Jim Cramer yells, rants and raves. But off the air, he's changing his stripes
With just seconds to go before his top-rated cable TV show begins taping, Jim Cramer, the maniacal host of CNBC's Mad Money, and his crew frantically search for the perfect prop to drive home his first stock pick of the day.
"Yes!" he finally shouts as an assistant hands him an electric screwdriver, and Cramer feigns the crazed dentist of Marathon Man.
"Let's roll!" shouts the producer.
Heavy-metal guitar blasts through the studio as the 52-year-old former hedge fund manager hunches over his laptop, taking a last sip of hot tea as he psyches himself up for a daily rant that-between throwing books, swinging baseball bats, and slamming fists on a panel full of campy sound-effects buttons-will melt a pound or more off his sweaty, 173-pound frame and knock a decibel or more off his already creaky voice.
"Pull this one out of the closet!! It's been left for dead! But I think it could make you some MAD MONEY!!!" he yells into the camera as a four-paragraph-long disclaimer warning of the perils of following his advice scrolls down the TV screen.
"Hey! I'm Cramer! Welcome to Cramerica!" he jabbers. "Other people want to make friends! I'm sure you and I both know that's a poor use of my time. I just want to make you money!"
It's a conceit, of course. Over the next hour, the stock trader turned TV star will attempt to do both: proffering the fruits of his stock-picking prowess to help his 350,000 or so daily viewers better invest their cash, while at the same time endearing himself with a blathering, stream-of-consciousness, WWE SmackDown-meets-Dr. Phil-meets-John Madden routine so daffy that it's sometimes hard to tell where insight ends and madness begins.
In truth, it's a bit of both. With a Harvard education, a Goldman Sachs pedigree, and upwards of $100 million in hard-earned net worth to prove it, Cramer's financial genius has not only helped make Mad Money the most-watched show on CNBC but also ensured that his is among the most influential voices on Wall Street today. Yet like the markets he obsesses over, that voice regularly swings between manic enthusiasm and utter pessimism, an admittedly bipolar state of affairs that has occasionally wreaked havoc on his mental health and sent him in search of a life that better balances work and family.
In the swim. Since walking away from his $450 million hedge fund six years ago, Cramer has dropped 30 pounds, works out every day, and now trades only on behalf of a charitable trust he created. He recently stopped throwing chairs on the Mad Money set (after his trainer told him he was hurting his back), pulled out of his syndicated radio show, Real Money, and now all but reserves his evenings and weekends for his two daughters, whom he shuttles to swim practices and soccer matches. He even asked his producer to swap out a recent taping for a prerecorded version so he could escort the girls to a concert.
"I used to think, 'Ugh, I've got to take them to this damned concert,'" he says. "Now I feel like, 'What an opportunity! Don't mess it up!'"
Friends say they notice a difference, too. "One might not know it from watching his show, but Jim is better at being in balance," says journalist Kurt Andersen, a college friend. "You have dinner out with him, and he's not throwing things."
Jokes aside, Cramer still starts his workday at 4 a.m. and admits he continues to struggle with workaholism that pushes him to author as many as five stories a day for his financial website, TheStreet.com, and spend as many as 12 hours preparing each of the more than 250 Mad Money episodes he's committed to yearly, not to mention the long list of charity auctions, book tours, and TV appearances he's asked to do.
"I have a difficult personal life," he says, alluding to his separation from his wife after 19 years of marriage. "I spend too much time at work, and I let people down."
He jokes on Mad Money that he unwinds by sitting on the kitchen floor and drinking bad scotch. In truth, he says he doesn't drink at all and instead uses the antidepressant Lamictal, which he began taking after a test suggested that his manic, sometimes violent mood swings may be linked to bipolar depression.
"It's something that cuts off the highs," he recently told radio host Don Imus of the drug. "Candidly, my mind races, and I need to slow it down. I needed to go 65 [miles per hour] and not 90."
Cramer's impatience dates back to the fourth grade, when he began skipping over the comics in his Philadelphia newspaper in favor of the stock tables. He became so addicted to following his fantasy portfolio that he begged his father to stay late at work so he would come home with the final edition of the afternoon paper that had the closing stock market prices.
"How else could I measure how right I was about my predictions?" he writes in his memoir, Confessions of a Street Addict, which details his subsequent turns as college newspaper editor, police beat reporter, and reluctant Harvard law school student.
He never lost his fascination, though, with the stock market. While law schoolmates crammed for exams, Cramer kept his eyes glued to the Financial News Network ticker on his dorm room TV. He penned a newsletter called Mr. Bullish and left stock tips on the telephone answering machine.
