Jim Cramer

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Jim Cramer
James J. Cramer
Cramer jim.jpg
Born February 10, 1955

Jim Cramer (full name Cramer, James J. (Jim), born February 10, 1955)[1] is the television host of CNBC's Mad Money, a former hedge fund manager, and also a best-selling author.[2] Cramer is a market commentator for TheStreet.com, which he co-founded and of which he is the largest shareholder. In addition to writing a column for TheStreet.com, Cramer also writes about the stock market as a columnist for New York magazine, and he is a frequent contributor to Time magazine. He was a founder of and former columnist for SmartMoney magazine and helped found American Lawyer magazine. Jim Cramer also shares his stock picks live on air with Erin Burnett during his "Stop Trading!" segment on CNBC's Street Signs.

Jim Cramer was born to Polish-American parents in Wyndmoor, Pennsylvania, a suburb of Philadelphia.[1][3] He went to Springfield Township High School in Montgomery County, Pennsylvania.[4] Cramer graduated magna cum laude from Harvard College in 1977 with a B.A. in government,[3] where he was President and Editor-in-Chief of The Harvard Crimson. After graduation he became a journalist for four years; he worked for the Tallahassee Democrat and later for the Los Angeles Herald Examiner before attending Harvard Law School where he earned a law degree in 1984.[5] In 1988, Cramer married his wife, Karen, and they had their first child in July 1991.[3]

Investing career

Cramer started privately investing in the stock market during his time at law school,[1] using his student loans. For months Cramer began leaving tips on his answering machine offering stock picks, and garnered the attention of Martin Peretz, editor of the The New Republic and a professor at Harvard, who had been profiting from these tips. Thus, he approached Cramer with a $500,000 check and wanted him to run his money. "He seemed to know very deeply so many stocks," said Peretz, who would prove loyal. "At one point, I was down $80,000 and he didn't give up on me," said Cramer. Cramer made Peretz $150,000 in two years.[6] In 1984, after obtaining a law degree, Cramer was employed as a stock broker in Goldman Sachs' Private Wealth Management division.[7] He worked at Goldman Sachs from 1984 to 1987.

Jim Cramer started his own hedge fund company in 1987, called Cramer Berkowitz.[8] 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),[9] Brill, and Peretz.[10]

Cramer's fund had one down year in 1998, a year that proved disastrous for many in the industry. Cramer, Berkowitz finished down 2-3% and they did not charge a management fee that year to their clients. In 1999 the fund returned 47%; in 2000, Cramer's fund finished up the year +36%, compared to -11% for the S&P 500 and -6% for the Dow Industrials.[6]

Cramer spent nearly 14 years at his hedge fund, where he routinely took home $10 million a year and more.[6] Jim compounded rate of return of 24% after all fees for 15 years at Cramer Berkowitz. After the tech bubble burst, he retired from his hedge fund in 2001, where he finished with one of the best records in the business, including having a plus 36% year in 2000.[11] He turned the company over to his long-time partner, Jeff Berkowitz. While Cramer's success in producing high returns for his fund was unmistakable, he began to concentrate on his passion for journalism.[3]

At the age of 44, Cramer is said to have accumulated a net worth of $58 million.[12]

TheStreet.com

Cramer's impact on Wall Street trading became even stronger in 1996, when he and Peretz each took 35 percent ownership of TheStreet.com, an online financial news company and publication for investors appearing on the World Wide Web.[8] TheStreet.com, Inc. is considered to be a leading financial media company that has distinguished itself from other financial Web sites with its journalistic excellence and unbiased coverage of the financial markets, economic and industry trends, and investment and financial planning.[13] Among the most popular columns — viewed by millions of readers weekly at TheStreet.com — are Top 10 Stocks; You Ask, Cramer Answers; Jim Cramer's Portfolios of the Week; The Five Dumbest Things on Wall Street This Week; Wednesday's Analysts' Upgrades and Downgrades, and Readers' Picks: The Street.com's Top 10.[14]

Mad Money

Main Article : Mad Money

The cable television program Mad Money with Jim Cramer began on CNBC in 2005. Mad Money features eight segments: The Lightning Round, Am I Diversified, Sell Block, Game Plan (also known as Speculation Friday), Executive Decision , Off the Charts, Sudden Death, and Mad Mail.[15] Jim Cramer's primary goal on the show is to help regular, every day investors "make Mad Money."

