Jim Cramer (James Cramer)

Born February 10, 1955 (1955-02-10) (age 54)[1]
Wyndmoor, Pennsylvania, U.S.
Alma mater Harvard College (B.A.)
Harvard Law School (J.D.)
Occupation Television personality, Author

James Joseph "Jim" Cramer (born February 10, 1955)[1] is an American self-proclaimed infotainer, a television personality, a former hedge fund manager, and a best-selling author. Cramer is the host of CNBC's Mad Money and a co-founder of TheStreet.com. He is also a regular contributor to New York magazine and an occasional contributor to Time Magazine.

* 1 Early years
* 2 Career
o 2.1 Journalist
o 2.2 Lawyer
o 2.3 Investor
o 2.4 TheStreet.com
o 2.5 Mad Money
o 2.6 Other television and radio shows
o 2.7 Cameos and other appearances
* 3 Controversies
o 3.1 Fox News Channel lawsuit
o 3.2 Market manipulation
o 3.3 SEC subpoena
o 3.4 Performance of stock picks and history of market calls
+ 3.4.1 Charitable Trust Stocks
o 3.5 Bear Stearns prediction
o 3.6 Jim Cramer's responses to criticism
+ 3.6.1 The White House
+ 3.6.2 Frank Rich
+ 3.6.3 Jon Stewart
+ 3.6.4 Response to criticism for his Wachovia call
+ 3.6.5 Response to pundits
* 4 Bibliography
* 5 Notes
* 6 References
* 7 External links
o 7.1 Biographies
o 7.2 Notable Jim Cramer sources

[edit] Early years

Cramer was born to Polish-American parents in Wyndmoor, Pennsylvania, a suburb of Philadelphia.[1] One of his first jobs was selling ice cream at Veterans Stadium during Philadelphia Phillies games.[2] Cramer went to Springfield Township High School in Montgomery County.[3]

He graduated magna cum laude from Harvard College in 1977 with a B.A. in government.[2] At this point in his life, Cramer was a staunch left-winger, naming his plan to revitalize The Harvard Crimson, the school newspaper, with inspiration from Lenin's "What Is to Be Done?"[4]
[edit] Career
[edit] Journalist

He began his journalism career in college, working for the Crimson, and rising to become its president. Upon graduating, Cramer worked his way through several entry-level reporting jobs in search of his big writing break. Dating back to March 1, 1978, Cramer worked for the Tallahassee Democrat in Tallahassee, Florida, where he covered the Ted Bundy murders. The then-executive editor, Richard Oppel, says "[Cramer] was like a driving ram. He was great at getting the story."[5]

He then worked as a journalist for The Los Angeles Herald Examiner. Around this time, his apartment was robbed by a stalker and he was left with nothing more than his car and the things in it; he lived out of it for about nine months. He also worked for Governor Jerry Brown temporarily.[1]
[edit] Lawyer

Following this experience, Cramer moved in with his sister in Greenwich Village. 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.[6] Cramer later earned a Juris Doctor degree from Harvard Law School.[2][4] During his years at Harvard, Cramer worked as a research assistant for Alan Dershowitz. He assisted Dershowitz's campaign to acquit alleged murderer Claus von Bülow despite the fact that Cramer admitted to himself that von Bülow was "supremely guilty".[7] His 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] Cramer was admitted to the New York State Bar Association in 1985, but he is currently not a member.[8]
[edit] Investor

Cramer started privately investing in the stock market during his time at law school,[1] 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.[5]

His track record helped Cramer obtain employment in 1984 as a stock broker in Goldman Sachs' Private Wealth Management[9] 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),[10] Brill, and Peretz.[11]

A year later, Cramer married Karen Backfisch-Olufsen, a trader with Steinhardt's firm.[citation needed] 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.[5] 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."[5] 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 stock other than his stake in TheStreet.com, trading only for his charitable trust.[5]
[edit] TheStreet.com
Main article: 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, MainStreet.com. An earlier similar project, TheRoad.com, did not yield the success Cramer had anticipated.
[edit] Mad Money
Main article: 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 not to tell you what to think, but to teach you how to think about the market like a pro. This show is not about picking stocks. It's not about giving you tips that will make you money overnight – tips are for waiters. Our mission is educational, to teach you how to analyze stocks and the market through the prism of events."

