Jim Cramer

James Joseph Cramer
James Joseph Cramer
Born	February 10, 1955 (age 71); Wyndmoor, Pennsylvania, U.S.
Occupation(s)	Television host, author, entertainer, former hedge fund manager
Years active	1978–present
Known for	Host of Mad Money on CNBC; co-founder of TheStreet; former hedge fund manager; co-host of Kudlow & Cramer
Notable work	Confessions of a Street Addict (2002), Jim Cramer's Real Money (2005), Jim Cramer's Mad Money (2006), Jim Cramer's Get Rich Carefully (2013)

James Joseph Cramer (born February 10, 1955) is a prominent American television host, author, entertainer, and former hedge fund manager. He currently presents Mad Money on CNBC and serves as an anchor on Squawk on the Street. After completing his studies at Harvard College and Harvard Law School, Cramer began his career at Goldman Sachs before establishing the hedge fund Cramer Berkowitz, where he was senior partner. He co-founded TheStreet, contributing from its inception in 1996 until 2021. Prior to Mad Money with Jim Cramer which debuted in 2005, he co-hosted Kudlow & Cramer from 2002 to 2005. His published works include Confessions of a Street Addict (2002), Jim Cramer's Real Money (2005), Jim Cramer's Mad Money (2006), and Jim Cramer's Get Rich Carefully (2013).

Early life

Cramer was born in 1955 in Wyndmoor, Pennsylvania, a Philadelphia suburb, into a Jewish household. His mother, Louise A. Cramer (1928–1985), was an artist, while his father, N. Ken Cramer (1922–2014), operated International Packaging Products, a packaging supplier based in Philadelphia.

The family relocated to Springfield Township, where Cramer completed his education at Springfield Township High School in 1973. During his time there, he was an active member of the track team.

Beginning in 1971, Cramer held various early sales positions, including selling Coca-Cola and ice cream at Veterans Stadium during Philadelphia Phillies games.

His fascination with the stock market started as early as fourth grade and persisted throughout his high school years.

Education and early career

In 1977, Cramer graduated magna cum laude from Harvard College, earning a Bachelor of Arts degree in government. While at Harvard, he served as president and editor-in-chief of The Harvard Crimson and was recognized as a National Merit Scholar.

Following graduation, Cramer worked as an entry-level reporter with an annual salary of $15,000. Beginning March 1, 1978, he joined the staff of the Tallahassee Democrat, covering significant events such as the Ted Bundy murders. Subsequently, he wrote obituaries for the Los Angeles Herald-Examiner. During this challenging period, after his apartment was burglarized, he lived out of his car for nine months. Additionally, he worked for California Governor Jerry Brown and was among the pioneering journalists at American Lawyer.

Cramer obtained his Juris Doctor degree from Harvard Law School in 1984. While attending law school, he actively traded stocks and earned enough profits to pay for his tuition. He promoted his stock recommendations through answering machine messages. Through alumnus Michael Kinsley, he met The New Republic owner Martin Peretz, who entrusted him with $500,000 to invest; within two years, Cramer returned $150,000 in profits to Peretz. During law school, although personally convinced of Claus von Bülow’s guilt, he assisted Alan Dershowitz’s defense campaign to acquit the alleged murderer.

Goldman Sachs

In 1984, Cramer began his career in the sales and trading division at the New York-based investment bank Goldman Sachs. He was admitted to the New York State Bar in 1985 but chose not to practice law. His legal license was suspended on April 2, 2009, due to failure to renew the registration.

Hedge fund

Cramer left Goldman Sachs in 1987 to establish a hedge fund initially named Cramer & Co., later renamed Cramer, Berkowitz & Co., which operated from the offices of hedge fund manager Michael Steinhardt. Among his early investors were Harvard classmate Eliot Spitzer, Steve Brill, and Martin Peretz. The fund raised $450 million through increments of $5 million and charged a 20% performance fee.

