Cramer has been there and done
that. He paid his dues in the '80s as a Goldman, Sachs & Co. (GS
) broker, followed by 14 years at Cramer Berkowitz, his $450
million hedge fund, where he earned an average return of 24% a
year after fees. There, he had enough mega-paydays to kiss the
Street hustle goodbye forever. With a net worth he says is
between $50 million and $100 million, you might think Cramer
would be out bronzing in St. Barts with daiquiri in hand.
he rises at 3.45 a.m. weekdays. After scanning headlines online,
checking messages, and shooting e-mails to his TV producer, he
works out in his Summit (N.J.) home gym until 5.30 a.m., when he
calls traders and brokers and writes his first online story.
Later, Cramer carpools his younger daughter, Emma, to school,
before setting off on the 75-minute trek to Wall Street. By the
time his workday is over, usually around 7 p.m., his driver will
have logged 120 miles, Cramer will have banged out six Web
columns, done a radio show, and scoured his larynx taping Mad
Money, his surreal nightly call-in show on CNBC that is
perhaps best described as Louis Rukeyser meets televangelism
meets Pee-wee's Playhouse. At some point, he'll work on
his monthly column for New York magazine. "I'm hard-core
about the market," he says, his bobble-head emerging from a wall
of flickering screens.
At one level, none of this makes much sense. With the market
trading sideways and in danger of posting its fourth losing year
since 2000 -- and real estate still the cocktail party topic of
choice -- stockpicking is not exactly a growth industry. (Cramer
trades stocks for a charitable trust; he no longer owns any
stocks personally, other than his 15.4% stake in TheStreet.com,
which he co-founded, worth about $15 million.)
Why, then, is Cramer so in-your-face? In the aftermath of New
York Attorney General Eliot Spitzer's attacks on Wall Street
research, analysts hide behind weaselly ratings such as
"In-Line" and "Equal Weight," and scores of stocks are no longer
covered. "The analysts," Cramer pronounces, taking a break from
another drug-pump tantrum, "they are colorless and odorless and
sanitized and fear Spitzer to the point of death." Even CNBC, he
complains, is "terribly gun-shy about being anything but
'corporate crime watch' when people still need to make money."
Cramer senses a huge information vacuum. "You can't just be
neutral on everything," he says. "Go see a shrink!" What he sees
is a woefully underserved market for unabashed, aggressive
stockpicking -- his kind -- that is laced with bombastic sound
bites like "Back up the truck!" and "Get the paddles!" and lends
itself to the showmanship that has made Mad Money a cult
hit with 384,000 nightly viewers. No Warren Buffett, Cramer is a
trading mercenary to the core. His rapid-fire in-and-out moves
are raising chat room buzz to levels not seen since day traders
reigned supreme during the bubble. All of which has turned
CNBC's once-moribund 6 p.m. slot into one of its top-rated
hours. "What's smart about Mad Money is it does away with
the usual boring guests and lets Cramer vent in a way that is
hard not to watch," says Washington Post media writer
Howard Kurtz, who profiled Cramer in his book The Fortune
Tellers. "It occupies some sort of netherworld between sheer
entertainment and useful financial advice."
On-screen antics such as animal noises and airborne chairs don't
faze the Cramer faithful. "You could put him in a clown suit for
all I care," says Philip Mason, a law student and certified
public accountant in Houston who watches Mad Money
avidly. "He's an excellent stock screener who gives me ideas
when I am not doing that well on my own." Mason credits Cramer
for persuading him to get into Motorola Inc. (MOT
) at 18 in June. (The stock is now at 21.) Cramer also made
Brian Johnson, a Mad Money blogger in Tacoma, Wash.,
wealthier -- albeit unintentionally. Johnson's blog, which
tracked Cramer's on-air stock picks, drew as many as 30,000
monthly hits and enough banner ads to make him consider quitting
his day job -- until, he says, CNBC slapped him with a
cease-and-desist letter. "It was incredible," he says. "Cramer's
fans wrote me constantly."
For Cramer, all of this is a long way from his old hedge fund
days. "When I took your money," he says, "you owned me. Waive
the 13th Amendment. I wanted to get rich -- that was the
covenant." Burned out, Cramer cashed out of his hedge fund at
the end of 2000 -- the dot-bomb year in which his fund trounced
the Standard & Poor's 500-stock index by 38 percentage points.
