By James J. Cramer
At some point in the past few years, I became a polarizing figure. True, I’ve never led what you’d call a quiet life. You could say I was born to pick stocks. After a quick stint at Goldman Sachs in the mid-eighties, I struck it rich trading for myself and started my own hedge fund in 1987, which was an emotional roller-coaster. Then, in 1996, I started TheStreet.com, the financial news and commentary Website, to let regular people in on what Wall Street pros are thinking and doing. It tanked at the end of the dot-com bubble and now is doing pretty well again. I retired from my hedge fund at the end of 2000 and got a TV show, with my friend Larry Kudlow, called Kudlow & Cramer. It was a traditional sort of financial-news and stock-picking show, and it did all right. I’ve also written a column for this magazine for years. But in March 2005, things started to get crazy.
I’d decided I wanted to leave Kudlow & Cramer to do a different kind of show—one that still gave me a way to point people to great stocks but also allowed me to express my innate insanity, in all its glory, to everyone who might be interested. Over the objections of just about everyone at CNBC, Jeff Zucker green-lighted the idea after I made a direct appeal to him. Mad Money debuted that month. On the show, I say stupid things, yell “Booyah” with alarming frequency, and occasionally wear a diaper or jump into a pile of lettuce to illustrate the finer points of investing.
God knows why, but there seems to be a market for this kind of idiocy. In that first year, the ratings took off; the network put the show in not one, not two, but three time slots; I made the cover of Business Week; and less than a year later, I was improbably filling college halls with cheering student fans (for some reason, college kids are an especially eager audience for my show). But sometimes it feels like for every person who likes what I do, there are a dozen who hate me for it. Mad Money has spawned legions of haters, people who write about the show and my character in really negative, sometimes pretty nasty ways. These people accuse me of being a clown or an idiot. Usually, I agree with them. When people ask for my autograph, I instantly hate myself. Half the time I don’t believe I even deserve a television show, and the other half I spend believing that no one is more deserving of a show. Slap me and I’ll change my mind like Faye Dunaway in Chinatown. People also accuse me of being irresponsible or giving bad advice. I don’t agree with that. Some of them have even questioned my integrity recently. That I find absurd.
As a 52-year-old father of two, a suburbanite, and a guy whose only big interests are stocks and sports, I find it incredible that I could be popular at all, let alone controversial. It is a mystery to me that I am so loved and hated at the same time, although I’m pretty sure writing an entire story focused on myself, like I’m doing right now, can only push more people into the hate column. When I wrote my first book, Confessions of a Street Addict, a disgruntled former employee came out with his own book about me at roughly the same time. I can’t remember who, but one of the funniest reviewers asked why the heck there was even one book out about Jim Cramer, let alone two! I’m not usually one to go in for humility, but this is the kind of question I find myself asking a lot lately. Don’t get me wrong: I love doing my show and consider it a success, but compare the numbers with the rest of cable news and you can see that there aren’t really that many people watching. And yet it feels like there are as many stories written about me as there are about a guy like Bill O’Reilly, who is much more controversial than I am, talks about more important things, and has a much bigger audience. Maybe it just feels this way to me because so many of the stories written about me are negative (and I’m the one noticing), but it seems as if I get a disproportionate amount of media coverage.
No one with a television show who attacks people and companies as relentlessly as I do has any right to complain about this, but don’t you think the whole thing is a little strange? Why do people care so much about this Cramer bozo? Why do so many people seem to enjoy watching me act like a lunatic on television, and what the heck are so many young people doing watching a 52-year-old man talk about stocks? I’m not cool or charismatic, but those auditoriums full of college students all chant “Booyah” and scream when I make my big entrance. This cannot be just because I make people money, or because I talk about Shakira on the show sometimes. Something bigger is going on.
I got incredibly lucky with the timing of Mad Money. When we rolled out the show a little more than two years ago, I was perfectly poised to ride two big trends that really have nothing to do with each other but that I had the good fortune to mash together. One of these trends is entirely cultural, and the other is all about making money, and if not for both of them, I would be either a well-regarded nobody or a much more loathed, much less successful somebody. Am I saying that we can look at Mad Money and, like some old-fashioned psychoanalyst, reveal deep-seated truths about the American psyche? I’m not that crazy, although that is the kind of hyperbole that often gets me into trouble. There are reasons for the show’s success, and those reasons reveal something about the people who watch.