He is said to have liquidated all stock holdings prior to Black Monday in 1987. Between 1988 and 2000, Cramer's fund experienced only one losing year—in 1998—when the S&P 500 increased by 29%, leading to substantial investor withdrawals. The fund posted returns of 47% and 28% in 1999 and 2000 respectively, outperforming the S&P by as much as 38 percentage points. Cramer asserts an average annual return of 24% over fourteen years with yearly earnings exceeding $10 million. Nevertheless, these claims have been subject to controversy.

Cramer retired from managing the fund in 2001, with his partner Jeff Berkowitz assuming control of operations.

SmartMoney

Cramer held the position of "editor at large" at SmartMoney magazine. He encountered criticism for profiting $2 million by buying stocks before recommending them in his articles, although he disclosed his ownership stakes within those writings. Ira Lee Sorkin, former head of the SEC’s New York office, suggested that Cramer's role as a general-interest writer might not have violated regulatory duties.

TheStreet

In 1996, Cramer and Peretz founded TheStreet, a platform dedicated to financial news and investment insights. In August 2019, the company was purchased by TheMaven for $16.5 million.

CNBC

During the late 1990s, Cramer regularly appeared as a guest commentator on CNBC. Between 2002 and 2005, he co-hosted Kudlow & Cramer (originally titled America Now) alongside Larry Kudlow.

The show Mad Money with Jim Cramer launched on CNBC in 2005 with the goal of empowering individual investors by providing actionable investment knowledge. Company policy at CNBC prevents Cramer from owning any stocks featured on the program.

Additional media engagements

Starting in 2001, Cramer hosted the nationally syndicated radio program Real Money, which aired until December 2006 and served as a precursor to Mad Money.

In 2005, he made guest appearances as himself in two episodes of Arrested Development, offering satirical commentary on fictional stock ratings. That same year, Dan Rather interviewed him for 60 Minutes, focusing on his hedge fund experience and personality traits. Cramer has also been featured on shows such as Today, NBC Nightly News, Late Night with Conan O'Brien, and Jimmy Kimmel Live!. In January 2007, he participated as a guest judge on The Apprentice, and in March 2009, he was interviewed by Jon Stewart on The Daily Show.

Cramer appeared briefly in the films Iron Man and Wall Street: Money Never Sleeps. Additionally, he served as a consultant for the original Wall Street movie, advising on realistic depictions of interactions with the character Gordon Gekko.

Lawsuit involving Fox News Channel

In 2000, Cramer and TheStreet resolved a legal dispute with Fox News Channel. Fox alleged that Cramer breached an agreement to create a show and also accused him of promoting TheStreet stock on Fox's network without informing the show's producer. Cramer filed a countersuit in response.

Performance analysis

Before retiring in 2001, Cramer claimed to have achieved an annualized return of 24% net of fees over a span of 15 years as a hedge fund manager, including a self-reported 36% gain in 2000 during the height of the dot-com bubble.

In early 2000, he advocated investing in technology stocks expecting similar results to those seen in 1999. His focus was on ten companies such as 724 Solutions, Ariba, Digital Island, and VeriSign, disregarding conventional valuation methods like price–earnings ratios.

A 2007 article in Barron's observed that his recommended stocks lagged behind market performance: over two years, portfolios following his advice increased by 12%, whereas the Dow rose by 22% and the S&P 500 by 16%. During the 2008 financial crisis, Cramer received criticism for encouraging investments in struggling banks including Bear Stearns, Merrill Lynch, and Lehman Brothers. On August 8, 2008, he advised buying bank shares shortly before significant declines occurred.

On October 6, 2008, when the S&P stood at 1,056 points, Cramer suggested that investors should pull out funds required within five years from equities; subsequently, the market plunged nearly 37% over the following months.

A February 2009 report from the Wall Street Journal indicated that employing short-term options to short stocks recommended by Cramer historically produced returns around 25% within one month.

In February 2023, shortly before its failure, Cramer endorsed purchasing shares of Silicon Valley Bank. The following month, he described First Republic Bank on Twitter as a "very good bank"; however, its stock declined by more than 80% within days and ultimately collapsed in May amid the 2023 banking crisis.