But his here and now, he insists, is journalism, which he swears
was his first love all along. You have to take at least some of
that claim at face value. After all, he worked his way up to
editor-in-chief of The Harvard Crimson, where he was a
rabble rouser with an Afro who led rallies against apartheid and
Richard Nixon on the side. An attack in the Crimson on
alleged elitism in the history department led, he says, to the
administration's withholding his diploma at graduation. "My
parents were crying," he says. "It was horrible." (He did
finally manage to wrest the diploma from Harvard that summer.)
Upon graduating, Cramer slummed his way through several
entry-level reporting jobs in search of his big writing break.
Cramer pulls out his wallet and carefully peels out a ripped,
sweat-stained pay stub for $172, dated Mar. 1, 1978, from the
Tallahassee Democrat, where he covered the Ted Bundy
murders. Then-executive editor, Richard Oppel, says "Jimmie was
like a driving ram. He was great at getting the story." While
that tenacity made Cramer a successful reporter in both Florida
and California, his finances were in a shambles after his house
was burglarized and checking account emptied. He ended up
homeless, and for nine months slept with a .22-caliber pistol
and a camping hatchet in his beat-up Ford Fairmont -- a lurid
chapter of his life he describes in his memoir, Confessions
of a Street Addict.
Cramer recalls getting pulled over by a bunch of Colusa County
(Calif.) police officers. "Like I would have a license and
registration when I was living in my car," he quips. The
officers held him splayed atop the hood of his Fairmont for two
hours, pulling his ears. (Cramer thought they were trying to
force an armed-robbery admission out of him; in fact, they were
looking for a robber with an earring.) "My dad cut off my Amoco
card and told me to get a real job," he says. "I hit rock
ALTHOUGH HIS OLD Harvard Crimson buddies later
helped him land a job at The American Lawyer magazine in
1979, when he slept on the floor of his sister's Greenwich
Village apartment, Cramer finally yielded to his father's
insistence that he apply to law school. "I figured maybe I could
become a prosecutor," he says, shrugging his shoulders.
In 1981, Cramer returned to Harvard. There he had access to the
just-launched Financial News Network, the forerunner to CNBC.
With its nonstop ticker and real-time analysis, FNN rekindled
Cramer's long-dormant interest in stocks. As a child in
Philadelphia, he used to memorize ticker symbols from business
pages that he spread all over the living room floor and ran a
fantasy portfolio. While cutting his law classes, Cramer would
either be in his dorm watching FNN or at the business school
library waiting to pounce on new stock research. "It was
unbelievable," he says. "This was it for me. I knew it."
With money he earned working as a researcher for law professor
Alan M. Dershowitz, and as a miserable summer intern at the
Manhattan law firm Fried, Frank, Harris, Shriver & Jacobson LLP,
Cramer started dabbling in obscure stocks such as Standard Press
Steel, American Agronomics, and Bobbie Brooks. "Nothing but oil
was working," says Cramer. Still, he felt the market was on the
cusp of a big rally, and he maxed out his academic loans to
raise money to invest.
As his brokerage account swelled, so did Cramer's obsession with
the market. He started leaving stock tips on his answering
machine every Sunday night. He recalls, "I was like, 'Hi, this
is Jim Cramer. I'm not here right now. Take a look at
PEOPLExpress, which has a good business model..."' Dershowitz
urged him to register as an investment adviser. Cramer agreed,
but says back then he never considered himself more than an
amateur with a knack for making money.
ENTER MARTIN PERETZ, editor of The New Republic
and Harvard professor, who approached Cramer out of the blue
with a $500,000 check. Peretz, who would later co-found
TheStreet.com with Cramer and invest in his hedge fund, had been
profiting from tips on the answering machine for months (after
initially calling to ask him to write a book review), and wanted
Cramer to run his money. "He seemed to know very deeply so many
stocks," says Peretz, who would prove loyal. "At one point, I
was down $80,000 and he didn't give up on me," says Cramer.