From the money side, which may be the more important one, I’m catching a wave that has been building for a long time. In the nineties, people learned the stock market was a game that could make them rich, and they loved it because the pursuit of wealth is our true national pastime. Then in the new millennium, ordinary investors discovered, much to their chagrin, that the game was rigged and stocks became almost as despised as the crooked analysts who peddled dishonest advice to serve the interests of their investment-banking customers. Today, people recognize that Eliot Spitzer & Co. did everything humanly possible to level the playing field, and they want to play the game again, albeit with a good deal more skepticism.
The problem, the one facing virtually every individual investor, is that regular people got crushed back in 2000 not because the game was rigged but because only the professionals knew the rules. The rules are the simple things no one ever bothers to explain when they pontificate about the strength of a company’s fundamentals or the quality of its earnings: Why does any of this matter at all? Why do stocks go up and down? What is the right way to invest? Granted, people got hurt by dishonest research and dishonest accountants, but what hurt more was their ignorance. Ignorance of basic investing principles like diversification, and ignorance of what I like to call the mechanics of the market. Without this information, everyone is doomed to lose the game yet again, but with it, they can win.
You would think something so basic as the rules of the game would come through in most business journalism, but thinking that would be a mistake. Most commentators assume their audience already knows the rules or the commentators themselves don’t have a clue. This is where I come in. Everyone wants back into the game, but they can win only if someone explains the rules, and that someone is me. Am I the best possible messenger for this? I doubt it, but I do the job well. Ultimately, it comes down to this: How many successful money managers would want to switch careers and take a huge pay cut in order to be on TV? I can think of only one who’s that out of his mind, and he’s writing this story. No one is trying to compete with me in this space, and that as much as anything has made Mad Money successful.
At this moment, stocks are back in as the vehicles for our collective avarice, but most investors still need a driving instructor, someone who can explain in plain English why the market works the way it does, someone who comes from the inside to enlighten all the regular people who want to come back to the table and play the game to win. That’s what I bring to the party.
Between my hedge fund, TheStreet.com, and my TV and magazine gigs, I’ve been managing large pools of money and explaining the way the market really works for more than twenty years. I left the hedge-fund business because I’ve already made my money. A guy who got rich picking stocks, who is now picking stocks for you simply because he likes being on TV, likes the thrill of making other people rich, and is so painfully insecure that he’s terrified he’ll be canceled if he fails is a lot more lucrative to listen to than your average run-of-the-mill stock-picker. I’m a loudmouthed, co*cky, obnoxious idiot with far too many other character flaws to list here, but my audience is smart. They understand that.
They also know that unlike many stock-pickers, I don’t stand to profit from my advice. I retired from my hedge fund, and my contract with CNBC prevents me from owning any stock other than TheStreet.com. I run a charitable trust, but that trust has heavy trading restrictions that make it impossible for me to use any media platform to jack up its performance. Even if these restrictions were lifted, I still wouldn’t be able to profit from the trust because the profits go to charity. When most guys who run money come on TV, the logical assumption is that they want to pump the stocks they own, but I own nothing. The only self-interest lurking in my stock recommendations is the desire to make myself look good by being correct. My desperate insecurity and outsize ego are your friends.
I’m not just saying this because I’m an arrogant jerk, but I’m also good at picking stocks. Even when I’m at the pinnacle of my self-hatred, I still acknowledge that I have a talent for finding the right stocks at the right times. What do I know that the other guys don’t? I know how the market really works.
It’s rigged, right? Actually, no. Not as much as it used to be, anyway. Back when I was getting started, I was always jealous of the guys in the business who played golf. On the links is where the CEOs used to leak how the quarter was going, or selectively give a nod to suggestions that the quarter was better than expected.
Spitzer and Enron changed that. Aided by tough new laws involving fair disclosure, regulators have really started to prosecute those who leak not just takeover bait but simple insight to some investors and not all of them. Now everyone gets their information at the same time. That’s a huge playing-field leveler, and it makes the market more honest, because the richest managers know no more than anyone who can access company presentations on the Web. Sure, at any given minute, there will still be some ne’er-do-well funds—usually underperforming funds with desperate managers—who try to profit from dangerous manipulations, but in the end, the big boys run too much money for any of this mini-manipulation to matter much. Those giants have too much money at stake to risk losing it by cheating. This is a relative statement, of course, but today, the market is less crooked and more open than at any time I can remember.