Action Alerts Charitable Trust Performance

From 2002 until May 2009, the charitable trust associated with Cramer's Action Alerts PLUS surpassed both the S&P 500 Index and Russell 2000 Index, delivering a 31.75% return compared to 18.75% for the S&P 500 and 22.51% for the Russell 2000. On an annualized basis, the trust outpaced the S&P 500 by 7.35% and the Russell 2000 by 3.33%. Nonetheless, Paul Bolster observed that when adjusting for market risk, Cramer's additional returns effectively amounted to zero, indicating performance consistent with the level of risk undertaken.

Criticism arose regarding Action Alerts PLUS's performance comparisons, as they did not account for dividend reinvestment—a practice mandated by the SEC for stock mutual funds. For instance, a Kiplinger article cited a 39% return for the trust against a 15.5% return for the S&P 500 over nine years; however, incorporating dividends reveals the S&P actually returned 38.3%.

A Wharton study analyzing August 2001 through March 2016 reported that Cramer's trust lagged behind the S&P 500 due to reduced market exposure following the 2008 financial crisis. By March 31, 2016, the trust's cumulative gain was 64.5%, whereas the S&P 500 (excluding dividends) achieved a 70% return. Wharton finance professor Robert Stambaugh characterized these results as neither significant underperformance nor outperformance after accounting for various factors, describing the research as "a commendable attempt" to evaluate Cramer's stock selection approach.

Allegations of "Market Manipulation"

In a December 2006 interview, Cramer revealed strategies employed by hedge fund managers to influence stock prices, some within legal boundaries and others not. He detailed how he could move stock prices with as little as $5 million in capital while managing his hedge fund. Cramer stated, "When I was positioned short—meaning I needed it down—I would create activity beforehand that could drive the futures." He recommended this method to hedge funds as "a very quick way to make money."

While asserting that his own actions were lawful, Cramer acknowledged that illegal tactics are widespread in hedge fund circles. He mentioned that some managers disseminate false information to depress stock prices: "It's important to create a new truth, to develop a fiction." He described spreading rumors through journalists he referred to as "the Pisanis of the world," alluding to CNBC correspondent Bob Pisani, and supplying information to what he called "the bozo reporter from The Wall Street Journal" to sway media coverage. Cramer admitted these illicit practices are facilitated by the SEC's lack of understanding. In this interview, he referred to himself as a "banking-class hero."

Bear Stearns Recommendation (March 2008)

During the March 11, 2008 episode of Cramer's Mad Money, a caller inquired whether Bear Stearns' liquidity was worrisome and if they should withdraw their holdings. Cramer responded emphatically, "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." However, on March 14, Bear Stearns shares plunged over 50% following announcements of a Federal Reserve bailout and a $2 per share acquisition by JPMorgan Chase. On March 17, Cramer clarified that his earlier remarks referred specifically to the liquidity of accounts held at Bear Stearns rather than its stock price. He stressed that he was not endorsing purchasing common stock but reassuring investors about their account safety. Subsequently, Cramer criticized media personalities for misrepresenting his comments as a buy recommendation instead of liquidity reassurance.

Author Michael Lewis pointed out that TheStreet had rated Bear Stearns as a "Buy" at $62 per share on March 11—the same day as the caller's question and just prior to the firm's collapse. During the Jon Stewart–Jim Cramer conflict on The Daily Show in March 2009, Cramer acknowledged mistakes in his Bear Stearns calls.

Opposition to President Obama's Policies (March 2009)

On March 2, 2009, Cramer characterized President Barack Obama's policy agenda as "radical," attributing to it "the most significant destruction of wealth I have witnessed from a president." Press Secretary Robert Gibbs countered this assertion, questioning its foundation and stating that Cramer's remarks lacked evidence.