Cramer made Peretz $150,000 in two years. He parlayed his record
into a three-year stint as a broker to the ultra-rich at
Goldman. Then he spent nearly 14 years at his hedge fund, opened
in 1987, where he routinely took home $10 million a year and
Back to 2005. It's 10:50 a.m. Cramer peeks at his watch,
launches himself out of his chair, and is halfway out the door.
"My producer is going to kill me," he says. "Pumps! We've got to
find out about these pumps. Gimme ideas!" he hollers to his
brain trust one last time, struggling into his jacket as he
heads for the exit.
With the area in front of the NYSE closed to traffic, Cramer
walks 40 yards to meet his driver for the commute to CNBC's
studios in Englewood Cliffs, N.J. It's still raining, but Cramer
couldn't care less: He lives for this not-so-random walk down
Wall Street. This is Cramer as Stock Star, as a Mad Money
viewer once called him. The instant he hits the street, he's
getting winks and "booyahs!" -- the show's trademark shout-out
-- and dumbfounded stares from Wall Streeters and tourists
alike. "Look. Look. It's him, the Cramer guy," says a
sneaker-clad woman to her husband and two sons. "It's the crazy
money man from CNBC," a man on a coffee break whispers into his
cell phone, before aiming the phone at Cramer for a snapshot.
Just as Cramer settles into the back seat of his BMW 760 and
hooks his laptop up to the cigarette lighter, a woman taps on
the window. "Could I get a picture with you?" she asks
breathlessly. "I love your show." He obliges.
Cruising north along the East River, Cramer wastes no time.
"Just let me check some e-mails," he says, pulling out stacks of
research and clearing away the newspapers, magazines, and wires
littering his mobile control room. The instant his wireless card
picks up a signal, messages from his brain trust about several
investment themes pop up on his screen: Baxter, Occidental
Petroleum (OXY ), Africa. Yes, Africa. Fed up with the U.S.
budget deficit and what he views as Federal Reserve Chairman
Alan Greenspan's intransigence about raising rates, Cramer is on
an Africa kick today, looking for gold plays there. After years
of making rich people even richer at Goldman and Cramer
Berkowitz, Cramer says he wants to help the little guy. "I'm
trying to show people at all times what I would be doing at the
old job," he says, already halfway through one last online
column for the day. "I want to keep you in the game -- keep you
from getting discouraged."
To the consternation of his CNBC publicist in the front seat, he
blows a kiss to Roger Ailes, the former head of CNBC who left to
run Fox News (NWS ) and is on the verge of launching a Fox
business channel. Cramer briefly worked for Ailes after Fox
picked up a Street.com show in 1999, when Cramer was in the CNBC
doghouse. (Cramer later settled after Fox sued him for playing
hooky from the show.) "His attention to product detail was
awe-inspiring," says Cramer. "It always came down to 'How often
am I helping people make money?"' That's the standard by which
Cramer says he wants to be measured.
Cramer's forays into TV and print stockpicking, however, have
come at a cost to his reputation. In 1995 he drew the attention
of the Securities & Exchange Commission for failing to disclose
that his fund owned three stocks he recommended in a
SmartMoney column. The magazine later took responsibility
for leaving off the disclosure; the SEC wrote to Cramer but
never pursued the matter. Still, a former boss at the Los
Angeles Herald-Examiner, Frank Lalli, who was then editing
the competing Money magazine, said that he felt he should
have done a better job instilling a sense of ethics in his young
reporter. "I regret that I failed," he wrote. The controversy,
Cramer says, made him deeply despondent and put him on
medication. "Suddenly," he says, "it's like I'm Ivan Boesky." In
December, 1998, CNBC briefly suspended him from its Squawk
Box program while it investigated the sell-off in shares of
dot-com WavePhore, which he had blasted on the air. (Neither he
nor his fund ever had a position in the stock; true to his
prediction, it is now worthless.)
So does Jim Cramer actually make people money? Not if you listen
to his many critics. Alan Abelson, the longtime voice of
Barron's, ripped Cramer's boosterism in an April, 2004,
column that argued that Cramer's group of then "super six"
stocks resembled his 10 dot-com bubble picks of 2000, which
ended up tanking by an average of 90%. "In retrospect,"
concluded Abelson, "a more fitting description of Mr. Cramer's
top 10 picks in February, 2000, given their subsequent
melancholy fate and the appreciable number that are no longer
with us, rather than 'The Winners of the New World' would have
been, 'The Winners of the Next World."'