Usually spot on, his missives soon caught the ear of Martin Peretz, a wealthy Harvard professor and editor of the New Republic magazine, who was so taken with Cramer's stock-picking that he handed the then 26-year-old law student a $500,000 check to invest on his behalf. "There was just something so contagious about his enthusiasm," Peretz recalls. "It wasn't just stocks, but politics, movies, books ... he had something to say about everything."
Peretz later helped bankroll Cramer's hedge fund, along with a cadre of soon-to-be-powerful backers, including future New York Gov. Eliot Spitzer (a Harvard classmate) and publisher Steven Brill, who had once hired Cramer as a reporter for American Lawyer.
"You just knew he was going to outrun them all," Brill recalls. "If there was a bad snowstorm, he'd tell you McDonald's stock was going to go down because it would ruin the potato crop and increase the cost of making their french fries."
Cramer's exploits over the next 14 years are as notorious as they are legendary. Flanked by his wife, Karen, a fellow trader whom he came to call his "Trading Goddess" for insisting that he liquidate his positions right before the market crashed in 1987, he barked out orders to underlings and subjected those who failed to follow through to boot-camp-style humiliations. He hurled office chairs and water bottles, smashed computer monitors, and slapped Post-it notes emblazoned with stock symbols on the foreheads of those who made stupid trades.
Going online. They nonetheless helped him rack up an impressive 24 percent average annual return that netted him tens of millions a year. All the while, he kept his hand in journalism, writing personal finance columns and teaming with Peretz to launch TheStreet.com, one of the first online publications to track the stock market.
Yet his personal life was beginning to spin out of control. Between stock market gyrations and the turmoil of launching TheStreet.com, he was a frequent no-show at family events and says he once dragged his girls away from a vacation in the Florida Keys so he could make a three-minute TV appearance on Good Morning America.
"Oh, God, shoot me for that," he now says of the incident.
Determined to make it up to his family, he went cold turkey in 2000, quitting his hedge fund and signing up to coach his daughter's soccer team.
"You aren't going to sit on that couch in the living room and watch the CNBC ticker all day, are you?" his autobiography recalls his wife asking when he told her he'd quit.
"Nope," he responded. "I am done trading."
Maybe so. But Cramer continues not only to eyeball the ticker but to move it as well. The "Cramer effect," as it's known, can lift a stock's shares 15 percent or more in the days following his "buy" calls. His daily picks-often a dozen or more suggested both in scripted segments and in a 10-minute "Lightning Round" that answers viewers' calls on the fly-receive close scrutiny.
Take his recent "buy" recommendation on Syneron Medical, maker of a new line of dental laser drills. His sleeves rolled up to his elbows as the Steadicam operator pulls in for a close-up, Cramer mugs a teeth-gnashing grimace, then grabs his electric drill and drives the bit into the mouth of a balding bobblehead doll made in his image.
"Symbol E! L! O! S!" he calls out like a cheerleader. "EEEEEELOS!"
"Oh, we liked it once. We actually HIT IT OUT OF THE PARK!" he yells, grabbing a baseball bat and beheading the doll with one swing. "And now I think it's time to nail ELOS again!"
Over the next 10 minutes he lays out the case for why Syneron's dental lasers are the next big thing. And sure enough, by the end of the next day, the company's share price has risen more than 17 percent on unusually high volume-despite no news other than Cramer's pick.
Surprisingly, such reactions cause him fits. "It shows that people aren't doing their homework," he complains of viewers who blindly follow his advice.
Monkeyshines? Critics say that those who do may be in for a letdown. "The truth is that a monkey does just as well," says Kevin Michaels, cofounder of cramerwatch.org, a site that tracks Cramer's stock picks and pans for 30 days, putting them up against Leonard the Wonder Monkey, an imaginary chimp who makes the same calls by flipping a coin. Over the longer run, however, Cramer says his picks fare better, racking up a 17 percent gain in 2006, versus about 16 percent for the S&P 500.
Yet others note that Cramer's in-and-out trading strategy can yield lower returns than if one simply bought and held the same stocks. "Of course, if he just told people to buy and hold, then the show would be boring," says Motley Fool commentator Rick Munarriz. "His capacity to entertain and educate is amazing, but I'd like to see him do a little more of the latter."
In fact, since Mad Money first aired in spring 2005, Cramer has increasingly stepped up his rhetoric against anyone foolish enough to take his buy and sell calls at face value. He has even written a stern warning in his new book: "In the first day after I tell you to buy a stock, and you like that stock, you are absolutely forbidden to buy it." Jim Cramer's Mad Money: Watch TV, Get Rich lays out a five-step plan for doing the required research. "Owning stocks isn't all booyahs and excitement, but trust me, if you do the homework right, you'll be plenty happy."
Now, if only Cramer could find a little more happiness, too.
This story appears in the February 26, 2007 print edition of U.S. News & World Report.