Mike Nudelman / Business Insider
You may know Jim Cramer as just an energetic guy on television, but there’s a lot more to his life story. After graduating from Harvard University, he worked as a legendarily aggressive reporter. After a few years of that, he went to Harvard Law School, where he worked for Alan Dershowitz on the famous case of Claus von Bülow — of whom Cramer later said was “supremely guilty.”
It was during law school when Cramer started recommending and trading stocks, which led to him becoming a stockbroker at Goldman Sachs — then his own hedge fund, founding TheStreet.com, and now “Mad Money” on CNBC. Along the way, he wrote seven best-selling books, grew 38 tomato plants, and owns an inn.
I asked him about his incredible life story and more when we sat down at IGNITION 2015.
(Interview edited for length and clarity.)
Blodget: You were the original financial blogger. You taught us all how to do it, somehow squeezing this in while you were doing your hedge fund, and all this success that you’ve had. Take us through it. What is the common thread? All those things are different. They’re all hard. You’ve hit the ball out of the park at every one of them. What’s the secret?
Cramer: Well, I am competitive. I am ambitious. The next generation doesn’t like to hear that. You’re not supposed to admit it. But I’m from a sports generation where I always felt you have to play above your head. You’ve got to succeed. I’ve had coaches, when I was a great runner at high school, instill in me: “You’ve got to go the extra mile. This stuff matters.” My father all my life said, “Listen, I need you to work really hard. I need you to be honest and work really hard and outwork everyone.” He always stressed this: In America, if you outwork everyone, you can succeed. And he drilled it in my head.
He passed away last year at 92. He worked until the day he died. He happened to have one of his biggest months in November, the month he died, which I thought was a pretty amazing salesman. He instilled in me a level of insecurity, candidly, where I was never good enough. There was always another guy down the block who was doing better than me. But I was always competitive, I always believe in what I do, and the other thing is, I have a great time. I only do things I want.
Blodget: Have you given your kids this same drive and work ethic?
Cramer: No, and I don’t want them to, because there’s also a downside to it. I’ve got a kid at Tulane who’s an artist and studies art and just did a fantastic paper that I read that she did on Holocaust art, which I really liked. Another daughter’s out at Oregon, and what does she care about? She cares about the outdoors, and she cares about sustainability.
Growing up, I didn’t feel I was wealthy enough to be idealistic. I don’t want to say we were poor, but there was a level of insecurity where my parents fought about money every day. I used to hear it. And I also lost everything. I lived in my car for a while, and the insecurity I had about money made it so that, yes, indeed, I wanted to go make some.
I also lost everything. I lived in my car for a while, and the insecurity I had about money made it so that, yes, indeed, I wanted to go make some.
And my kids, while not knowing necessarily “we’re swimming in it,” they want to take advantage of the fact that they can be cause-oriented, and I think that’s great. When I communicate with my daughter, it’s through links like reforestation in India, companies changing the way they use water. My discussions are about the environment, ecology, and how they can do more to help the planet. They’re not like me in any way.
Blodget: Can you give them the drive to pursue those causes with the same incredible passion? Because I have to say, I learned relatively late, coming out of college — in college it was cool to pretend that you didn’t do any work and still do well. It’s just you’re gifted, you don’t work hard — it was later that I realized, “No, it’s about hard work,” but I have a tough time as a father telling my kids, “I’m sorry. Work hard. You have talent, but work.”
Cramer: My daughter, Emma, I’m not supposed to mention it, but anyway, she texts me this morning, it’s 7:30, and she’s, “Dad, Dad, I want you to know that I haven’t gone to sleep yet. I’m working on my paper. You’ll be proud of me.” The short answer is yes. That 7:30 text, time-stamped. My other daughter is incredibly passionate about causes. GMO. OK, GMO. She’s passionate and she goes, “Dad, how can you let those food companies come on air and not hit them about GMOs?” The passion there is not necessarily a competition, but to instill in me the notion of “Dad, you talk about the profit-motive all the time, but why would I go to work for XYZ company? They’re not the least bit interested in sustainability.” So, I mean, their passion isn’t competitive, but they care about — they’re very different from each other — and they care about their issues in a way that I think is fabulous.
Mike Nudelman / Business InsiderBlodget: You’re now 60, which is incredibly hard to believe …
Cramer: S—, don’t say that.