He's also the target of a regular fusillade of online zingers.
"Cramer says Buy, I SHORT BIG TIME," writes a user in a Yahoo! (YHOO
) message board for the stock Yum! Brands Inc. (YUM ), which
Cramer highlighted on Mad Money as a smart play on the
boom in China. "When a stock starts receiving the carnival
barker treatment on CNBC, I know it's close to the end." Adds
another message board regular: "I can't believe anyone actually
watches that idiot. I don't know if he's good or bad at picking
stocks; I just know he acts like a total FOOL!"
BUT CRAMER'S FANS have his back. Damon Plonczynski, 27, a
New York City cop, says he started watching CNBC five months
ago, when he resolved to learn how to invest. "The first thing I
turned on was Jim Cramer," he says, "and it just drew me into
stocks. He's a motivator for you to do your own homework."
Plonczynski regrets that he didn't act on Cramer's homeland
security and natural gas stock recommendations. "I'm kicking
myself," he says.
At the other end of the expertise spectrum is Douglas A. Kass,
president of the hedge fund Sea Breeze Partners Management and
an occasional Mad Money guest. "We disagree on more
market subjects than we agree on," says Kass, "but we generally
learn from one another." Kass says Cramer persuaded him to cover
his firm's short position in Time Warner Inc. (TWX ) stock in
spring, 2003, when it was trading at 12. The stock has since
Testimonials aside, Cramer's roster of Picks of the Week from
Mad Money since the show started in March have jumped an
average of 7.1% after three months, according to BusinessWeek
calculations. That's nearly triple the S&P's 2.5% gain and seven
times the meager 0.9% advance of the Dow Jones industrial
average. By the end of the first day's trading after Cramer
unveils his picks, usually on Mondays, they're up an average of
2.2%, vs. drops of 0.1% each on the S&P and Dow. From the day
they were picked to Oct. 18, notable winners include Google (GOOG
), whose shares have soared 35.7% since he recommended them in
late April, and Apple Computer Inc. (AAPL ), up 24.5% since Apr.
Cramer's undisputed dog is Dick's Sporting Goods Inc. (DKS ) It
has fallen 25.1% in the two months since he picked it. "I think
I'm going to be eating crow about this one for at least the rest
of the year, if not the decade," he said in a special "Day of
Atonement" Mad Money that aired on Yom Kippur. "When
you're playing with retail, be skeptical -- more skeptical than
I was," he said. Cramer readily admits his screwups, both in
print and on screen -- where he will wear a Post-it note with
the offending stock's ticker symbol on his forehead, just as he
used to demand of his hedge fund colleagues. "Look, you have to
do your homework," he says, a self-inoculating refrain that he
repeats at least 10 times during the course of the day.
"It has nothing to do with being right or wrong," says Eliot
Spitzer, Cramer's friend since their days at Harvard Law School,
of the chilling effect his investigations and reforms have had
on stockpicking. "It was about believing what you said. This is
a guy who genuinely loves the market and is as devoted to making
it work properly as anyone I know."
But just how valuable is a Jim Cramer pick that's revealed after
the markets close and jumps sharply before average investors can
buy the next morning? Consider Conexant Systems Inc. (CNXT ), a
semiconductor fallen angel that once traded above 30. On Sept.
19, Cramer made it his pick of the week after it closed at 1.63.
The next day, it opened at 1.94 and went as high as 2, a 23%
spike, with 82 million shares traded -- nine times the daily
average. "Look, it's difficult," he says, blushing. "I was at
Kudlow & Cramer for three years and could have stood on my
head to recommend a stock, and it would do nothing." He takes a
moment to think it over. "My bottom line is, this is a complete
work in progress. If I had to do it over on Conexant, I'd say
you're an idiot if you buy it at 2."
The "Cramer effect" is making the pros sit up and listen. "He
moves the market," says Gregg Goldstein, a Manhattan hedge fund
analyst who started paying closer attention to Mad Money
after an influential researcher in Brazil devoted an entire
report to Cramer's TV analysis of Latin American companies.
"He's really infiltrating all these areas -- my friends, my
co-workers, my clients," he says. "Everyone knows who he is and
what he's saying."