Performance of stock picks and history of market calls

Cramer is a former hedge fund manager and founder/owner and Senior Partner of Cramer Berkowitz, where Jim reported a compounded "rate of return of 24% after all fees for 15 years" at Cramer Berkowitz. He retired from his hedge fund in 2001, where he finished with a self reported 36% return in 2001.[16]

On August 3, 2007, in an interview with Erin Burnett during Jim Cramer's "Stop Trading!" segment on CNBC's Street Signs, before the stock market fell and before the recession began, Cramer made a passionate plea to Federal Reserve Chairman Ben Bernanke to consider cutting interest rates and, in turn, help the market and the people who are losing their jobs on Wall Street. The rant is now known as the infamous 'Rant Heard Round the World.'[17]

On July 8, 2008 Jim brought up the possibility of bank failures. In his article, 'Look At The Facts'[18] Cramer said, "The losses are increasing, the auction-rate preferreds are now biting, the mortgage implode-a-meter now measures how many home-builders are going under." The following day on July 9, 2008, during a segment on Mad Money Cramer again pointed out the forthcoming Financial Collapse. "Most frightening," Cramer said, "is the silence from those in the government who could take action but haven't. If silence means there is no plan, that's trouble for everyone."[19] A few months later on September 15, 2008, the beginning of the market meltdown occurred.[20]

On Hardball with Chris Matthews for September 19, 2008, Cramer suggested, "It's not too late to be on the sideline." On this day the Dow was resting at 11,388.[21] Cramer spoke again on the Today Show on October 6, 2008, suggesting to investors, "Whatever money you need for the next five years, please take it out of the stock market."[22] By February 24, 2009 the Dow was down to 7,351; since Jim Cramer's first warning to investors the DOW plunged some 3,000 points, ultimately it had plummeted 36% over the next five months.[23]

Academic study

  • A study published in the academic journal Financial Services Review was done by two professors at Northeastern University, Paul Bolster and Emery Trahan, called "Investing in Mad Money: Price and Style Effects."[24] The study demonstrates how Jim's buy and sell recommendations have consistently outperformed the averages; it found that following Cramer's advice yielded a 12% annual return on average, compared with 7% for S&P 500 index over the same period.[25][26]

Dispute with the White House

On March 2, 2009, Jim Cramer drew the attention of some critics after his evaluation of President Obama's spending plans and the administration's handling of the banking crisis.[27] Cramer's name came up the following day, on March 3, during a White House press briefing after Cramer said that Obama was responsible for "the greatest wealth destruction I have seen by a president."[28][29] An offended White House shot back. When questioned by NBC's Tom Costello, Press Secretary Robert Gibbs said this:

“ I'm not entirely sure what he's pointing to make some of the statements. If you turn on a certain program it's geared to a very small audience [...] And you can go back and look at any number of statements he's made in the past about the economy and wonder where some of the backup for those are, too.[30] ”

On March 5, Jim Cramer responded to the White House.[31] Jim Cramer rebuked:

“ Huh? Backup? Look at the incredible decline in the stock market, in all indices, since the inauguration of the President, with the drop accelerating when the budget plan came to light because of the massive fear and indecision the document sowed: Raising taxes on the eve of what could be a second Great Depression, destroying the profits in health care companies, tinkering with the mortgage deduction at a time when U.S. house price depreciation is behind much of the world's morass and certainly the devastation affecting our banks, and pushing an aggressive cap and trade program that could raise the price of energy for millions of people. The market's the effect; much of what the president is fighting for is the cause. The market's signal can't be ignored. It's too palpable, too predictive to be ignored, despite the prattle that the markets predicted far more recessions than we have.[32] ”