Blodget: You don’t look it at all. I apologize.
Cramer: When you turn 50, you turn out to be great. When you turn 60, it sucks.
Blodget: So you’ve just told us that your dad had his best month at 92 …
Cramer: He had a big month.
Blodget: So what is going to drive you from here?
Cramer: I’ve got to tell you: I own an inn, which then made me realize how I liked hospitality, because I was making breakfasts Sunday mornings. So then I opened a restaurant, Bar San Miguel, in Carroll Gardens in Brooklyn, and I love it, because there’s people. I’m in the soloist profession of TV because you’re looking at the camera. The endless talk about money is leaving me cold.
We’re not allowed to talk about money at the dinner table. Lisa says, “Hey, all you do is talk about money. Can we not have that at the dinner table?” But I say, “Well, it’s stocks; it’s not money, but you know what I mean.” I have an idea for a restaurant, which I can’t reveal because then someone will take it ’cause it’s such a competitive business, but I like people, and I feel as I get older, I’ve got to spend more time doing that. I love my jobs. I’m not stepping back at all, but this restaurant has just turned out to be a gift. And I got 120 tequilas and 40 mezcals, and nobody knows me because it’s Brooklyn and they’re all hip and young and they don’t have cable or they cut the cord or they never had the cord. It’s pure joy.
The other day, two Fridays ago, I shut it down and put on “Timber,” Kesha, and said, “Listen, we’re dancing.” And then I put on, you have to, [Taylor] Swift, but it’s a great joy to be able to buy people drinks. Buy a drink; I love it. Let me buy you a drink. The first time I did it, there was like a table of 23-year-old women. I said, “Let me buy you all drinks.” And it was like, “Wow, weird guy.” I was like, “It’s OK! I own the place! It’s all right! It’s OK!” But that’s fun for me.
Mike Nudelman / Business Insider
Blodget: You have multiple jobs, and a punishing schedule. (See the sidebar, A Typical Cramer Day.) So is that schedule a big key to success? I’ve heard other people — Martha Stewart famously two hours a night, Trump three hours a night, whatever it is. Lots of successful people, Marissa Mayer, very famously. Is that key?
Cramer: Yes it is, because I’ve got to get the volume. I mean, sometimes, like when I get up to say goodbye, kiss my wife before I go to work, she’ll say, “Why are you so frantic?” And I’ll say, “I’m late, I’m late!” She goes, “It’s quarter of six! Who’s late at quarter of six? What kind of day?” But yes, the answer is that I can’t get the production and do the homework. For instance, if you’re going to interview Dan Schulman, who was an absolutely fantastic “get” for me, so to speak, then you have to at least do an hour and a half … you gotta read the conference call, you gotta study it, you gotta ask the people what do they think of them or what do they think about PayPal.
When you have Marissa Mayer, even though you’re total second banana to David Faber, who is amazing, you have to have your 20 questions so that you can ask two. It’s all homework, and you know that. The homework is the skill. It’s the skill, so when I hear that Dow Chemical is merging with DuPont at 9 o’clock, I gotta break out everything, so I’m ready for the question when Faber turns to me, and he says, “What do you think about the economics of it?” or “What do you think about the prospects?” That’s that question. That’s a 9:07 question. Or when Carl Quintanilla turns to me and he goes, “Jim, Marissa Mayer … her performance, she’s up 140% since then, what do you make of that?” That homework is that minute, so you work an hour and a half for seven minutes, but if I slept more, I couldn’t do it, and I absolutely hate it. If I haven’t done the homework, I am so insecure. It drives me crazy. I took the subway up here, and there wasn’t room to sit down, so I’m trying to read, and I have my PC open, and I’m like, “I gotta look ’cause … when is he moving Venmo to pay?” If you don’t do the homework, you suck. Period. Whether you’re 60 or 20. You suck without the homework.
Blodget: Indeed. You’ve had ups and downs. You’ve had this amazing explosion of entertaining rage against Ben Bernanke and the Fed as they were going and they were late and you helped everybody realize it. CNBC has used that clip for years. It’s wonderful, so these incredible highs, and then you got completely ambushed famously by Jon Stewart at the bottom, and so what do they feel like? What does it feel like to get really blindsided by Jon Stewart on the show?