To provide viewers with "the knowledge and the tools that will empower you to be a better investor," Mad Money features nine segments: The Lightning Round, Game Plan, Executive Decision, Mad Bull Disease, Off the Charts, Sell Block, Sudden Death, Am I Diversified, and Mad Mail.[12]
[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. They split when Cramer called Kudlow "sweet potato bull macho" on air.

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

* 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 hedge fund; for example, his violent temper, and what finally led him to come to his senses and "calm down."[citation needed] Footage of Cramer at his family home with his daughters and wife was also included.[citation needed] On November 15, 2005, Jim mentioned on his program that he received 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 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 2008 motion picture Iron Man spoofing Stark Industries on his show Mad Money.[13] and is due to appear in the upcoming movie Wall Street 2: Money Never Sleeps[14].
[edit] Controversies
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[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.[15]
[edit] Market manipulation

In March 2007, a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast stirred controversy after it appeared on YouTube.com.[16] In the video, Cramer described activities used by hedge fund managers to manipulate stock prices - some of debatable legality and others illegal. 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 at my hedge fund...When I was positioned short--meaning I needed it down--I would create a level of activity beforehand that could 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".[17]

Cramer stated that everything he did was legal, but that illegal activity is common in the hedge fund industry as well. He also stated that some hedge fund managers spread false rumors to drive a stock down: "What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction."[17] Cramer described a variety of tactics that hedge fund managers use to affect a stock's price. Cramer said that one strategy to keep a stock price down is to spread false rumors to reporters he described as "the Pisanis of the world". The comment was a reference to CNBC correspondent Bob Pisani, who reports from the trading floor of the New York Stock Exchange. "You have to use these guys," said Cramer. He also discussed giving information to "the bozo reporter from The Wall Street Journal" to get an article published.[18][19] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."[20] During the interview Cramer referred to himself as a "banking class hero."[21]
[edit] SEC subpoena

In February 2006, an investigation by the U.S. Securities and Exchange Commission (SEC) 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. The SEC then began to back away from the subpoenas, indicating it had no intention of enforcing them after lawyers for Dow Jones said they would not comply. SEC Chairman Christopher Cox took the unusual step of rebuking the SEC's staff attorneys for filing subpoenas on two Dow Jones reporters without first consulting him or the other top commissioners. Cox issued a statement saying neither he nor any of the SEC's four other commissioners were aware of the subpoenas, which he called "highly unusual."[22]

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.[23]
[edit] 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.[24] These returns are in dispute as they have not been independently audited or verified and are based on the firm's claimed returns.

On February 29, 2000, about one week before the historic all-time high of the NASDAQ Composite index, Cramer delivered his "The Winners of the New World" speech at the 6th Annual Internet and Electronic Commerce Conference and Exposition in New York. In this speech, Cramer recommended 10 stocks and went on to say "I wouldn't own any other stocks in the year 2000". By 2009, all of the mentioned companies have either gone out of business, have been taken over by competitors or trade at fractions of their 2000 stock price.[25]

