Jim Cramer

James Joseph "Jim" Cramer (born February 10, 1955) is an American television host of CNBC's Mad Money and a co-founder of TheStreet.com, a former hedge fund manager, and a best-selling author. He is also a regular contributor to New York magazine and an occasional contributor to Time Magazine.

Cramer was born to Polish-American parents in Wyndmoor, Pennsylvania, a suburb of Philadelphia. 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. He graduated magna cum laude from Harvard College in 1977 with a B.A. in government.

Career

Investor

Cramer started privately investing in the stock market during his time at law school, using his student loans. Cramer began leaving stock picks on his answering machine, impressing The New Republic owner Martin Peretz, who gave him $500,000 to invest; Cramer earned Peretz $150,000 in two years.

His track record helped Cramer obtain employment in 1984 as a stock broker in Goldman Sachs' Private Wealth Management division. Cramer's success in this position led him to found 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), Brill, and Peretz.

Cramer's fund had one down year from 1988-2000 while he ran it, in 1998, a year that was 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 28%, beating the S&P 500 by 38 percentage points. Cramer retired from his hedge fund in 2001, finishing with a 24% average annual return over 14 years and having "routinely [taken] home $10 million a year and more." The fund was taken over by his former partner Jeff Berkowitz after Cramer's retirement.

Cramer claimed to be worth $50 to $100 million in October 2005. He no longer owns any stocks of his own other than his stake in TheStreet.com, currently only trading for his charitable trust.

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 is currently a market commentator and adviser to the TheStreet.com, as well as its largest shareholder. He 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, MainStreet.com.

Mad Money

The cable television program Mad Money with Jim Cramer began on CNBC in 2005. As mentioned on CNBC's Web site in an article titled, "Mad Money Manifesto" by Jim Cramer, the show's mission statement and Cramer's job is "to help regular people – shareholders at home watching the show – to better understand the market." Mad Money is about education, "this show isn’t about stock picking, as many critics think it is." The show features eight segments: The Lightning Round, Game Plan, Executive Decision , Off the Charts, Sell Block, Sudden Death, Am I Diversified, and Mad Mail.

Other 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. He is also expected to appear in the upcoming movie Wall Street 2: Money Never Sleeps.

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.

On August 3, 2007, before the stock market fell and before the recession began, Jim Cramer can be heard in what is now known as the infamous 'Rant Heard Round the World.' 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.

On July 8, 2008 Jim brought up the possibility of bank failures. In his article, 'Look At The Facts' 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." A few months later on September 15, 2008, the beginning of the market meltdown occurred.

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. 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." 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.

Academic Review

• 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." 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.

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. Cramer’s name came up 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.” An offended White House shot back. Press Secretary Robert Gibbs said, "I'm not entirely sure what he's pointing to make some of the statements." When pressed further by NBC's Tom Costello, Gibbs said, "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."

On March 5, Jim Cramer responded to the White House. He 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."

Cramer questioned criticism he received which he explained makes him "uncomfortable being in the crosshairs of columnists and comedians I enjoy." 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."

The Obama Accountability Index

The day after Barack Obama was sworn in, on January 21, 2009, an economist and television host of 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." It 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."

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 Jan. 21, the day it was created. The S&P 500 over that same period has declined just 8%." So Obama, at least according to Cramer’s portfolio, wasn't doing too well.

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. Cramer reminded viewers that, while the score of 96.1 may not sound bad, this measure of Obama's job performance "has been on the downswing." On a technical basis alone, Cramer warned, "The OAI could drop to 84 if all this anti-business chatter continues." 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."

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. Cramer apologized both on Mad Money and on the Today Show for believing in Steel.

John Stewart

On March 12, 2009, Jim Cramer appeared on The Daily Show with Jon Stewart. Stewart reiterated earlier claims regarding the CNBC host's "silly and/or embarrassing and/or stupid financial observations." Moreover, he claimed CNBC shirked its journalistic duty by believing corporate lies, rather than being an investigative "powerful tool of illumination." 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."

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."

Frank Rich

On March 9, 2009, on Mad Money, 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," 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."

On the same day, 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,'" 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, and subsequently Rich - 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." Cramer then argued, "I called out [Paulson and Geithner] for their mistakes, where was Frank Rich praising me on that? Where was that?"

Biographies

• Jim Cramer biography on CNBC.com
• Jim Cramer biography on TheStreet.com

Jim Cramer's Rules for Investing and Trading

• Cramer's Twenty-five Rules for Investing
• Watch and Learn Cramer's Rules to the Game
• 20 Golden Rules for Traders
• Cramer's 20 Rules for Effective Trade Execution
• Cramer's 20 Rules To Stop Losing Money

External Links

• Jim Cramer's Mad Money, Homepage
• TheStreet.com
• Jim Cramer archive blog by Jim Cramer
• Mad Money w/ Jim Cramer MADCAP RECAP
• Stockpickr Stock market social networking site.
• Time's 100 Most Influential People of 2009 - Jim Cramer