Cramer questioned criticism he received which he explained makes him "uncomfortable being in the crosshairs of columnists and comedians I enjoy."[33][34] Cramer asked, "So, why after toiling in the cable wilderness for four years with Mad Money am I the target of the wrath of the Obama clan, and the darling, albeit surely momentary, of the Obama-critics? After all, my criticism of Obama's handling of the economic crisis is a lot less pointed than my withering August 2007 'They Know Nothing' meltdown against Ben Bernanke and the previous administration's handling of the economic crisis."[35][36]

Obama Accountability Index

The day after Barack Obama was sworn in, on January 21, 2009, on his television show Mad Money, Jim Cramer created a stock index to track the new president's progress. Cramer chose companies that operated in the very sectors that needed the most help, and he suggested their performance would tell Americans how effective Obama had been and whether or not his plans to save the economy had worked. Solely based on the performance of the stock market, Cramer created the Obama Accountability Index (OAI).[37] The OAI consisted of six stocks: Bank of America (BAC), Citigroup (C), Caterpillar (CAT), General Electric (GE), General Motors (GM) and JPMorgan chase (JPM). It's an equal-weighted index that starts at 100, using closing prices on the day the index was created as a baseline. Cramer said, "This index will grade Obama’s success as president. If he fails, so does the stock market."[38]

On February 20, 2009, Jim Cramer graded the president's ability to rejuvenate the economy, based on the Obama Accountability Index. Reviewing Obama's 30-Day Report Card, Cramer said, "Well, the index is down 35% since January 21, the day it was created. The S&P 500 over that same period has declined just 8%."[39] So Obama, at least according to Cramer's portfolio, wasn't doing too well.[40]

On July 8, 2009, Jim Cramer on Mad Money again graded the performance of Obama's administration and economic policies against the performance of the stock market. He commented, "The same force that so hurt the markets this winter has yet again reared its ugly head: the White House’s anti-business rhetoric. [...] Investors don’t seem to trust President Obama to create jobs and stimulate the economy, not when he prioritizes climate change and health care." Moreover, the Mad Money Obama Accountability Index score had dropped to 96.1 from its starting point of 100.[41] He urged Obama to postpone his agenda in favor of boosting the economy. "Without more job creation," Cramer said, "the president’s agenda and his tone will continue to slowly and inexorably squeeze the life out of this stock market."[42]

Index Timeline

The Obama Accountability Index (OAI) began tracking the president's performance on the economy the day after Obama was sworn in, on January 21, 2009. As of August 22, 2011, according to the Obama Accountability Index, Obama is failing to rejuvenate the economy. The timeline below indicates on a given date whether the OAI has outperformed or underperformed the S&P 500 Index since it was created.

  • On November 10, 2009, the OAI reached 158 from its baseline of 100, outperforming the S&P 500 by 18% during the same time period.
  • On February 10, 2010, the OAI had declined to 141.65, however still outperforming the S&P 500 by 14.45% during the same period.
  • On August 22, 2011, the OAI reached 160.93 from its adjusted baseline of 122.11 but underperformed the S&P 500 Index by 1.91% during the same period.[43]

Cramer has not mentioned the Obama Accountability Index on Mad Money since July, 2009.

Criticism

Wachovia

On September 29, 2008, during a segment of Mad Money on CNBC, Jim Cramer discussed the Wachovia call he made on September 15, 2008.[44][45] Wachovia CEO Bob Steel told Mad Money viewers that out of $500 billion in loans on the bank's books, only $10 billion were bad. Just two weeks later, Citigroup bought Wachovia for a highly discounted price, because the actual total was $42 billion, and the FDIC was about to seize Wachovia. Cramer trusted CEO Bob Steel, who he's known as a solid financier for 25 years, and he urged viewers to do the same. More than anything, Cramer was mad at himself for letting his viewers down. "I let you down," Cramer said. "I let my judgment of Steel cloud my thinking about Wachovia."[45] He apologized both on Mad Money and on the Today Show for believing in Steel.