On September 15, 2008, Cramer invited the CEO of Wachovia on his show, Mad Money, in order to recommend the stock to potential investors.[26] Cramer agreed with CEO Robert Steel that the company was fundamentally sound and that the ratio of good loans to bad loans was low. Cramer would recommend the stock to his viewers before Citi announced their intentions to acquire Wachovia's banking operations. Cramer stated that Wachovia was part of the "Fortress Five" in relation to having a fortress balance sheet stating "It's now the "Fortress Five"... thanks to the leadership of Bob Steele, who I believe will be able to split WB into a good bank and a bad bank, and lead it much higher... Now that the stock was up today a couple of smackers... have a little pullback... knowing this market, you're going to get one." [27] On Monday, September 29, Wachovia's share prices dropped over 95% in the pre-market and over 80% in market hours following news of a possible Citi acquisition. [28] Prior to this, Cramer had stated, "This is run by Bob Steel. He's as close as we're going to get to a great banker. I think he's going to make this a great company. "[29] Eventually, Wells Fargo would purchase Wachovia for $15.1 billion in an all stock deal leaving Wachovia shareholders with 0.1991 shares of Wells Fargo for every share of Wachovia stock, resulting in a large decline in stockholder value.[30] In 2008, Wachovia shares declined 88 percent.[31]

On August 3, 2007, Cramer made a passionate plea to Federal Reserve Chairman Ben Bernanke to cut interest rates because of off-the-record comments he was getting from contacts at investment banks and their concern about adjustable-rate mortgage borrowers increasing loan rates. Cramer also praised Bear Stears, then trading at $109.48 per share as an investment saying, "I like Bear Stearns very much[32].

On July 8, 2008, in an article on TheStreet.com titled, 'Look At The Facts'[33] 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."

On Hardball with Chris Matthews for September 19, 2008, Cramer stated "It‘s not too late to be on the pom-pom...the sideline" in regards to home teaser loans.[34] 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."[35]

On September 22, 2008, Wall Street Journal best-selling author and syndicated newspaper columnist, Eric Tyson, criticized Cramer's stock picks and his performance in general.[36]

In a August 20, 2007 cover story, Barron's found that "his picks haven't beaten the market. Over the past two years, viewers holding Cramer's stocks would be up 12% while the Dow rose 22% and the S&P 500 16%. "CNBC disputed the magazine's findings.[37] In a February 9, 2009 story, Barrons further reported that betting against Cramer's Buy recommendations could yield 25% in a month based on options-market activity. [38]
[edit] Charitable Trust Stocks
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This section may require cleanup to meet Wikipedia's quality standards. Please improve this section if you can. (July 2009)

[Link to Article|http://stock-broker-security.com/jim-cramers-charitable-trust/]

Jim Cramer's Charitable trust is set up to pay a percentage of its assets out to select charities every year. Cramer hand picks the investments within the trust in an effort to maximize charitable payouts. Each Day Jim Cramers stock picks are verbally announced so that any viewer can follow them.[39]

Abbott Laboratories (ABT) Bank of America (BAC) Bank of America – New Position! BHP BHP Billiton (BHP) Bristol-Myers Squibb Co. (BMY) BP Plc (BP) Caterpillar Inc. (CAT) – Sold Caterpillar! Cisco Systems, Inc. (CSCO) Chevron Corp. (CVX) China Unicom Ltd. (CHU) China Unicom – New Position! ConocoPhillips (COP) Devon Energy Corp. (DVN) Devon Energy – New Position! Emerson Electric Co. (EMR) General Electric Co. (GE) Gilead Sciences Incorporated (GILD) General Mills (GIS) Goldman Sachs Group Inc. (GS) Hewlett-Packard Co. (HPQ) Home Depot Inc. (HD)

Honeywell International Inc. (HON) Honeywell – New Position! JPMorgan Chase & Co. (JPM) 3M Company (MMM) Nike Incorporated (NKE) – Sold Nike! PepsiCo Inc. (PEP) PPG Industries (PPG) QualComm Inc. (QCOM) State Street Corporation (STT) Visa Incorporated (V) VF Corporation (VFC) VMware (VMW) Wells Fargo & Co. (WFC) Yum! Brands Inc. (YUM) Wal-Mart Stores (WMT) – Sold[40]
[edit] Bear Stearns prediction

On the 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 not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear."[41]

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.[42] Over the next few days BSC stock fell 92%, on news of a Fed bailout and $2/share takeover by JPMorgan. The final shareholder approved cost of acquiring Bear Stearns would be $10/share.

