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Worlds' Greatest Investors Part 6; Jim Cramer

We profile some of the greatest investors in the world. Their achievements have influenced and inspired many. In Part 6, we feature Jim Cramer.

 

 

Jim-Cramer

 

1. Who Is He?

James Cramer called Jim, was born on 10 February 1955. He is a popular American television personality, former hedge fund manager and best selling author. Jim is the host of CNBC's Mad Money and co-founder of a brokerage firm called 'The Street'. He is a regular contributor to New York and Time magazines.

 

2. Background and Career

Jim was born into a Jewish family in Philadelphia. His first job was selling ice cream at Veterans Stadium during Philadelphia Phillies games. Cramer went to Springfield Township High School in Montgomery County. He graduated cum laude from Harvard College in 1977 where he was also president of the Harvard Crimson. At this point in his life, Cramer was a unwavering leftist with a plan to revitalise the Crimson after Lenin's 'What is to be Done?'. Today, a large painting of Lenin, the Bolshevik leader, can be seen in the background of the set of his show 'Mad Money'. In 1983, while bound to a bed with the mumps for 3 months, he took an even greater interest in the stock market since all he could do was read the papers.

 

3. Jim the Journalist

After college, following a 2 month tenure as the key operator at Congressional Quarterly, he worked as a journalist at the Tallahassee Democrat in Tallahassee, Florida. Living almost next door to Florida State University, he was one of the first on the scene after serial killer Ted Bundy attacked 4 women in 1978. After Tallahassee, he worked at the Los Angeles Herald Examiner as a spot news reporter covering violence in California. Whilst covering a shooting in San Diego for the Examiner, a burglar cleaned out his Los Angeles apartment and bank account. For the next 9 months, he lived mostly out of his car with a gun for protection.

 

4. Jim the Lawyer

Following this experience, Jim moved in with his sister in Greenwich Village. She was studying to be a lawyer and encouraged Jim to become a prosecutor. Jim was one of the first reporters at American Lawyer magazine, where he worked for founder Steven Brill. He later earned a Juris Doctor degree from Harvard Law School. While at Harvard, Jim worked as a research assistant with Alan Dershowitz. After graduating in 1984, Jim’s plans to become a prosecutor ended when he was denied employment with the Office of the United States Attorney for the Southern District of New York, headed by Rudy Giuliani. His law school grades were deemed not good enough. Jim was admitted to the New York State Bar in 1985.

 

5. Jim the Investor

He obtained employment in 1984 as a stock broker for Goldman Sachs. Success in this position led him to fund his own hedge fund, Cramer & Co. in 1987. The fund operated out of the offices of hedge fund pioneer Michael Steinhard. Early investors included Eliot Spitzer, a Harvard classmate and one of his oldest friends, Steven Brill and Martin Peretz. A year later, Cramer married Karen Olufsen, a trader with Steinhardt's firm. Cramer has been a contributor to New York magazine since 2000. He retired from his hedge fund in 2001.

It was taken over by his former partner Jeff Berkowitz. In 1996 Cramer co-founded The Street with The New Republic editor Martin Peretz, one of his hedge fund's original clients. Cramer later had a fall out with Peretz over business matters. Cramer is currently a market commentator and adviser to the The Street. He manages a charitable trust stock portfolio through a subscription service. Cramer currently works on new projects in an effort to bring stock trading awareness to people.

 

6. Jim the Celebrity

Cramer has his own television show on CNBC called 'Mad Money with Jim Cramer'. It features his opinions on stocks queried by callers. Mad Money is well known for over the top antics; he throws chairs, or his latest book whenever a caller mentions it, funny sound effects and for the catch phrase 'Booyah'. Cramer often takes the show on the road to various U.S. colleges. After being a commentator on CNBC in the 1990s, Cramer co-hosted CNBC shows 'America Now' and 'Kudlow & Cramer' with Lawrence Kudlow in 2000.

Kudlow and Cramer split when Kudlow called Cramer 'sweet potato bull macho' on the air in October 2002. Cramer hosted a 1 hour radio show 'Jim Cramer's Real Money' until December 2006 which was similar to his Mad Money TV show. Cramer's past at his fund was volatile. There is footage of his violent temper while at the fund. Nobody knows what finally led him to come to his senses and eventually calm down.

 

7. Jim’s Controversies

In 2002, Nicholas Maier, a former trader at Cramer's hedge fund, released the book, 'Trading With The Enemy' about his time at Cramer, Berkowitz & Co. In the book, Maier alleged that Cramer and the hedge fund engaged in illegal trading practices. Maier also stated that Cramer was the subject of an SEC investigation. Cramer denied the allegations and threatened to sue the publisher. The publisher of the book destroyed 4000 copies of the original release and re-released it after editing out 4 pages.

In February 2006, an SEC investigation into allegations of collusion between short-sellers and a stock research firm led to the serving of subpoenas to Cramer, as well as journalists for Dow Jones. Cramer disclosed the subpoena on his Mad Money television show, holding it up to the camera with the word 'Bull' handwritten on it. Cramer refused to comply with the SEC's demands for communications between journalists and their sources. Soon after, the SEC stated it would not enforce the subpoena and the investigation of the stock research firm was dropped a year later.

 

8. Market Manipulation

In December 2006 an interview with Jim stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures". He also encouraged hedge funds to engage in this type of activity because it is 'a very quick way to make money'.

Cramer claimed that everything he did was legal but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumours to drive a stock down. Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters. "You have to use these guys" said Cramer.

 

 

 

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