Monday, October 24, 2005


This week's cover story in BusinessWeek. Great article by Roben Farzad. I read about Jim Cramer's background before, but this one was a bit more entertaining. I sometimes watched him on Kudlow & Kramer, and recently started watching him on his new show, Mad Money. Definitely a character and someone worth listening to.

Cramer has been there and done that. He paid his dues in the '80s as a Goldman, Sachs & Co. (GS ) broker, followed by 14 years at Cramer Berkowitz, his $450 million hedge fund, where he earned an average return of 24% a year after fees. There, he had enough mega-paydays to kiss the Street hustle goodbye forever. With a net worth he says is between $50 million and $100 million, you might think Cramer would be out bronzing in St. Barts with daiquiri in hand.

Instead, he rises at 3.45 a.m. weekdays. After scanning headlines online, checking messages, and shooting e-mails to his TV producer, he works out in his Summit (N.J.) home gym until 5.30 a.m., when he calls traders and brokers and writes his first online story. Later, Cramer carpools his younger daughter, Emma, to school, before setting off on the 75-minute trek to Wall Street. By the time his workday is over, usually around 7 p.m., his driver will have logged 120 miles, Cramer will have banged out six Web columns, done a radio show, and scoured his larynx taping Mad Money, his surreal nightly call-in show on CNBC that is perhaps best described as Louis Rukeyser meets televangelism meets Pee-wee's Playhouse. At some point, he'll work on his monthly column for New York magazine. "I'm hard-core about the market," he says, his bobble-head emerging from a wall of flickering screens.

At one level, none of this makes much sense. With the market trading sideways and in danger of posting its fourth losing year since 2000 -- and real estate still the cocktail party topic of choice -- stockpicking is not exactly a growth industry. (Cramer trades stocks for a charitable trust; he no longer owns any stocks personally, other than his 15.4% stake in, which he co-founded, worth about $15 million.)

Why, then, is Cramer so in-your-face? In the aftermath of New York Attorney General Eliot Spitzer's attacks on Wall Street research, analysts hide behind weaselly ratings such as "In-Line" and "Equal Weight," and scores of stocks are no longer covered. "The analysts," Cramer pronounces, taking a break from another drug-pump tantrum, "they are colorless and odorless and sanitized and fear Spitzer to the point of death." Even CNBC, he complains, is "terribly gun-shy about being anything but 'corporate crime watch' when people still need to make money."

Cramer senses a huge information vacuum. "You can't just be neutral on everything," he says. "Go see a shrink!" What he sees is a woefully underserved market for unabashed, aggressive stockpicking -- his kind -- that is laced with bombastic sound bites like "Back up the truck!" and "Get the paddles!" and lends itself to the showmanship that has made Mad Money a cult hit with 384,000 nightly viewers. No Warren Buffett, Cramer is a trading mercenary to the core. His rapid-fire in-and-out moves are raising chat room buzz to levels not seen since day traders reigned supreme during the bubble. All of which has turned CNBC's once-moribund 6 p.m. slot into one of its top-rated hours. "What's smart about Mad Money is it does away with the usual boring guests and lets Cramer vent in a way that is hard not to watch," says Washington Post media writer Howard Kurtz, who profiled Cramer in his book The Fortune Tellers. "It occupies some sort of netherworld between sheer entertainment and useful financial advice."
Already 13 hours into his workday, Cramer seems no less a workaholic than he was during his reign of terror at Cramer Berkowitz, where he frequently hurled water bottles at associates and smashed keyboards. He even told his partner, Jeff Berkowitz, that he had no business at his daughter's school play when Intel (INTC ) was about to report its results.

He takes a breather to talk about the impact of his obsessiveness on his family. After a catastrophic 1998 that nearly sank Cramer Berkowitz, the fund netted clients 47% in 1999 and 28% in 2000. "I was killing the market when everyone else was doing badly, and yet I was more miserable than ever," he says. His elder daughter didn't want to be around him, resenting him for being constantly leashed to his investors by phone. "All I did was say, 'Be quiet. Please leave Daddy alone. Daddy has to trade."'

In 2000, Cramer's wife, Karen, gave him an ultimatum: Slow down, or else. She had been a partner at his hedge fund. He still affectionately calls her his "trading goddess" for persuading him to sell out before the 1987 crash and buy into the October, 1998, panic. (She declined to comment for this story.)

The tipping point came just before Thanksgiving, 2000, on a trip to Las Vegas with his dad. After ignoring his dad to call in orders to his fund for hours, Cramer suddenly turned to him and said they were clear to go to dinner. His dad exploded: "'You're 46 years old, and this is what you're doing?"' Cramer recounts. "'You don't care about anything but the fund. How can you be so miserable?"'

Cramer says the incident forced him to rethink his life. Later, he cashed out of the fund, handing full control to Jeff Berkowitz. "Easy come, easy go," Cramer says, with a clap. These days, his daughter's morning carpool is his top priority. "I never miss," he says. "It's inviolate." On weekends, Cramer tends to his garden's beefsteak tomatoes and chili peppers and digs night crawlers for bass fishing at his country house.
(full article)

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