How does the market really work? The truth is, it’s a big fashion show. People mess up because they focus only on the merchandise, the stocks, and not on the audience, the buyers—all the big funds that do most of the transactions on any given day. In the press and in most of the Wall Street research departments, everything is about the companies, their earnings, their products, sometimes their management. I spend plenty of time talking about all of that, too, but always within the context of what the big institutional investors want, what styles they seem to prefer this season. I know how the big institutional money managers think because I was one of them and because I have been predicting their behavior and buying stocks accordingly, for almost as long as I’ve been a professional. The truth is that the people who control most of the money that moves the market tend to think the same way. They were all trained at the same funds or investment banks, they all know each other, they all gobble up the same conventional wisdom, and they all buy the same stocks. The way the market really works is the way these big-time investors operate. Stocks don’t naturally gravitate to a special level where they become “properly valued.” They go where the managers of the institutional funds send them. The market is a plutocracy, not a democracy. The big institutional money managers are the market. Keeping track of their ever-changing tastes is the key to success.
You can see how I anticipate the big institutions’ moves in some of my better picks. I made a company called Allegheny Technologies my stock of the year in 2006 because the company looked like exactly what the big institutional investors wanted that season. Allegheny Tech makes specialty metals, mainly stainless steel but also titanium. Titanium mattered because it was in short supply and high demand—it’s needed to replace old airplane engines made out of heavier and less durable metals to control rising fuel costs. And I knew Allegheny was best of breed because I’d helped take it public at Goldman and remembered that it was the most technologically advanced titanium producer. Put these two facts together, and you’ve got a guaranteed soon-to-be hot stock—the No. 1 name in its field poised to capitalize on a burgeoning and easily understood trend. When a set of perfect conditions comes together like that, you don’t have to be a genius to imagine how the guys at the big funds will behave. They’ll buy a stock like Allegheny so that when their investors call, they can say, “I like titanium. And we have the best titanium. We have Allegheny Tech!” In this case, I was right. The funds didn’t stop buying—they haven’t stopped to this day. I also get plenty wrong. Alas, in this game you’re only as good as your last pick, and even though most of my new stocks of the year for 2007 have outperformed the averages, one of them, the New York Stock Exchange, has so far been a huge disappointment, and I am pretty sure if it stays that way, I’ll be the bum of the month come the end of the year. Bring me the head of Alfredo Garcia Cramer again.
That brings to mind another humble observation I’ll make about myself. I’m fearless. Or out of my mind. One way or the other, I think people appreciate the fact that every night I go out and put my head right back on the chopping block by firmly coming out for or against a stock. A lot of commentators shy away from making definitive pronouncements because it’s inherently risky. They’re afraid of picking a stock and then being really, demonstrably wrong. When you pick stocks in the public eye, especially when you do it five days a week like I do, getting some of them wrong is not a risk, it’s a certainty. Being wrong occasionally is simply the price of ever being right. You just have to be tough or foolish enough to tolerate the public humiliation. Another thing I do that no one else does is admit my mistakes. Every Thursday, I reserve a segment of Mad Money for owning up to the stocks I get wrong and trying to learn from my errors. When I blow a call, I joke that such bad stock-picking drives me to sipping cheap blended Scotch on my dirty linoleum floor at home; but that’s plain false. It’s a parquet floor, and it’s expensive single-malt Lagavulin.
But if it was only about the money, I wouldn’t have the college kids chanting. If it was just the money, there would not be half a dozen people clamoring for my head every time I say something provocative. And that’s why I think I’m benefiting from a second trend, this one cultural. There is an interesting split in the media and entertainment in general that I am not the first to point out. Although I probably am the first in financial media, which is a key to my success. There’s a widespread hunger for authenticity, originality, and even surprise from the purveyors of traditional media. Prime-time entertainment shows, the news, politicians—all of them are more scripted and produced than ever before. Barely a word is spoken that hasn’t been poll-tested and focus-grouped before being released to the audience. I know, some revelation.
On the other hand, there’s YouTube, the altar of everything unprepared, unpolished, and off-guard. We get more out of listening to Alec Baldwin scold his daughter in a private voice-mail message (was I the only one who felt like he was in the right?) than we do from even the best television shows. Why? Not just because we are voyeurs (although we are), but because old-school media has left us starved for authenticity. The MTV generation is already having children. The YouTube generation is watching TV, and they have different values. Even though I have a television show, I see myself as being on their side.
