Jim Cramer isn’t a yeller, a flailer, or a thrower of large objects—he just plays one on TV. There is method to Mad Money, his hyperactive, twice-daily stock-picking show on CNBC. Pacing the set like a raging bull (or a wounded bear), punching up callers on his control panel, he fires off buy/sell advice at machine-gun speed, usually punctuated by cries of “Booyah!” and sound effects like a toilet flushing or a train wreck.
Recently, Cramer donned a matador costume and bellowed at viewers to buy stock in Banco Santander, a large Spanish bank.
“It was ridiculous,” he admits. “I’m acutely aware of that. But you wouldn’t be the least bit interested in Spanish stocks unless I put on the cape and the hat. I don’t know how else to get you to pay attention to Banco Santander, which is a really good bank that you should buy.”
Sitting in an empty office at TheStreet.com—the financial news Web site he co-founded in 1996 with New Republic editor Martin Peretz—Cramer’s wearing his on-air uniform of solid-colored shirt and tie, but his demeanor is calm. He speaks slowly, with a hint of Philadelphia accent (his hometown). The Summit resident’s fifth book, Jim Cramer’s Stay Mad for Life, which hit bookshelves in December, actually counsels patience, moderation, and long-term planning—not what one expects from the frenetic trader who got rich in the ’90s, first as a broker at Goldman, Sachs and then running his own hedge fund, Cramer, Berkowitz, and Co.
As much as he loves to shoot bullets into the floor, Cramer, 52, actually is a well-trained intellectual (he earned B.A. and law degrees from Harvard) and a former newspaperman who still writes a literate and often insightful investment column for New York magazine.
“Skeptic” could be his middle name. “There are a lot of things that happen in investing,” he says, “that involve the notion that someone may not be giving you the proper story.” He isn’t shy about pointing those out.
In early August of 2007, in the thick of the sub-prime mortgage meltdown, Cramer launched a tirade on CNBC, accusing Federal Reserve chairman Ben Bernanke of being blind to the financial pain the crisis was causing. “He has no idea what it’s like out there. None!” Cramer screamed at CNBC anchor Erin Burnett. “They’re nuts! They’re nuts! They know nothing! This is a different kind of market, and the Fed is asleep…Cut the rate!”
Not to imply cause and effect, but later that month the Fed did exactly that, cutting its discount rate (the interest it charges banks to borrow) by half a percentage point. Cramer quickly calmed down. “While I have been a big critic of the Fed, I have not been critical since last Friday, when they made their move, which I applauded,” he wrote in his TheStreet.com column. “I think the Fed is being very clever here. It is bailing out the deposit institutions but not the mortgage brokers. It is bailing out the responsible lenders, not the irresponsible borrowers, like the hedge funds that levered up and bought crummy mortgages.” But by the end of the year, Cramer was again on the Fed’s case, criticizing the central bank for not cutting interest rates more than a quarter-point at its December 11 meeting.
Cramer, it must be said, can take candor to dicey extremes. In a now-infamous video interview on TheStreet.com in December of 2006, he boasted about how easy (and necessary) it is for hedge fund managers to manipulate the market by buying or selling huge blocks of stock and by spreading false information. “What’s important when you’re in that hedge-fund mode is to not do anything remotely truthful,” he said. “Because the truth is so against your view, that it’s important to create a new truth to develop a fiction.”
Henry Blodget, a former securities analyst who now writes for Slate, called Cramer out for “once again giving terrible advice…by advising investors to engage in practices that might be considered illegal.” Cramer said publicly that he was just being his usual over-the-top self and claimed that he wasn’t talking about his own exploits. (In parts of the interview, however, he clearly talked in detail about “what I used to do.”)
Cramer’s on-air shtick, a combination of scalding commentary and clowning, does seem to antagonize many in the media. In a 2005 review of Mad Money, The New Yorker’s Nancy Franklin called him “exhausting to watch” and added, “a normal person isn’t fit for any other activity afterward, except perhaps a cleansing walk across Antarctica or the Gobi Desert.” Criticism of his style or financial advice doesn’t faze Cramer, who remains one of CNBC’s few genuine stars.
Raised in the Philadelphia suburb of Wyndmoor, a “decent, middle-class neighborhood,” Cramer describes his childhood as a “typical, garden variety non-New York suburban.” He has said that his father, Ken, a paper-goods wholesaler, gave him his first issue of Business Week when he was nine, but making money was never at the forefront of his mind. “I grew up in a household like many, where I didn’t know I was rich. I just knew I was fine.”
And smart. At Harvard, Cramer joined the staff of the Crimson, discovered his passion for writing, and decided to go into journalism. After graduation in 1977, he got a job at the Tallahassee Democrat covering sports at Florida State. In January 1978, when Ted Bundy broke into the university’s Chi Omega sorority and went on a killing spree, Cramer was one of the first reporters on the scene. He won “some awards” for his coverage, and later moved to Los Angeles to cover the homicide beat for the Examiner.
Cramer hit a rough patch after his apartment was repeatedly burglarized. “Everything was gone,” he says. “Even my checks were gone. It was like I didn’t exist in the place.” Already living paycheck to paycheck, Cramer took to sleeping in his car. When he was diagnosed with a jaundiced liver, he hit rock bottom. “I had to ask myself questions like, ‘Do I go to the doctor or do I get an apartment? Do I have a nice meal or do I go to McDonald’s?’” In the end, Cramer decided it was time to start caring about his bank account. “I did make it my goal to go make a lot of money,” he says. “I hated waking up with fear.”
He returned to New York to write about prosecutors and white-collar crime for The American Lawyer. That impelled him to get a law degree at his alma mater, where the finance bug bit him. While his classmates—among them Eliot Spitzer—focused on landing gigs at big law firms, he focused on the banking world. But even with his Harvard pedigree, Wall Street wasn’t interested.
“There wasn’t a brokerage house that would take me,” he says. “They simply didn’t want someone from Harvard Law.” Finally, Goldman Sachs hired him. (He did pass the bar, but never practiced.)
Cramer sees companies as living, breathing “stories.” He tracked down those “stories” to great success at Goldman until 1987, when he left to create his own hedge fund. In 2005 he told Business Week his net worth was between $50 million and $100 million.
After doing impassioned guest spots on various talk shows in the wake of 9/11, Cramer wound up on Kudlow & Cramer, a talk show that aired on CNBC from 2001 to 2005 about the intersection of politics and finance. The show’s focus, though, was wrong for Cramer. “It was hard for me because politics is not my inclination,” he says. “I just really don’t care for [the topic].”
What he does care for—stocks and companies—he hopes comes alive on his show, which CNBC offered to him after he split with Kudlow. Convinced that average people only watch a finance show if it’s outlandish, Cramer created a clown-like doppelganger.
The one place Cramer is controversy-free is in Summit. He moved to the upper-crust suburb from Brooklyn Heights in 1993. Cramer and his wife, Karen, have two daughters, Cece, 16, and Emma, 13, who both attend Summit public schools. Cramer loves the town. “It’s just a beautiful place: great mayor, great [city] council, great restaurants, great stores.”
He’s coached school sports teams—his daughter is the goalie on the varsity lacrosse squad—and is currently working on a program with Summit superintendent Dr. Carolyn Deacon to create a student-run news channel to air locally. The program will allow students working on-air and behind the scenes to taste Cramer’s world. “I think the media has a lot of what you need in order to be successful in anything.”
“Summit is my community and not New York,” he says, lighting up as he talks about local dining spots like Fiorino and Roots. That’s because in Summit Cramer gets to be himself—not the guy he plays on TV.