. 
  24. ^ Cramer, James; Cliff Mason (2006). "Mad Money: Watch TV, Get Rich". New York: Simon & Schuster, 45. ISBN 978-1-4165-3790-8. 
  25. ^ "In Defense of Jim Cramer on Bear Stearns", Seeking Alpha, 2008-03-17. Retrieved on 2008-03-18. 
  26. ^ YouTube - Jim Cramer back-pedals after Bear Stearns Collapse
  27. ^ Jason Zweig, Commentary on the Introduction, "The Intelligent Investor" by Benjamin Graham
  28. ^ Blodget, Henry (2007-01-29). Pay No Attention to That Crazy Man on TV. Slate. The Washington Post Company. Retrieved on 2007-02-18.
  29. ^ LeCompte, Steve (2007-03-17). Jim Cramer Deconstructed. Retrieved on 2007-03-17.
  30. ^ James J Cramer, Mad Money Indeed. Retrieved on 2007-10-04.
  31. ^ Wolf, Martin (2007-08-17). Fear makes a welcome return. Retrieved on 2007-08-17.
  32. ^ Cramer on Sub-Prime Crisis two weeks before his slur against the FED (2008-01-01). Retrieved on 2008-01-01.
  33. ^ Cramer statements about Subprime loans (2008-01-01). Retrieved on 2008-01-01.
  34. ^ Rick Santelli takes down Jim Cramer.

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