Not everyone likes their coffee so strong, though. Sure, Cramer has his fans. Magazine writers have fawned over him, even touting his “irrepressible brilliance.” Many investors hang on his every word, not only about investments, but also his musical tastes (Coltrane, Marley, Beethoven). Few figures in business, though, have drawn so much fire, so steadily, as Cramer. Just last week, Barron’s called him “a threat to objective journalism.” In a 6 a.m. interview last week at his Wall Street office, Cramer, who dishes out criticism pretty well himself, said the pounding is getting to him. He’s simply trying to make people better informed about their finances and savvier about the market, he says. “There is a kind of bizarre disconnect between how much I’m disliked and what I’m trying to do.”
Perhaps not so bizarre, though. Cramer, 44, is criticized in part because he wears so many hats–journalist, hedge-fund manager, founder of an Internet company about to go public. Those roles create at least the possibility of conflict of interest, though Cramer wallpapers his comments with disclaimers and disclosures about his holdings, based on guidance from market regulators. Because articles in high-profile media can affect share prices, most journalists aren’t allowed to write about stocks they hold. “He’s having his cake and eating it, too, both in terms of being a journalist and financier,” says Michael Kinsley, the editor of Slate who’s a longtime friend of Cramer’s, as well as a small investor in his fund. Cramer’s critics “feel he’s sort of getting away with it in all sorts of ways,” he adds. Cramer argues that his frontline experiences in the market provide readers with insights they don’t get elsewhere. (In his hedge fund, he manages $265 million, makes about 80 trades a day and says he knows 500 stocks well enough to trade.)
But even that doesn’t quite explain Cramer’s outsize profile. He is perhaps the quintessential figure of today’s market, both a creature of and a prime mover in the democratization of investing. Popular fascination with markets has made Cramer a star, and he feeds that fascination by helping give individual investors the kind of information that used to be husbanded by professionals. And his boundary-blurring work is perfect for the Internet, where opinion, rumor, analysis and traditional news are all separated from each other by just a mouse-click. He has often clung to the label of journalist, but his work clearly does not reflect the objectivity the label often implies. Readers follow his advice at their peril–as Cramer himself warns. He appears to change his opinions so much that Dave Kansas, editor in chief of TheStreet.com, has posted a guide at the site to reading Cramer. “It’s great to hear what he has to say, but don’t read something on Thursday and expect to hear the same song on Friday,” it says, for example. “In these moments, where he offers a clear view into the trader’s skull, enjoy the sights, but don’t bank on the duration of the view.”
Such cautions do nothing to inhibit Cramer’s growing celebrity. Fans ask him when he is going to appear in movies, and he is often asked during his online chats how he got started. It is a story appropriately told with ticker-tape brevity. At Harvard in the mid-’70s, Cramer ran the Crimson newspaper, and forged ties with students who would go on to be top journalists (including a few editors at NEWSWEEK). He reported for a while, then returned to Harvard in 1981 for law school. Martin Peretz, who owned The New Republic, tried contacting him to write a book review. He kept getting his answering-machine message, which included stock tips. Peretz followed the advice, which paid off so handsomely that he gave Cramer $500,000 to invest. Cramer eventually started his own fund, which boasts an impressive track record (its 2 percent return last year was a rare sub-par performance).
Cramer attracted national attention in 1995, though, after he wrote a column for Smart Money magazine that discussed stocks he held stakes in. The magazine left out its standard disclosure, and Cramer was attacked in the media for trying to inflate his holdings’ value. The SEC investigated, eventually determining he had done nothing wrong. In 1996 he and Peretz invested $1.5 million each to launch TheStreet.com. He created more fireworks last December on CNBC after he discussed a company called WavePhore and whether people were shorting it–betting its shares would fall. The company howled. Cramer said he was simply trying to explain how the market works. After his hedge fund performed poorly last year, he decided he had spread himself too thin, and now rejects all requests for extracurricular writing and appearances. Even with the grim schedule he keeps (he’s at work by 5 a.m.), this is a relatively quiet period in Cramer’s life. He has a little more time to spend with his two children and his wife, a former stock-picker whom Cramer refers to in his writings as the “Trading Goddess” because of her sharp market instincts and disciplined, unemotional approach to trading. In coming years, he wants to spend more time with them, and devote some of his famous energy to helping charities.
Even with his current, lower profile, though, the scrutiny continues, especially now that TheStreet.com is planning to go public in April or May. Like a lot of Internet companies, TheStreet.com is losing money–$16.3 million last year on revenues of $4.6 million. Its top five advertisers accounted for two thirds of its ad revenue last year (which in turn made up 55 percent of its total revenue; its 37,000 subscribers contributed 36 percent). From TheStreet.com, Cramer gets $250,000 in annual salary, which increases yearly by 10 percent through 2003. He received options for 333,333 shares at an exercise price of $3. He previously received options on 66,667 shares at 3.3 cents. In all, Cramer owns about 2.7 million shares. Some back-of-the-envelope math suggests the company may go public for about $12 a share, valuing his holdings at more than $30 million. But with dot-com in its name–the surname of choice for investors these days–many experts are predicting this IPO will quickly soar.
Cramer can’t comment on the initial public offering because of strict SEC rules that silence a company’s principals before an IPO. But Cramer writes so much that he has left a long paper trail. During an online chat on Yahoo! a year ago, he wrote: “I would never bring something public until it was solidly profitable.” Then again, he’s also written that he is neither a trader nor an investor. Rather, he says, “I am an opportunist.” If that strikes you as a little dry for Cramer, try this one from the man himself: “I am as emotional as a truckload of TNT driving through an old jungle tote road.” Need some milk for that coffee?