Jon Stewart

On March 12, 2009, Jim Cramer appeared on Comedy Central's The Daily Show with Jon Stewart.[46] Stewart reiterated earlier claims regarding the CNBC host's "silly and/or embarrassing and/or stupid financial observations."[47] Moreover, he claimed CNBC shirked its journalistic duty by believing corporate lies, rather than being an investigative "powerful tool of illumination."[48] For his part, Cramer disagreed with Stewart on a few points, but acknowledged that he could have done a better job foreseeing the economic collapse: "We all should have seen it more."[49]

Stewart also discussed how short-selling was detrimental to the markets and investors. Cramer admitted to Stewart that short-selling was detrimental, stated his opposition to it, and claimed that he had never engaged in it. He said, "I will say this: I am trying to expose this stuff, exactly what you guys do, and I've been trying to get the regulators to look at it."[50]

Frank Rich

On March 9, 2009, on Mad Money,[51] Jim Cramer said Frank Rich "chastised me for endorsing Wachovia's stock after then-CEO Bob Steel came onto Mad Money and spoke positively about the bank." After the bank collapsed, Cramer reminded viewers that he takes pride in "the part about accountability,"[52] and is the first person to admit when wrong. Cramer mentioned, "Look, I was taken in, the guy pantsed me. I made a mistake. The SEC is investigating Steel's appearance on the show for truthfulness, though. I made a mistake, but they're investigating him to see if he lied. Bigger issue. Sometimes you just get had."[51]

On the same day,[51] Jim Cramer also admitted, "OK, I'm a tempting target. Plenty of people come in and give their criticism on this show. But we're dealing with serious issues here; we need solutions, which I offer almost every night. I don't want ad hominem attacks. Take Frank Rich and Jon Stewart; I criticize Obama, so both of them seize on the urban legend that I recommended Bear Stearns the week before it collapsed, when I simply told an emailer that the deposit in his account at Bear Stearns was safe. 'Your money is safe in Bear Stearns,'"[53] Cramer repeated, referring to his own quote during a March 11, 2008 segment of Mad Money. Moreover, Cramer outlined, "But through a clever sound bite, Stewart,[54] and subsequently Rich[55] - neither of whom have bothered to listen to the context of the pulled quote - pass off the notion of account safety as an out-and-out buy recommendation. If you called Mad Money and asked me about Citigroup, I would tell you that the common stock might be worthless, but I would never tell you to pull your money out of the bank because I was worried about its solvency. Your money is safe in Citi as I said it was in Bear. The fact that I was right rankles me even more."[56] Cramer then pointed out that, "I called out Paulson[57] and Geithner[58][59] for their mistakes, where was Frank Rich praising me on that? Where was that?"[51]

Publications

Jim Cramer is a best-selling author and has published several books. His publications include the following:

Television appearances

Cramer has made appearances on NBC's Today show, 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 Daily Show with Jon Stewart & The Colbert Report, The Tonight Show with Jay Leno, Late Show with David Letterman, ABC's Jimmy Kimmel Live and NBC's The Apprentice (U.S. Season 7) called The Celebrity Apprentice.