On my show, I rant and rave and run around and sweat and scream. I say absurdly digressive things people couldn’t possibly expect me to say, about topics that have nothing to do with the actual subject of Mad Money: stocks. I break all the rules of TV journalism because I break the cardinal rule: I don’t take myself or the medium seriously. In fact, I think the medium is absurd, along with the conventions that rule it, which are unchanged from pre-Internet days and therefore hopelessly troglodyte. My audience, everyone’s audience for that matter, craves spontaneity, they crave madness, because the usual ordered packaging of old-media content has become stale. Because I essentially like attention and am constitutionally manic and basically have no shame, I’m willing to cross whatever lines need crossing, to go completely over the top. For some reason, I find myself alone in this. My audience skews young—about 28 years old, with about 40 percent being college kids. At least that’s who calls in. That’s not just because the young are as greedy as the rest of us. It’s also because they’re hungry for spectacles. These young people don’t want to be millionaires, they want to be billionaires and won’t waste their time in the seven-to-nine figures.
Forget Real World or Survivor—all these reality-TV shows go only part of the way because they’re so heavily produced. I have an hour-and-a-half tape delay. I say whatever pops into my head, and we keep it in the show even if it makes me look like an unsophisticated moron, a way too sophisticated know-it-all, or the worst: when I come off as a Marxist-Leninist, even though I’m a Trotskyite at heart (an easy mistake to make given my close resemblance to Lenin). On some level, the show is dedicated to the proposition that 98 percent of my education, or at least the parts my parents paid for, was not irrelevant, or at least the Western-civ stuff, along with that Shakespeare course, because it lets me confuse the bard with C.R. Bard, the medical-supplies company. Look at Mad Money in contrast to The Daily Show or The Colbert Report, two programs that ought to be able to sue for libel after being included in the same sentence with Mad Money. Jon Stewart and Stephen Colbert are both very smart, they’re both entertaining, and they both appeal to the kids. But at the end of the day, even they are heavily produced. On Mad Money, we cannot be produced because we are pretty much at the whim of whoever decides to phone in and ask me a question. And even the parts of the show I control are a lot more off the cuff than you would expect or even believe.
If I told you that the scripted parts of the show were the result of a day-long process of e-mailing back and forth with my 22-year-old nephew, who has yet to graduate from college (I am convinced he is still in school only to spite me) and may be crazier than I am (too soon to tell), would you credit that? It’s true, and it explains why the show is so quirky and unpredictable, not to mention schizophrenic, editorially unprofessional, and juvenile. I am convinced that some of the show’s best moments come out of the two of us competing to produce more and more surreal, ridiculous one-liners. If there’s one person who’s responsible for Mad Money’s success, or at least its resonance with young people, it’s my nephew, co-writer, and secret weapon, Cliff Mason. We’ve got a system worked out. I come up with the ideas and the serious content, then I write a preliminary story with as much smart and funny stuff as I have time and brains enough to dream up, and I e-mail it to Cliff. Then he e-mails me back with a revised story that ranges from having a handful of changes to being barely recognizable, then I make changes and tell Cliff to fix any problems or make clarifications, and we keep batting it back and forth like that until it’s done—usually four or five different cuts between 1:30 and 3:30 (the show starts taping at about 4:30 and airs at six), unless he has finals or a paper due. Our only crisis came when he overslept after three all-nighters and I had to do a subpar show devoid of King Henry IV, The Brothers Karamazov, or Fergie and Sir MixaLot references.
Even when I’m scripted, it’s totally unlike the polished, professional stuff you see everywhere else on TV, and that, along with the fact that I’m a proven moneymaker, if not one you can shake, is the appeal.
This style is also, I think, the main source of the hatred, disgust, scorn, and general antagonism that’s been heaped on me in the press since I started the show. It’s definitely the reason why so many people demanded I get the ax after a video I made back in December started getting a lot of play on YouTube in March. Live by the YouTube, die by the YouTube.
I was speaking on a Web-based episode of TheStreet.com’s Wall Street Confidential segment and trying to talk about a subtle, complex subject in a cartoonish and oversimplified way. Several months after I made the video, the big papers picked it up and claimed that popular but controversial TV talk-show host Jim Cramer had made remarks suggesting that he may have broken the law when he was a hedge-fund manager, and might be investigated by the Securities and Exchange Commission. Naturally, I assumed that everyone in the media was out to get me, in true Richard Nixon style, even though that was obviously not the case. All kinds of people were demanding the head of Jim Cramer, but it was because I invited them to come after me.
Never mind that I was talking about other people on this video, not myself. Never mind that I would never even consider doing anything illegal or unethical because I’m basically an uptight goody two-shoes. Never mind that I’m a Harvard-trained lawyer with a Harvard-trained lawyer as counsel, and that I—we—know the rules perfectly well. If you simplify a complex issue, talking about it in black and white with a dose of sarcasm and misplaced humor thrown in, people aren’t going to understand and you’re going to get in trouble. Lesson learned, and I won’t be repeating that mistake here or anywhere else.
