In the Money, continued
It's a Monday in March, the day the NASDAQ slipped under 2,000 for the first time in almost two years. Jim Cramer '84 is filing one down-on-tech commentary after another for TheStreet.com, the investing site he launched in 1995 with former HLS lecturer Martin Peretz. He usually files six or seven columns a day on the investing how-to site, but this day, he'll post ten missives, most of them skewering investors and individual companies for placing far too much faith in the technology sector.
The famously bombastic former Wall Street trader--he gave it up in late 2000--had been criticized for being bearish on tech. But, as the NASDAQ withered and the business press called for his opinion, Cramer felt vindicated.
"I think tech is awful," he said. "People don't listen. Technology--the industry--is a growth industry. But tech stocks may be overvalued. I'm a huge bull in the stock market, but I can't be a bull in that sector."
Many people do listen to Cramer. He made millions for investors over the nearly 20 years he spent trading, first from his dorm at HLS and later from his own hedge fund, Cramer, Berkowitz & Co.
Cramer loves the stock market. And it has suited him well. His acumen for numbers is legendary; he can recall every trade he made in a day or even in a year. At HLS, he followed the market's every move from his room, and made enough from trading to cover tuition. He even recorded his weekly stock picks on his telephone answering machine and got his first investment client when Peretz--who made money from those picks--enlisted Cramer to manage his money for him. When Cramer tripled his earnings, the two formed a partnership that remains strong today.
Cramer says once he got the fever for the stock market, he couldn't see himself working as an attorney but worried that he might disappoint his family. He credits Dean Robert Clark '72, a professor at the time, with encouraging him to take his chances in the business world.
"I went to him and said, 'I really love the stock market and I have a chance to work at Goldman Sachs,' and he said, 'I think you should do it. Follow your heart.' I don't think I would have done it if he had said not to," Cramer recalled. "I met these unbelievable professors who just helped me a tremendous amount in making important decisions. I couldn't have made it without them. If I got that out of my tuition, I did pretty well."
Now 46, Cramer writes columns for TheStreet.com and New York magazine. His retirement from the hedge fund, he said, has been "a godsend."
"I love my new life," he said. "Now I just think. I'm having a great time."
Until last December, Cramer was widely known as the manic millionaire trader who routinely got to the office by 5 a.m. He'd read five newspapers before trading opened and spend the rest of the day in a frenzy of high-stakes buying and selling. "I was really good at it," he said. "Like a professional baseball player who had a really good batting average."
He also garnered more than his share of controversy by writing about the stock market while actively investing and trading. He's been accused of crossing the line into conflict of interest. But Cramer never pretended he wasn't an interested party and has always disclosed his own stake in anything he has reported.
Cramer says he made piles of money for himself and his clients. But it took a toll on his family life. "I lived and breathed it. But I still came to work every day nervous about how I'd do. It's one reason I wanted to give it up. It was just a very nerve-wracking job. I wanted more time with my family and for my writing. I didn't want that pressure anymore. I had made enough money."
The last straw, he says, came one day in November, when a trade didn't go well. "At the end of the day, I did a trade and lost $13,000 in a few minutes," he said. "I broke my terminal and my keyboards. I was just furious and throwing things, and my head trader and my partner said, 'You can't keep doing this.' My wife was saying it, my dad, my kids. Everybody wanted me out of the business except me. I was just making everybody's life miserable."
In his new life, Cramer is still addicted to the morning papers, but he does sleep more. He's at TheStreet.com offices by a healthy 7:15 a.m. and works out an hour a day. He has planned a rather leisurely summer. He manages nobody's money except his own in what he calls "very low-impact, long-term investing stuff."
Cramer is writing a book, expected in bookstores in September, called Confessions of The Street Addict about his Wall Street exploits and his experience running a dot-com and a hedge fund. Also in the works are a radio program called "Real Money Talk" and a regular commentary on CNBC. "I want to tell people how I made money in the market and try to keep them in the game," he said.
Through his columns and commentary, Cramer challenges investors to understand what is happening in the markets and take responsibility for their own outcomes. Regardless of whether people have the help of investment professionals, vigilance is necessary. "You should always worry about your own money," he said.
As the stock market dipped this winter, Cramer stayed bullish. "Stocks ran up because we felt that the Fed would come to our rescue. But the Fed didn't put us in these stocks that are bad. There are two stock markets--the NASDAQ, which people have way too much faith in, and the rest of the market, which, I think, people have way too little faith in. I believe the system will hold."
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