THE CRAMERMOBILE pulls into CNBC's suburban New Jersey
campus at 11:35 a.m. Cramer strides into the building. One
imagines Mick Jagger gearing up to play Madison Square Garden.
Cramer makes a beeline for his producer, Susan Krakower, another
hyperactive character who towers over and gleefully bullies
Cramer. She persuaded him to consider the Mad Money
format and lobbied studio head Jeffrey A. Zucker for the show
when Cramer's contract for CNBC's Kudlow & Cramer show
ran out in late 2004. (Lifelong Democrat Cramer felt like a fish
out of water while co-host Lawrence Kudlow extolled all things
Republican, when all Cramer wanted to talk about was stocks.)
"Susan knows TV business news," he says, before ducking into her
office for the requisite high-fives. "She thinks like Ailes."
Krakower eggs on Cramer's on-screen craziness. "Our job is to
seduce," she says. "We have that first minute-thirty to capture
you." Today, she has the TiVo (TIVO ) ready to roll. "The
chopping of the heads," she says, "that was so riveting. You've
got to go with it." For the final show of the week, she wants to
replay Cramer decapitating and castrating little plush bulls --
his way of saying that the bears are in control of the market.
This summer, she had him film an ad wearing a straightjacket in
a padded cell, with two orderlies lifting the drugged
stockpicker by his elbows. She boasts that NBC is now
advertising Mad Money during its Today Show and
across its stable of broadcast and cable programs. "That's how
much this network believes in the show," she says, with
infomercial zeal and all sorts of finger wagging and arm
touching. She ticks off a list of her boardroom backers: "Immelt,
Wright, Zucker" (that is, Jeffrey R. Immelt, CEO of CNBC parent
General Electric Co., NBC Universal CEO Robert C. Wright).
"That's unheard of," she boasts.
Of course, Mad Money, which airs at 6 p.m., 9 p.m., and
midnight on both coasts, was less of a gamble than it might seem
for CNBC. In the 6 p.m. slot, Cramer averages 184,000 viewers,
an 86% gain over Bullseye, the show it replaced in March.
Cramer's total audience grew to 384,000 in October, from 338,000
in May. While these figures are dwarfed by those of Fox's Bill
O'Reilly, they do finally afford CNBC some lift for its nightly
It's not yet noon, and Cramer is dousing his gaggle of
researchers and editors in a torrent of stream-of-consciousness.
"Baxter: Do you like it?" he yells into a speakerphone to a
research associate. "How about financials?" "I want more
research on Miller Petroleum. I want to flood the place with
everything that's not right about Miller." "Peru is really the
next Chile. But I can't do Peru and China -- that sends a
Now it's 1:50 p.m. Cramer is recording his daily WOR radio show
in a tiny closet in the bowels of the CNBC building. Once again,
he's surrounded by flickering Bloomberg terminals. "5,4,3,2,1.
The brokers are ridiculously oversold!," he screams. "More in a
moment." During the break, he takes off his headphones. "This
pump story," he says, "I'm booking the CEO of I-Flow tonight. I
don't feel like recommending the stock, but this Baxter news is
a fabulous opportunity for another player." After Steve Miller's
song Take the Money and Run leads into his next segment,
he tells listeners: "I think I can give you information and help
build your confidence." After taking several calls and answering
a widower's e-mail, he takes the headphones off again. He has
just recommended shares in Goldman -- his old stomping ground.
"I got sophisticated at Goldman," he says, tapping the side of
his head. "So-phis-ti-ca-ted."
Soon, Cramer is again marching down the hall in his sagging
pants. With 75 minutes until Mad Money's taping, it's
time for makeup. He squints while the circles under his eyes get
powdered. A ruff of paper towels protruding from his collar
makes him look like a circus clown. "I'm glad I got out of
Comcast at a profit," he says, as its ticker rolls past on the
TV screen above. True to form -- one look from his exasperated
makeup woman confirms as much -- Cramer just can't shut up. "Refco
was a false blowup," he babbles. "This is not Long-Term
Already 13 hours into his workday, Cramer seems no less a
workaholic than he was during his reign of terror at Cramer
Berkowitz, where he frequently hurled water bottles at
associates and smashed keyboards. He even told his partner, Jeff
Berkowitz, that he had no business at his daughter's school play
when Intel (INTC
) was about to report its results.