Others say the comments were clear and unambiguous, and that the viewer was asking whether he should withdraw money he had held in a brokerage account at Bear Stearns.[43] In other words, the caller wanted to know if it was possible that the liquidity crisis at Bear was so bad, that the viewer would be unable to get his money out of his Bear Stearns account if it went under.[44] On March 17, 2008, Cramer claimed he meant the latter explanation, rather than the previous one.[45] Cramer states he was not recommending the common stock but allaying concerns about the account holder's liquidity held in a Bear Stearns brokerage account.

Michael Lewis, a journalist for the U.K.-based Evening Standard news Web site, claims TheStreet.com listed Bear Stearns as a "Buy" at $62 per share on March 11, 2008 which was the same day as the caller's question and a day before the collapse of Bear Stearns.[46] However, TheStreet.com[47]--the web site quote that shows the ratings history for actual changes that Cramer makes—indicates that Cramer changed Bear Stearns rating to a "Sell" on February 5th 2008. On his March 11, 2009 appearance on the Daily Show, Cramer admitted he made mistakes on his Bear Stearns calls.[48]
[edit] Jim Cramer's responses to criticism
[edit] 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.”[49] An offended White House shot back.[50] 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.[51] 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."

Cramer questioned criticism he received which he explained makes him "uncomfortable being in the crosshairs of columnists and comedians I enjoy."[52] 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[53] against Ben Bernanke[54] and the previous administration's handling of the economic crisis."
[edit] Frank Rich

Referring to March 8, 2009 charges leveled against Jim Cramer by New York Times columnist Frank Rich, Cramer said, "I called out [Paulson[55] and Geithner[56]] for their mistakes, where was Frank Rich praising me on that? Where was that?"[57]
[edit] Jon Stewart
Main article: Jon Stewart's 2009 controversy with CNBC

On March 12, 2009, Jim Cramer appeared on The Daily Show with Jon Stewart.[58] Stewart reiterated earlier claims regarding the CNBC host's "silly and/or embarrassing and/or stupid financial observations."[59] Moreover, he claimed CNBC shirked its journalistic duty by believing corporate lies, rather than being an investigative "powerful tool of illumination."[60] 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." [61]

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."[62] However, Stewart played several video clips from 2006 where Cramer discussed the spreading of false rumors to drive down stock prices and encouraged short-selling by hedge funds as a means to generate returns.[63] At one point in a clip from December 22, 2006 he said, "I would encourage anyone in a hedge fund to do it." He called it a very quick way to make money and very satisfying. He continued, "By the way, no one else in the world would ever admit that, but I don't care, and again, I'm not gonna say it on TV." [61] Stewart responded, "I want the Jim Cramer on CNBC to protect me from that Jim Cramer." [61] Cramer again admitted that he can do better, and that he should try to change. The interview ended when Stewart pointedly suggested: “Maybe we can remove the ‘financial expert’ and the ‘In Cramer We Trust’ and start getting back to fundamentals on the reporting, as well, and I can go back to making fart noises and funny faces.” Cramer responded: “I think we make that deal right here.” [64]
[edit] Response to criticism for his Wachovia call

On March 9, 2009, during a segment on Mad Money,[65] 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, Jim 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."[65]

Jim Cramer apologized both on Mad Money and on the Today Show for believing in Steel.[66]
[edit] Response to pundits

"The pundits," Jim Cramer explained on March 9 2009 in a MainStreet article, "who haven't paid attention to anything I have been saying or writing for the past 18 months are all over me."[67] Cramer said the pundits "won't engage in the merits of, say, favoring Tier 1 capital for the banks vs. common equity, or forbearing on the banks to work the situation out over time because the banks can be profitable if we have some patience. They just attack me."[68] Cramer suggested, "It's time to get serious. It's time to take the issue from the pundits and from the left and right, and put it where it belongs: serious non-ideological debate to put out the real firestorm, the collapse of the economy from Wall Street to Main Street and the ensuing Great Wealth Destruction for all."