That said, I do rub a lot of people, myself included, the wrong way. I’m loud and obnoxious. I cough, I choke, I sneeze. I sweat like a pig on-air. (But if you prick me, do I not bleed?) This kind of thing does not go over well in some circles. For every person who’s watching the show to see if I’ll have a stroke, a heart attack, an aneurysm, or the much more common mental breakdown, there are a dozen people who tune out.
Even I have trouble watching Mad Money sometimes. It’s made for an audience that’s younger than yours truly. The lightning round, in which I respond to viewers’ questions about random stocks in rapid succession, can be particularly hard to watch. To be honest, it’s also the most lightweight part of the show. Because I buy into this new-media stuff and want to be interactive, my viewers get to pick the stocks, which means on any given night there might not be anything worth hearing about in the whole lightning round. And since I want to get to as many people as reasonably possible, my analysis obviously isn’t going to be as in-depth in 30 seconds as it is in a minutes-long segment focusing on a single stock. I know that when I take a long time to prepare a story about a stock, I give much better advice than when I take phone calls off-the-cuff. That’s why I gave up on the chair-throwing, the old introduction to the lightning round, in order to make time for more phone calls (and to stop straining my back).
My viewers know the difference between the lightning round and the rest of the show. What really gets to me is this nasty impression so many of my critics have of the Mad Money audience: that they’re people who are too dumb to know the difference between a prepared story and an answer to a question. I’m a loudmouthed, obnoxious idiot with too many faults to list, but my viewers are great. They’re incredibly smart, probably a lot smarter than some of the journalists who characterize them as mindless drones, doing whatever I tell them to do on the show.
In TV, there’s a really pervasive sense that the audience is stupid and should be treated accordingly. I don’t do that. It’s standard operating procedure on television to dumb things down for the audience because the last thing anyone wants to do is say something his viewers can’t understand (call it the Dennis Miller effect). While this may have been right ten years, or even five years ago, it’s not right anymore. I make dozens of comments in passing every show, and there is no way that even the best-educated guy in the world is going to know what I’m talking about all the time. But that’s okay because my audience isn’t just smart, it’s Google-smart. You hear something you don’t know about, and instead of feeling stupid, you go to a computer and look it up. Mad Money may be the first show to be made for the Google-literate. I believe people are smarter than most of the media expect, and I know that people can make themselves smarter. The old canard that I have always heard—pitch it to the trailer-trash people because that’s who watches—just isn’t true. They may live in them, but they are not trash, and they want to get rich like the rest of us.
This is all well and good, but it still doesn’t answer my big question: Why do people hate me? I listen to my critics, perhaps a little too much for my own health, and they generally fall into two groups. There are people who don’t like my style. They’re the ones who don’t like it when I wear the diaper or swim in the pool of lettuce. There’s no accounting for taste. That said, the people who don’t like my style are not the people I’m trying to reach. The guys who think that my shtick is obnoxious and impossible to watch are already well served by the conventional outlets for information and entertainment. My target audience probably has trouble sitting still through the evening news, and there’s no one out there, aside from Cramer, making the market interesting or compelling for this cohort.
Then there’s the second group of “Cramer-haters,” as I call them on the show. This group is supremely well intentioned, and for the most part right. They’re skeptical about my ability to make people money. It makes sense to be skeptical (although my most recent internal performance review found that the stocks I pick for the show beat the S&P 500 63 percent of the time). They warn individual investors not to immediately buy any stock I recommend and often caution that investing is hard work that takes patience and practice. I agree with these critics so strongly, in fact, that I make these points on Mad Money almost every night, telling my viewers to do their homework on my stock recommendations and wait at least a day or two before making any purchases to let the hubbub subside. I can’t blame most of these critics for not raptly watching the show every night before determining that I am just a tout doling out stock picks to the weak-minded and lazy. I too caution that investors should be skeptical about the advice they take, and if I heard about some screaming guy with a TV show telling people they ought to own this or that stock, I also would be pretty unwilling to give the madman a chance.
For the people who still can’t stand me, anything I do, or what I claim to stand for, I can offer only one thing. Despite the fact that wherever I go I get asked for my autograph, and if I stop for too long I end up getting my picture taken with a dozen strangers, I remain completely and utterly repulsive to myself.
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