About Jim Cramer
Jim Cramer is an investor best known as the host of CNBC’s Mad Money television show, in which he offers stock picks and advice on trending companies.
Cramer got involved with stock investing at a young age – by some accounts, as early as elementary school. He continued to trade while attending college at Harvard University and then made enough from stock trading to pay his way through Harvard Law School in the early 1980s. During this time, Cramer left stock picks on his answering machine, and in doing so, attracted the attention of Martin Peretz, owner of The New Republic magazine. Peretz entrusted Cramer with half a million dollars, on which Cramer produced a roughly 30% return in two years.
Cramer joined Goldman Sachs as a stock broker in 1984 and then left to start his own hedge fund, Cramer & Co., three years later. He raised $450 million from investors such as Martin Peretz and Eliot Spitzer. His returns while running the hedge fund have been the subject of controversy, but Cramer claims that he only saw negative returns in 1998. According to Cramer, the fund generally beat the S&P 500 by double-digit percentages. Cramer retired from the hedge fund in 2001.
Throughout this period, Cramer served as an at-large editor for SmartMoney magazine and a frequent commentator on CNBC. He co-hosted Kudlow & Cramer on CNBC from 2002 to 2005, and launched Mad Money in 2005. Cramer also launched TheStreet.com with Martin Peretz in 1996 as a financial news and stock picking service. Mad Money and TheStreet.com continue today, although Cramer sold the website to TheMaven in 2019 for $16.5 million.
As of 2020, Jim Cramer’s net worth is estimated at $100 million.
Jim Cramer’s Investing Style
Jim Cramer invests in stocks over medium- to long-term timeframes, on the order of months to years. He generally looks for stocks that are undervalued or that can enjoy quick gains as the broader market makes a step higher.
In that sense, Cramer could be described as both a value and momentum investor. He looks for companies that lie at the intersection of these two properties, considering both fundamental aspects of well-known companies and current technical conditions for entry and exit. In addition, Cramer encourages investors to invest in a few positions that are highly researched and poised for long-term value regardless of short-term gyrations in the market.
Jim Cramer’s Key Investing Tips And Insights
On TheStreet.com, Cramer lists out his investing philosophy in 25 succinct bullet points. His tips and insights could be summarized as encouraging investors to be smartly aggressive.
Cramer encourages investors first and foremost to pick their battles. He believes in investing in best-of-breed companies and researching those companies highly to determine their fair value and potential for long-term growth. Moreover, he suggests that investors should have a few companies that they truly believe in to retreat back to when the market becomes volatile.
At the same time, Cramer does believe in a few conservative trading principles. He is an advocate for scaling in and out of positions and believes that it is better to wait and see than to sell during a panic. He also encourages investors to see value in cash, especially during times when there aren’t many undervalued companies in current market conditions.
Perhaps one of Cramer’s best tips for investors is that you should be able to explain your stock picks to another investor. Articulating why you believe a stock is undervalued and why its current price chart signals an entry point can force you to develop a more coherent argument and challenge some of your own assumptions.
Jim Cramer’s Key Holdings
Jim Cramer’s most public portfolio requires a subscription to Action Alerts Plus, a service from TheStreet.com. This portfolio is used as a fund for charitable donations, but gives some insight into Cramer’s current thoughts on the market. Many of the stocks in this portfolio are large-cap companies, including a number of tech behemoths.
Historically, one of Cramer’s most important trades concerned Bear Stearns in 2008. Several days before the investment firm’s collapse and subsequent bailout, Cramer listed Bear Stearns as a buy on TheStreet.com and publicly recommended the company on Mad Money.
Jim Cramer’s Controversies
Cramer has been an extremely controversial figure for many years, in large part, thanks to his own comments.
In one 2006 interview, for example, Cramer outlined a number of illegal techniques that hedge funds (such as the one he ran until 2001) could use to inflate or deflate the price of stocks. While Cramer made the point that he was above these practices, the admission that these illegal practices are commonly used by hedge funds did not help his public image.
Cramer’s historic stock picking performance is also debatable. His hedge fund returns have never been independently confirmed, and based on comments he made over the years, it is questionable whether his fund performed as well as he claimed during the late 1980s and through the dot-com bust. Cramer has also come under fire for claims that his charitable portfolio, which is available through Action Alerts Plus, has generally outperformed the stock market. A 2016 study found that the portfolio has slightly underperformed the S&P 500 for the period from 2001 to 2016.
It’s also noteworthy that TheStreet.com was investigated by the SEC for accounting fraud in 2012. However, Cramer himself was not implicated in these charges.
Jim Cramer’s Services
Jim Cramer continues to offer the Action Alerts Plus service through TheStreet.com. This subscription service gives investors access to Cramer’s charitable portfolio as well as offers online time with Cramer himself to ask questions. Cramer also continues to appear nightly on Mad Money on CNBC.
Conclusion
Jim Cramer is one of the best-known investors in the US in large part thanks to the fact that he has had a television slot on CNBC for nearly 20 years. While he has undeniably made a significant amount of money by trading stocks, the net returns from his hedge fund, charitable portfolio, and broadcast recommendations are questionable. While Cramer’s investing style and advice have merits, investors would do well to treat his individual stock picks and analysis with caution.