By March 5, 2009, Cramer stood by his critique, pointing to the steep decline in stock markets following Obama's inauguration, which intensified after the budget proposal was revealed. He expressed concerns over planned tax increases amid fragile economic conditions, potential negative impacts on healthcare sector profits, modifications to the mortgage deduction during a housing downturn, and an aggressive cap-and-trade initiative that might elevate energy expenses. Nevertheless, major stock indices more than doubled by the conclusion of Obama's administration.

Reacting to criticism on March 8 from The New York Times columnist Frank Rich, Cramer voiced doubts about the feasibility of implementing tax hikes, cap-and-trade measures, and healthcare reform amidst a recession. While he supported taxing high earners, he argued that the administration should first concentrate on addressing housing, joblessness, and financial system challenges before advancing these policy reforms.

Dispute with Nouriel Roubini

In 2009, Cramer disparaged Nouriel Roubini as being "intoxicated" by his own forecasts. Roubini retorted by labeling Cramer a "buffoon" and telling him to "just shut up." Cramer invited Roubini to debate him on his program. Years later, in 2021, Roubini again insulted Cramer, calling him "a total f---ing idiot."

Exchange with Jon Stewart (2009)

On March 12, 2009, Cramer appeared on The Daily Show hosted by Jon Stewart. Stewart criticized CNBC for insufficient investigative depth and described Cramer's financial advice as "silly and/or embarrassing." Cramer admitted he could have better predicted the economic downturn. Stewart condemned short-selling practices; while Cramer publicly agreed with the criticism, he had previously acknowledged engaging in short-selling during his hedge fund career. Stewart showcased clips where Cramer advocated short-selling and rumor-spreading for profit. The discussion concluded with both agreeing to emphasize fundamental analysis.

Federal Reserve Criticism (2007–08)

On August 3, 2007, Cramer called on the Federal Reserve to reduce interest rates, referring to its members as "nuts" and "asleep." The August 7 FOMC transcript showed officials laughing at his comments; however, subsequent events during the 2008 financial crisis validated his bearish market outlook. In September 2008 on Hardball with Chris Matthews, Cramer held the Fed responsible for fueling the housing bubble.

Referring to House Speaker Nancy Pelosi as "Crazy Nancy" in Interview

During a September 15, 2020 interview with U.S. Speaker of the House Nancy Pelosi, Cramer used the nickname "Crazy Nancy," a term frequently employed by President Donald Trump. He later issued an apology for using this phrase while discussing negotiations over coronavirus relief.

"Inverse Cramer" Exchange-Traded Fund

In 2022, Tuttle Capital Management submitted filings to introduce two ETFs: "LJIM" (Long Cramer), which tracks all of Cramer's stock selections, and "SJIM" (Inverse Cramer), designed to take positions opposite to his recommendations from Mad Money and Twitter. The Inverse Cramer ETF attracted attention following Meta Platforms' Q3 2022 earnings shortfall and Cramer's subsequent apology—an event some interpreted as a bullish indicator for Meta shares.

Personal life

From 1988 until 2009, Cramer was married to Karen Backfisch, a former stock trader; together they have two children. In 2015, he wed Lisa Cadette Detwiler, who works as a real estate agent and manages a restaurant in Brooklyn. He currently lives in Summit, New Jersey, where he owns an expansive property, and also maintains a summer residence in Quogue, New York.

Cramer has been candid about his struggles with anger and related workplace conduct issues. In 2009, he made an investment in the DeBary Inn located in Summit and holds co-ownership of Bar San Miguel, a Mexican dining establishment in Brooklyn.

In 2009, he was listed among roughly 200 contenders for the Time 100 recognition. As an enthusiastic supporter of the Philadelphia Eagles, he promotes economic development in Philadelphia by advocating for enhanced transportation connections with New York City.

Bibliography

Confessions of a Street Addict (2002)
You Got Screwed! Why Wall Street Tanked and How You Can Prosper (2002)
Jim Cramer's Real Money: Sane Investing in an Insane World (2005)
Jim Cramer's Mad Money: Watch TV, Get Rich (2006)
Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer) (2007)
Jim Cramer's Getting Back to Even (2009)
Jim Cramer's Get Rich Carefully (2013)

External links