Jim Cramer: Education, Career, and Influence on Financial Media

James J. Cramer, born on February 10, 1955, is a prominent American television personality, author, and former hedge fund manager. He is best known as the host of "Mad Money" on CNBC and as an anchor on "Squawk on the Street." Cramer's career spans journalism, finance, and television, marked by both significant achievements and notable controversies.

Early Life and Education

Cramer was born in Wyndmoor, Pennsylvania, a suburb of Philadelphia, to Jewish parents. His mother, Louise A. Cramer, was an artist, and his father, N. Cramer's academic journey began at Harvard College, where he graduated magna cum laude in 1977 with a Bachelor of Arts in government. During his time at Harvard, he served as the President and Editor-in-Chief of The Harvard Crimson, the university's prestigious daily newspaper. He was also a National Merit Scholar.

Early Career in Journalism

After graduating from Harvard College, Cramer started his career as an entry-level reporter, earning $15,000 per year. Beginning March 1, 1978, Cramer worked for the Tallahassee Democrat in Tallahassee, Florida, where he was one of the first reporters to cover the Ted Bundy murders, as he lived only a few blocks away from the crime scenes. Richard Oppel, then-executive editor, noted that "[Cramer] was like a driving ram. He was great at getting the story." He later worked for the Los Angeles Herald-Examiner, writing obituaries.

Harvard Law School and a Budding Interest in Stocks

In 1981, Cramer enrolled in Harvard Law School, where he rediscovered his interest in the stock market. He became fascinated with the emerging 24-hour cable television business news channels and sought to try his hand at investment counseling. While at Harvard, alumnus Michael Kinsley introduced him to Martin Peretz, the owner of The New Republic, who contacted Cramer to write a book review. Peretz, after profiting from Cramer's stock picks he heard on Cramer's answering machine, gave Cramer $500,000 to invest. In two years, Cramer made $150,000 for Peretz. During his years at Harvard Law School, Cramer worked as a research assistant for Alan Dershowitz.

Cramer financed his law school tuition through his stock market investments. In 1984, he received a Juris Doctor degree from Harvard Law School. He was admitted to the New York State Bar in 1985 but did not practice law.

Goldman Sachs and the Launch of a Hedge Fund

After earning his law degree, Cramer joined the investment bank Goldman Sachs in 1984. In 1987, he left Goldman Sachs to start his hedge fund, Cramer & Co. (later Cramer, Berkowitz & Co.). The fund operated out of the offices of Michael Steinhardt. Early investors included friend and classmate Eliot Spitzer, Steve Brill, and Martin Peretz. Cramer claims to have sold all of his stocks on the Friday before Black Monday (1987). From 1988 to 2000, Cramer claims to have had only one year of negative returns - 1998, a year when the S&P 500 Index rose 29%. The underperformance in 1998 led to significant investor withdrawals. In 1999, the fund returned 47%, and in 2000, it returned 28%, beating the S&P 500 Index by 38 percentage points. As manager of his hedge fund, Cramer claims to have realized a "rate of return of 24% after all fees for 15 years" until he retired from the hedge fund in 2001.

Transition to Media: TheStreet.com and "Mad Money"

In 1996, Cramer co-founded TheStreet.com, a financial news and literacy website. He wrote for the site from 1996 to 2021. In 2019, Cramer and Peretz sold TheStreet.com for about $16.5 million.

In 2000, Cramer left the hedge fund, which regularly earned him more than $10 million annually, and the following year, he began hosting a syndicated radio show, "Jim Cramer’s RealMoney". "Mad Money," his CNBC show, debuted in 2005. The program featured market analysis, stock advice, and interviews with business reporters. Cramer's energetic and unconventional style, which included roaming the TV studio with his shirtsleeves rolled up, yelling at the camera, and using props, quickly propelled him to fame.