Cramer also appears in the 2008 motion picture Iron Man, spoofing Stark Industries on his show Mad Money.[65] He is also expected to appear in the upcoming movie Wall Street 2: Money Never Sleeps.[66]

References

  1. ↑ 1.0 1.1 1.2 Michael A. Kowalski (Spring 2008). Cramer, James J. (Jim). The Pennsylvania Center for the Book., June 6, 2009.
  2. ↑ Jim Cramer Bio, CNBC.com
  3. ↑ 3.0 3.1 3.2 3.3 "Jim Cramer", International Speakers Bureau. , June 6, 2009
  4. ↑ Springfield Township High School. publicschoolreview.com., June 6, 2009
  5. ↑ Jim Cramer RealMoney columnist, TheStreet.com
  6. ↑ 6.0 6.1 6.2 "The Mad Man Of Wall Street" BusinessWeek, 31 October 2005.
  7. ↑ Jim Cramer biography, Library of Congress.
  8. ↑ 8.0 8.1 Cramer, Berkowitz & Co., Funding Universe, Company History.
  9. ↑ Jeff Poor. "A Rather Sedate Jim Cramer Reacts to Spitzer Prostitution Revelation", NewsBusters.org.  March 10, 2008.
  10. ↑ Alex Markels. "Meet CNBC's Mad Money Man", usnews.com.  2/18/07.
  11. ↑ Jim Cramer Bio. [1], Mad Money w/ Jim Cramer, CNBC.com.
  12. ↑ John Abbott. Street Smartypants, TIME Digital 50.
  13. ↑ TheStreet.com Inc., BNET resources.
  14. ↑ TheStreet.com, "About Us".
  15. ↑ Jim Cramer. About Mad Money. CNBC.
  16. ↑ CNBC TV Profiles - Jim Cramer
  17. ↑ Jim Cramer. "Cramer's Rant, the Anniversary", CNBC.  07/29/08
  18. ↑ Jim Cramer. "Look at the Facts", TheStreet.com. , July 8, 2008
  19. ↑ Derek Erwin. "A Tribute to Jim Cramer's Mad Money", A 1-In-100 Blogger.  March 17, 2009.
  20. ↑ Andrew Ross Sorkin. "Lehman Files for Bankruptcy; Merrill Is Sold", The New York Times.  September 15, 2008.
  21. ↑ Jim Cramer. "'Hardball with Chris Matthews' for September 19, 2008", MSNBC TV. , September 19, 2008.
  22. ↑ Michael Inbar. "Jim Cramer: Time to get out of the stock market", Today MSNBC. , October 6, 2008.
  23. ↑ Cramer’s ‘Get Out’ Call: One Year Later, CNBC, October 15, 2009.
  24. ↑ Paul J. Bolster, Emery A. Trahan. Investing in Mad Money: Price and Style Effects (PDF) Financial Services Review, Spring 2009.
  25. ↑ Cramer Picks Outperform S&P, Russell Indexes: Study, CNBC, May 19, 2009.
  26. ↑ "Cramer, Not So Mad?", NPR, May 11, 2009
  27. ↑ Stop Trading!: Cramer Hearts Rush Limbaugh?, CNBC's Stop Trading!, Jan. 29, 2009.
  28. ↑ "Cramer to White House: Wealth Destruction Is Real", CNBC. , March 3, 2009
  29. ↑ Rush Limbaugh. Jim Cramer Held Hostage, RushLimbaugh.com, March 19, 2009.
  30. ↑ "White House Knocks Jim Cramer For Calling Obama Budget "Greatest Wealth Destruction By a President"", CNBC.  March 3, 2009
  31. ↑ Rush Limbaugh. Liberal Jim Cramer Sees the Light, RushLimbaugh.com, March 5, 2009.
  32. ↑ Jim Cramer. "Cramer: My Response To The White House", MainStreet.com. , 2009-05-03
  33. ↑ Jim Cramer. "Cramer Takes on the White House, Frank Rich and Jon Stewart", MainStreet.com. , 2009-09-03
  34. ↑ Rush Limbaugh. Welcome to the Club, Cramer, RushLimbaugh.com, March 9, 2009.
  35. ↑ "Jim Cramer's famous rant about the "know nothing" Fed.", NBC.  July 29, 2007.