Cramer: That night, I said I was with Stewart, and it was a tough day because she thinks I should use heavier count sheets at my inn, ’cause I was on Martha Stewart the same day I was on Jon Stewart. You make a joke of it.
Now that was a bad day. It was a bad day because your kids see it. Anytime it crosses over to your kids is bad, because otherwise you can take anything. I mean, you can take any amount of heat, but then when your kids on the Facebook page says something bad about Jon Stewart, then you know that it really is personal; it’s not business. Was it fair or unfair? It’s TV. Did I get a beatdown? Of course I got a beatdown. Was I sheepish? Whatever they wanted to say is fine.
Mike Nudelman / Business InsiderBut you know what? The next day I got up at quarter of four, I worked out real hard with my trainer, I did a piece, I went into the shower, I did another piece, and I was on TV and I did my job, and the way you come back is to show up the next day, no matter what they do to humiliate you or try to take you down. You show up the next day. And the way you beat them is to show up. You just show up, and you do your damn show, and you come back and say, “Hey, I’m Cramer.” And it starts all over again. That’s the only way to win against the people who try to take you down. You do your damn job.
Can you be humiliated? Absolutely. It’s part of the game, but it is like [Bill] Belichick, OK? We’re on to Cincinnati. Like Aaron Rodgers … R-E-L-A-X. Ya show up, and that’s the revenge. I’m on for 11 years. This is my 11th year because I show up every day. That’s the secret. I put my suit on, I put my tie on, I do my homework, I go in. You want to mortify me? Good. You got me for three hours. You got me down for three hours. There will be some article that’s negative about me, and my wife will say, “OK, you got two hours. Get in that garden, pick the damn tomatoes, and we’re canning.” So, that’s it. That’s it. If you let ’em get to ya — even if it’s a national beatdown — if you let ’em get to ya, then ya just failed. The key is to not fail. Show up. That’s the revenge.
Blodget: Absolutely. So, somewhat ironically, given the passion behind that, you were just telling me that you’re the new mellow Jim Cramer.
Cramer: Well, OK. [laughs]
Blodget: You had an epiphany somewhere along the way, because earlier in your career, running TheStreet and others, you were too passionate, scaring people.
Cramer: Right, I was.
Blodget: So it’s a new, mellow Jim Cramer. So what happened and what is that?
Cramer: OK, you get older. Now, being mellow for me, obviously, is everybody else is Gandhi. I joke about it. My nephew will put stuff like, it’ll say, “Now that I’ve become Jeffersonian …” It’s like, oh, my God. Here’s what’s happened. You get kids, and I come out, and I’m visiting my daughter in Oregon, and there’s someone who pissed me off on Twitter. And she said, “Dad, we’re going to cute-cat them.” I said, “What does that mean?” “We’re going to send them pictures of cats playing with each other. That’s how … you don’t argue with these people.”
I was brought up in a very tough situation where my father said, “Get tough, get tough.” I got in a lot of fist fights. I had a lot of times I had to stand up for myself. But I was still hitting people 10 years ago, and you can’t hit.
I got in a lot of fist fights. I had a lot of times I had to stand up for myself. But I was still hitting people 10 years ago, and you can’t hit.
You can’t, at that Eagles game, turn around and hit the guy who is badmouthing your quarterback, who’s wearing the Green Bay jacket. My father and I were sitting at a game — this was eight years ago — and there was a guy badmouthing McNabb the whole time, and I am a passionate Eagles fan. And my father said, “This is Philadelphia. That guy better watch it because someone is going to hit him.” And the guy didn’t stop, and he didn’t stop, so finally, I turn around and I hit him with everything I had. And my father says, “You weren’t supposed to be the one who hit him.” Now, as we know, that would have been the lead story — someone would have caught it on social media, and I’d be finished. I don’t hit anymore. I have not thrown a water bottle at anybody’s head. I have not choked anybody. I don’t do any of that. I am a man of peace!
Blodget: But you did throw up in a mailbox.
Mike Nudelman / Business InsiderCramer: OK, so I come back, this is the way the new world is. I go to Egypt, OK, and I get sick as a dog. I get the Egyptian flu, and I drop from 175 to 163 almost instantly, so I gotta go [to] the doctor. And I’m typing, ’cause I have a few minutes, I’m typing on my PC on a mailbox, ’cause wherever you can, and suddenly I realize, oh, my God, I have to throw up. I gotta throw up. And I throw up, and bingo, it’s in Gawker. It’s like, immediately, whatever you do. I was hit by a bike. Someone had a picture of me being hit by a bike. It was an instant. Whatever you do, you’ve got to believe that someone is looking at you and taking a picture of you. In many ways, that’s great. I love to look at them, except for when it’s yourself. You don’t like that.