"Mad Money" and Television Appearances

"Mad Money with Jim Cramer" first aired on CNBC in 2005. On November 13, 2005, Dan Rather interviewed Cramer on 60 Minutes. In 2005, Cramer appeared as himself in two episodes of Arrested Development. Cramer has also made appearances on Today, NBC Nightly News, Live with Regis and Kelly, Cheap Seats, Late Night with Conan O'Brien, The Tonight Show with Jay Leno, and Late Show with David Letterman, Jimmy Kimmel Live! In 2000, Cramer and TheStreet settled a lawsuit with Fox News Channel in which Fox had claimed Cramer had reneged on a deal to produce a show for Fox. During this period Cramer coined the legendary expression "Chicken T!ts Tartars" to refer to stocks that are about to take off like rockets.

Controversies and Criticisms

Cramer's career has been marked by several controversies and criticisms. In a December 2006 interview, Cramer described activities used by hedge fund managers to manipulate stock prices-some of debatable legality and others illegal. 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 at my hedge fund … Cramer stated that everything he did was legal, but that illegal activity is common in the hedge fund industry as well. He also stated that some hedge fund managers spread false rumors to drive a stock down: "What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction."

During the 2008 financial crisis, Cramer faced criticism for giving erroneous advice. On the March 11, 2008, episode of Cramer's show "Mad Money," a viewer submitted the question "Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?" Cramer responded "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear." On March 14, 2008, the stock lost more than half of its value on news of a Fed bailout and $2/share takeover by JPMorgan Chase. On March 17, 2008, Cramer stated his statements were made regarding the liquidity of accounts held at Bear Stearns as opposed to the stock. Cramer said he was not recommending the common stock but allaying concerns about the account holder's liquidity held in a Bear Stearns brokerage account.

In 2009, amid criticism of financial gurus for failing to warn the public about the impending economic recession, Cramer engaged in public disputes with figures like Jon Stewart, Paul Krugman, and Nouriel Roubini. On March 2, 2009, Cramer said that President Barack Obama was responsible for "the greatest wealth destruction I have seen by a president." In response, Press Secretary Robert Gibbs stated, "If you turn on a certain program, it's geared to a very small audience."

During a discussion about short-selling with Jon Stewart, Cramer stated his opposition to it and claimed that he had never engaged in it, which contradicted earlier statements in which he described going short while managing a hedge fund. Stewart played several video clips from 2006 where Cramer discussed the spreading of false rumors to drive down stock prices and encouraged short-selling by hedge funds as a means to generate returns.

In September 2020, Cramer addressed House Speaker Nancy Pelosi as “Crazy Nancy” during a TV interview, then sent several tweets in which he defended his actions before apologizing for using the phrase, which is also employed frequently by President Donald Trump.

Performance of "Action Alerts PLUS"

Cramer claims that, between 2002 and May 2009, the performance of his "Action Alerts PLUS" charitable trust outpaced the S&P 500 Index and the Russell 2000 Index. The charitable trust realized a return of 31.75%, the S&P 500 had a return of 18.75% and the Russell 2000 had a return of 22.51%. On an annual basis, the trust outperformed the S&P 500 by 7.35% and the Russell 2000 Index by 3.33%.

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However, Paul Bolster said that Cramer beats the market in part because of the excess risk in his picks. "If we adjust for his market risk, we come up with an excess return that is essentially zero", Bolster said, adding that "zero", in this case, means his returns are roughly in line with the risk he's taking on. Another criticism of Actions Alerts Plus is that it does not compare itself to indexes that include dividend reinvestment (as the SEC requires for stock-oriented mutual funds). A study done by Wharton researchers Jonathan Hartley and Matthew Olson found that in the timeframe of August 2001 to March 2016, Cramer's charitable trust underperformed the S&P 500 primarily as a result of underexposure to market returns in years after the 2008 financial crisis.

Personal Life

From 1988 to 2009, Cramer was married to Karen Backfisch, with whom he had two children, Cecelia and Emma. In April 2015, he married Lisa Detwiler.

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