  36. ↑ "Cramer: Bernanke, Wake Up", NBC.  2007-03-08
  37. ↑ Cramer's 'State of the Market' Address, CNBC's Mad Money, Jan. 21, 2009.
  38. ↑ Obama Lied, Our Economy Died, A 1-In-100 Blogger, February 2009.
  39. ↑ Obama's 30-Day Report Card, CNBC, Feb. 20, 2009.
  40. ↑ Jim Cramer. Opening Segment #3: 'Make The Grade', February 20, 2009.
  41. ↑ Cramer: Obama Hurting the Economy, CNBC, July 8, 2009.
  42. ↑ Rush Limbaugh. The Founders Wanted Presidents to Fail If They Deserved To Fail, RushLimbaugh.com, March 10, 2009.
  43. ↑ Personal voucher by DerekE. This user has calculated the OAI to update its accountability status (recalculated on September 06, 2011). <http://conservapedia.com/Talk:Jim_Cramer#OAI_Underperformed>, see: Talk:Jim Cramer#OAI Underperformed
  44. ↑ "Wachovia CEO Offers Plan for Markets", CNBC.  September 15, 2008.
  45. ↑ 45.0 45.1 "Wall of Shame: Wachovia CEO Bob Steel", CNBC.  September 29, 2008.
  46. ↑ Daily Show interview of Jim Cramer. The Daily Show with Jon Stewart. comedycentral.com., March 14, 2009.
  47. ↑ "CNBC's Jim Cramer Responds to Jon Stewart's Response to CNBC's Jim Cramer", Comedy Central.  March 10, 2009.
  48. ↑ In the Jon Stewart-Jim Cramer Bout, It's Stewart By a Knockout. About.com: Journalism., March 13, 2009.
  49. ↑ March 12, 2009: Jim Cramer Unedited Interview Pt. 2. Comedy Partners. March 12, 2009.
  50. ↑ Out with Cox, in with Uptick Rule. CNBC. November 21, 2008.
  51. ↑ 51.0 51.1 51.2 51.3 "No Respect: Cramer Criticizes His Critics", CNBC.  March 9, 2009.
  52. ↑ Derek Erwin. "All Press is NOT Equal in Value!", A 1-In-100 Blogger.  October 21, 2008
  53. ↑ Mad Mail: Is Bear Stearns in Trouble?
  54. ↑ "CNBC Gives Financial Advice", The Daily Show.  2009-05-03
  55. ↑ Frank Rich. "Some Things Don’t Change in Grover’s Corners", New York Times. , 2009-07-03
  56. ↑ Jim Cramer. "Cramer Takes on the White House, Frank Rich and Jon Stewart", MainStreet.com. , 2009-09-03
  57. ↑ Jim Cramer. "Cramer's 'Mad Money' Recap: Dec. 16", TheStreet. , 12/16/08
  58. ↑ Rush Limbaugh. Business Leaders Can't Let Go of Emotional Investment in Obama, RushLimbaugh.com, March 11, 2009.
  59. ↑ "Cramer: Where the Heck Is Tim Geithner?", CNBC.  Friday, 20 Feb 2009
  60. ↑ Jim Cramer. Mad Money: Watch TV, Make Money, CNBC, December 2, 2006.
  61. ↑ James J. Cramer, Cliff Mason. Jim Cramer's mad money: watch TV, get rich
  62. ↑ James J. Cramer, Cliff Mason. Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)
  63. ↑ Jim Cramer. Cramer's Advice: Don't Give Up, TheStreet.com, October 13, 2009.
  64. ↑ http://books.simonandschuster.com/Jim-Cramer's-Getting-Back-to-Even/James-J-Cramer/9781439158012
  65. ↑ Carlo Dellaverson. "Cramer In 'Iron Man'", CNBC.  Friday, 2 May 2008
  66. ↑ Time Arango. Oliver Stone Returns to Wall Street for a Sequal NYTimes.com, September 7, 2009.

See also

External links

Jim Cramer's Rules for Investing and Trading

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Articles relating to Jim Cramer
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