Blodget: OK, current events. Is this country heading in the right direction?
Cramer: I was with a CEO, and I was very positive and very noncorrosive about the country. And he said, “Are you a Pollyanna?” And I said, “No, the country is different from the leadership, and the country is different from the anger. I think people really want to do well. Our leaders are not as good as our people, and I think it gets us down, but I believe in the spirit of America, and I think a lot of it is because I believe in the people who run these companies.”
I’ll go on “Squawk on the Street,” and I’ll say, “Oh, my God, I read the greatest thing last night.” “Tolstoy? Was it Lincoln’s speech?” “No, it was the Facebook conference call. It’s a fabulous play, the arc of it, Cheryl comes in …” and I have such faith in younger people and the younger people are so smart now.
I was talking to Dan Schulman earlier, and I said my kids introduced me to his product, PayPal, and as long as I have faith in younger people, which I do in this country, of, by the way, black, white, Catholic, Jewish, Muslim, Hindu, all that stuff. I hate that anyone talks about that stuff. I grew up in a house where you were not allowed to talk about politics. That was divisive. You’re not allowed to talk about any of these things involving religions and race, and all of that is so horrible. I mean, ultimately, we’re talking about abortion and gay rights, these are all things that Eisenhower would never talk about, that even Nixon would never.
I’m embarrassed that this is what we talk about: That’s personal. And I get very upset when I listen to the leaders. If you go back and read about Eisenhower, who was actually a great president, he would be appalled by all of these things. He thought we were a great country, and that included everybody. He wanted to integrate the military, and Truman wanted to integrate the military, and the resistance of people to doing the right thing was incredible. And now it’s like the leaders are the polarizers, and suddenly we’re supposed to think about these things. My kids are mortified. My kids will say, “Oh, my God, that person is talking about things, and they have no right to talk about them publicly.”
And so I’m embarrassed by our leaders. I’m embarrassed by the discourse. I’m embarrassed about what we talk about. Business, to me, is the last neutrality. We don’t discuss these things. Yes, I was very proud I was part of the Mark Benioff thing in Indiana, to be able to say what is this with trying to stop gay people from being able to go to retail? I mean, I don’t care, left, right, what is that about? I voted Republican 50 percent of the time, and I’m not against guns, although I’m against automatic weapons. These things I can’t believe are divisive. I cannot believe what’s divisive in this country. These are things that if you were Nixon, you would say, “Wow, are they upset about the wrong thing.” Goldwater would be upset about these things. These are guys that would never vote for him, never say anything good about … I’m mortified by our country right now, but I’m not mortified by the people.
Blodget: Investing. You have an incredibly entertaining show. You have just a brilliant breadth of market coverage. You have very exceptional insights into the market, things that I learned when I was on Wall Street, just how many smart people are out there that you’re competing with. They have these incredible research staffs. Now, you’re on every night, so people have to compete with you. You have to beat everybody if you want to beat the market. I ultimately came to the conclusion that as an individual, the smart thing to do is just buy an index fund and not try to compete all the time. And you have vociferously disagreed.
Mike Nudelman / Business InsiderCramer: Not recently. In the last five years, what I’ve been saying is, “OK, I want everybody to own an index fund, and until you have $10,000 in an index fund, I don’t even want you to think about a single stock. There’s too much single-stock risk.” So everybody has to have an index fund, and for your 401(k) and your IRA, I would really prefer you to have an index fund. And when you finally have enough mad money, we can build a diversified portfolio, five, six stocks, but … this was hard-fought for me to do.
