An evangelist? A charlatan? A visionary? A fraud? Jim Cramer has been called all of these things and more. But he rejects most monikers. ‘Can’t I just be out there doing this because I believe in it? I’m not Che Guevara. I’m not Lincoln. I’m not a leader of a movement. I just like what I do. I’m fired up by it every day.’
To be sure, there’s no doubting Cramer’s zeal. But he is wary of sounding self-righteous and would not want to claim his motivation is pure altruism. He certainly has a visceral loathing of companies and individuals who are parsimonious with information. And he senses the world moving with him on this. But his real reason for getting up in the morning – if you can call it the morning: he’s at his desk most days by 4.30 am – is that he loves what he does.
And what he does is rather a lot. He spends most of his time at Cramer Berkowitz, a Wall Street-based hedge fund where, as the name of the firm indicates, he is one of the two principals. But he is also a prolific writer about investment, which is how he came to be involved in another of his major pursuits, TheStreet.com.
Back in 1996 Cramer became a co-founder of, and contributing editor to, TheStreet.com, the web-publishing business that now boasts tens of thousands of subscribers and a surprisingly loyal following. Undoubtedly, Cramer’s outpourings onto the site – his column is known internally as ‘the Cramer’ – are among its strongest draws.
Because the Cramer is so opinionated and individualistic, The-Street.com’s editor-in-chief Dave Kansas feels obliged to offer all manner of warnings about how it should be read. ‘Cramer tends to file like a Chicago voter, early and often,’ he says, explaining that it’s important to get the hang of how pieces are likely to differ according to the time of day they are written. ‘Cramer is a trader,’ he also notes. ‘Be careful here, because his market view could last minutes or seconds.’ More than that, Kansas says, ‘Cramer trades like a banshee’; and ‘Cramer is emotional.’
Of course, it is precisely because he is so passionate and idiosyncratic that Cramer has such committed fans. His columns are always engaging and vehement. They are never dull and never self-serving, not least because he is obsessed with transparency and is absolutely rigorous about disclosing his position – in keeping with the whole ethos at TheStreet.com. To some extent, this results from a controversy some years back when Cramer, working for SmartMoney, wrote about a number of small stocks. SmartMoney did not disclose his position; the stocks went up; and next thing the SEC was investigating.
Smart public
But the obsession with disclosure evinced by TheStreet.com in general and Cramer in particular derives from more than this one incident. ‘I’m a huge believer that the public is smart,’ declares Cramer. ‘The public wants to know where you’re coming from. And as long as you disclose it they’ll be able to make an informed judgement. Journalists often regard the public as easily fooled and needing to be protected. That’s just not true. I think most journalists are out of touch with the investing public. The public wants people who are in the game, who disclose their positions and put their money where their mouth is.’
And that about sums up Cramer. In his view, people who interface with investors – journalists and IROs included – must learn to accept that the public is ‘smarter than they are.’ They must begin to realize that the public are not sheep, he says; that today they have knowledge and want to take control of their own finances. ‘They don’t want to be lied to or fooled; they don’t want to be coddled; they don’t want to be protected,’ he insists. ‘They want the same information that has always been available to the rich and to powerful institutions. And it’s their right to have it. The SEC agrees it’s their right; the constitution says it’s their right; the Fifth Estate says it’s not their right. And I want to change that.’
This, of course, is where TheStreet.com – along with the internet and new technology in general – come in. ‘Technology is an enabler,’ says Cramer. ‘It’s not the endgame.’ Now that it’s so easy to get information to ordinary people at the same time as it reaches the professional investment community, ‘You’re making a judgement if you choose not to give those people the straight dope. You’re making a judgement that they are not going to be able to form an opinion on their own.’
Cramer cites Kodak, whose quarterly figures happened to be coming out the day we spoke – a Friday. ‘I’m sure there was a time when there would have been 38 people in the world who would have known the information about this Kodak quarter today,’ he posits. ‘The rest of the world would know by Monday. But the net – including streaming video, conference calls online and so on – have changed all that. The playing field has been so leveled that today the public is involved, and knowledgeable, in a way that ten or 15 years ago only the top 38 people were.’
For Cramer, it truly is a revolution. And anyone who doesn’t recognize this will be over-run by it. ‘I compare it to the inability of the old Soviet communists to control the information flow in the USSR. And IROs, analysts, business people should all understand that two years from now the information flow will be even greater than it is now.’
The end of spin
Cramer warns IROs, among others, not to underestimate the power of individuals to find out everything that’s going on. ‘They’re going to find out anyway so you might as well tell them the truth,’ he suggests. ‘Companies have to recognize this: I’m in your office and so is everybody else. We’re all in your office. We will find out, we will know. So don’t spin us. I think it really is the end of spin.’
Cramer is talking here directly to the IR function: ‘Don’t tell us things were good when they were bad, investor relations. Society is too open for that now, so tell us the truth. People who try to make the bad look good are in our cross hairs. And when I say our, I don’t just mean mine, I’m including everyone on the net. And last time I looked that was 40 mn people and going higher.’
Another impact of the net is that, by rehabilitating retail investors it is changing the investment world fundamentally. Cramer divides investment into three classes: mutual funds; index funds; and investment by individuals, whose interests he’s mainly addressing in his columns. ‘I think it’s the individual investor who has all the cards right now,’ he says. ‘The next big trend – which we’re seeing already – is the individual saying: You know something, I can do this better [than the professionals] myself. That’s what I see happening, at lightning speed. And it’s confounding the investment world.’
This, of course, has all manner of implications for IR. Take the closed conference call. ‘That’s a relic. I’m waiting for the first class action brought by an individual investor who’s knocked off a conference call for a stock that then goes up,’ Cramer says with unconcealed relish. ‘The notion of Joe Blow not being allowed on your conference call is over.’
But Cramer is optimistic about IR prowess in this changing world. ‘I talk to about 100 IR people a day and I think the general caliber is excellent. We wouldn’t spend all our time trying to call round them if we didn’t think that. But it’s a sea change. In the last four years or so the investor relations officer has gone from being a peripheral, in-the-dark aparachik to being a figure brought in at the highest level to let the CEO do his job while knowing the company’s story is being told right.’
Cramer singles out Lucent’s IRO for special praise, paying the highest compliment to Mary Ann Niebojeski: ‘I don’t feel if I’m talking to Mary Ann that I’m not getting the same story I’d be getting from Rich [Richard McGinn, CEO]. The point is, I don’t care which I get. The notion of the clueless IRO is out-of-date.’