He takes a breather to talk about the impact of his
obsessiveness on his family. After a catastrophic 1998 that
nearly sank Cramer Berkowitz, the fund netted clients 47% in
1999 and 28% in 2000. "I was killing the market when everyone
else was doing badly, and yet I was more miserable than ever,"
he says. His elder daughter didn't want to be around him,
resenting him for being constantly leashed to his investors by
phone. "All I did was say, 'Be quiet. Please leave Daddy alone.
Daddy has to trade."'
In 2000, Cramer's wife, Karen, gave him an ultimatum: Slow down,
or else. She had been a partner at his hedge fund. He still
affectionately calls her his "trading goddess" for persuading
him to sell out before the 1987 crash and buy into the October,
1998, panic. (She declined to comment for this story.)
The tipping point came just before Thanksgiving, 2000, on a trip
to Las Vegas with his dad. After ignoring his dad to call in
orders to his fund for hours, Cramer suddenly turned to him and
said they were clear to go to dinner. His dad exploded: "'You're
46 years old, and this is what you're doing?"' Cramer recounts.
"'You don't care about anything but the fund. How can you be so
Cramer says the incident forced him to rethink his life. Later,
he cashed out of the fund, handing full control to Jeff
Berkowitz. "Easy come, easy go," Cramer says, with a clap. These
days, his daughter's morning carpool is his top priority. "I
never miss," he says. "It's inviolate." On weekends, Cramer
tends to his garden's beefsteak tomatoes and chili peppers and
digs night crawlers for bass fishing at his country house.
But for now, the obsessive stock lunatic version of Jim Cramer
is wanted in the studio. Producer Krakower is pacing and gorging
on popcorn; Cramer is sipping tea. The crew is setting up the
remains of the chair he smashed the night before, one leg of
which cracked a glass panel on a studio wall.
THE CAMERAS ROLL. Cramer hits a button, and a haunted
voice from above yells, "the house of pain!" to cue his
cameramen to run to the right. From Cramer's
cartoonish-sound-effects console comes the roar of a bull.
"O.K., home gamers, listen up: This is what the bottom looks
like!" he hollers through a megaphone. "You need to start buying
'cause stocks are going to rise!" he says, later adding: "The
Fed's job, which is to kill the economy, is almost done! Pretty
soon Greenspan is going to be in Sunrise Senior Living."
Cramer explains that because the ratio between ordinary
investors and pros who've sold stock short -- one of his
favorite contrarian indicators -- is at a five-year high, the
moment is ripe to buy. To drive home the point, he goes full
throttle with his effects -- from machine gun fire to crashing
bowling pins to barking dogs, and a hideous clip of a screaming
man flying out of a glass building.
After a commercial break, viewers who have been holding the line
for as long as an hour finally get to talk to Cramer. "Let's go
to Ashley from Georgia," he says. "A big boo-yoo-hoooya to ya,
Jim!" she drawls. "I'm heavily invested in oil, and it's been
very bad the last 10 days. I'm wondering: Are we gonna get hit
again?" Cramer signals his continued bullishness wordlessly by
hitting his load-up-the-truck button. Another chair hits the
wall, as Cramer goes through 25 calls in his lightning round, in
which viewers get a few seconds to ask his view on a stock.
"Investing in Citibank is like investing in a Sunday school
ethics class!" he tells one. "Schwab!" (SCH ) He slams his fist
into his Buy button four times. "Am I making myself clear?"
The show closes on a calmer note with the CEO of I-Flow on the
phone for 105 seconds on the hot seat. "Sir," Cramer asks, "do
we have an opportunity for you to take [market] share with the
Baxter recall? Do you not sell products in similar situations?"
The CEO guardedly agrees, and Cramer gives I-Flow a halfhearted
endorsement: "It's O.K., it's not great."
Even so, the stock's message boards are already abuzz. "Cramer
seemed positive toward IFLO [sic] so we may get some volume &
positive action next week," says a user at 7:09 p.m. "This
pump," Cramer mumbles to himself, shaking his head as he exits
the studio, hoarse, red-faced, and soaking