I did not feel that way initially because we were in a great bull market and I wanted people to find the next Apple. I think you can find the next Apple, but not until you have the index fund. It’s not a defeat. It’s too hard. It’s too hard for most people to find good stocks. I was with Dan Schulman, and I said, “Boy, this PayPal’s good.” And that would be a fabulous stock to have with your mad money. If you don’t have the index fund, then you’re going to end up, maybe you just put all your money in, like 2000 you bought the wrong stocks in 2000 or whatever, so I’ve had to default index fund, and we do a bunch of things called evergreens, if I get to take a day off, and all my evergreens are geared toward, “Listen, you think I’m a traitor. I really want you to invest, but I don’t even want you to think about individual stocks until you do index funds.” And the last two books, I told my publisher, “Listen, we’re going to bore the heck out of people at the beginning of these books by making sure that everybody has index funds because there’s been too many mistakes made and too much money lost. We have to make it so they can only lose money that they don’t need.”
And younger people, you can have more mad money, but as you get older, I really don’t want you to have a lot of single-stock risk, because maybe that’s the bad one. I’ve picked bad ones. In the last six months, we had the destruction of Rich Kinder and Kinder Morgan, and I liked that it had a steady income stream, and it blew up. If it was your mad money, that would be fine, but if it was your core holding, then I hurt you. So I have to kind of do a Hippocratic thing first, do no harm. But this is a change for me from when we first met and a change for me from when I was a hedge fund … I mean, I had too much hedge fund in me, because no one is going to pay it on an index fund if you’re a hedge fund manager.
But I have now gotten to the point where if you don’t do, and I do it on Twitter a lot, like they’ll say “I just got my first paycheck” or “I just got my first thousand” index fund. They say, “You cop out. You loser.” I’m fine. Call me a cop-out loser. I need you to be an index fund, because I don’t want you to screw up. And then once you have enough money saved, then maybe, you want to take a flier and own a Regeneron. But I’ve learned my lesson, and it’s a hard-fought lesson because I’ve always felt I was embracing mediocrity, but what I am doing is embracing diversification and safety and then let people have an opportunity to put what they see or like — a Facebook, an Alphabet, maybe the kids use PayPal. Newell Rubbermaid is a very interesting company, because people shop and they realize “Wow, look how much more they have in that aisle.” Or that Whole Foods stopped working but there’s still … Kroger. You shop at Kroger, maybe you buy some Kroger, so I’ve gone from being, yes, way too stock-oriented to being, OK, look, it’s not a defeat. Index funds first until you’re full up, and then we can buy a mad-money stock.
Mike Nudelman / Business InsiderBlodget: That is great advice. You have come up with this wonderful acronym that fits this conference perfectly: FANG. Facebook, Amazon, Netflix, Google. You’ve been rooting for them all year. It’s been going to the moon. Do they keep going to the moon?
Cramer: There’s this scarcity of companies that can grow at a pace that are so exceptional, large-cap companies, and FANG is really because everybody else is not FANG. And Facebook is great because there’s no one who can be Facebook, and Amazon is great. I mean, these are just a total economic scarcity issue of stocks of companies that can grow fast, so I’ve kinda backed into it. You can add Expedia or you could add Priceline, but they’re a little more travel-oriented. If travel goes down off of terrorism or something, which is actually true, or the dollar gets strong, they don’t have that secular trend that FANG has. But I mean, I know when I did FANG, the first thing I said was, “OK, I’m going to get crushed on FANG and I’ll be mortified,” but I said, “If I could explain to people why Netflix isn’t bound by the four walls of the spreadsheet …”
My father-in-law was short Netflix, and I said, “You can’t short Netflix. You want ‘Narcos.’ You can’t short Netflix, ’cause ‘House of Cards.'” But he goes, “The earnings! The earnings!” And I said, “Absolutely.” There are a couple companies that get anointed, and they aren’t bound by the spreadsheet, and we hate them. I remember the CEO of a major retailer telling me he hated Amazon because it wasn’t bound. You know what? They figured out how to go scale — we know what that means. They figured out how to use the stock market for money.
Have you ever tried to get in on a job at a Google or Facebook? I mean, I can call a million companies and get someone in front of someone. Doesn’t mean they’ll get the job. I could not get someone to have an interview at Facebook. I could never do it. It’s just too high a level. These companies get the best and brightest, and they have tremendous moats. And they are doing such incredible things, and they’re just not enough other companies that are growing at their pace, so the money management industry funnels into FANG. I’m very conscious that these are classic mad-money stocks. If you had both Facebook and Amazon, you would have to pick one. Typical people say, “Well, wait, one is a retailer and one is this thing that basically is you,” and I’ll say, “But they trade together, so you’re not diversified with FANG, so pick your favorite part of FANG.”