Bill, I thought you were the .com poster boy!
I'll never forget the day when you said "I'm outta here"!
>MILLBURN, N.J. - He had tried for weeks, but Jim Cramer couldn't shake the uneasy sense something was terribly wrong with the stock market. It had nothing to do with the usual worries that plague Wall Street types: fear of recession or a wild inflationary run-up.
It was something far more subtle - an apocalyptic feeling that this reckless enthusiasm for dot-com stocks was pure insanity.
It was April 12, 2000, 10 minutes into another volatile trading day, and the hedge fund Cramer managed was $7 million in the hole. Thirty minutes later, an additional $2 million was gone. By the end of the day, it was down $13 million.
"It was just incredible, the way we were losing money so fast," said Cramer, whose fund already was unloading dot-com stocks as if they were radioactive waste. "I've never seen anything like this other than in 1987. The velocity of the decline. I was losing money like I did in 1987 before the crash. I said, `I'm outta here' and we got out."
It was a good call.
Two days later, on Friday, April 14 - a little more than a month after the Nasdaq crested - the markets crashed. By year-end, the tech-fueled Nasdaq was down 39 percent, the Dow down 6.2 percent.
And Cramer? His hedge fund was up a remarkable 36 percent, but that success came with a price.
You see, Jim Cramer wasn't just another money manager; he personified the intense and hyperkinetic world of start-up dot-coms. He even founded one, sinking $5.5 million of his own money into TheStreet.com, an online financial-news site. But now, just as his hedge fund was turning its back on Internet stocks, investors were bailing out on Cramer and his own dot-com dream.
"I don't want to be known as the era, because the era ended badly."
Everyone who trades stocks seems to know Cramer. With his regular TV appearances on CNBC's "Squawk Box," his magazine articles and his daily dispatches at TheStreet.com, the 45-year-old Cramer, with his undergraduate and law degrees from Harvard, is a franchise unto himself.
Even when he's trying to be a regular guy, Cramer is hard to miss.
During an interview at a diner near his home, Cramer, dressed in his usual attire of untucked polo shirt, jeans and sneakers, draws fleeting glances and outright stares. Two elderly ladies a few booths away decide the loud, loud man with the red goatee and curly red hair is a very nervous guy who just can't shut up.
He is, after all, LOUD. You look at him and get the sense he's about to blow an artery.
Yes, Cramer elicits strong reactions.
Typically, there is no middle ground. You either love him or hate him. You either hang on his every word or see him as a shameless self-promoter.
Over the years, Cramer's odd combination of writing and trading has raised quite a few eyebrows and twice gotten him in hot water with the Securities Exchange Commission (SEC).
In 1995, he wrote a column for Smart Money magazine about stocks he held stakes in. The magazine left out the proper disclosures. Then, in 1998, he was accused of bashing a stock he had shorted and was temporarily suspended from "Squawk Box" - although he recently has returned.
The SEC cleared Cramer of any wrongdoing in both cases. His visibility and popularity continued to soar, as waves of new investors flooded the markets, many looking for insight and advice.
Suddenly, he was the de facto poster child for the sharp rise and gut-wrenching fall of the tech-fueled bull market.
"I know, I know," he moans. "There are tremendous parallels between the era and what I did, and it's kind of funny because I'm like an ordinarily married guy with a couple of kids from the Jersey suburbs who was just into PCs and journalism and the stock market and the Web."
"Why do you think the gold diggers were called 49ers anyway? There were no 1850ers. The Gold Rush ended in 1849."
When Cramer talks about the tech-fueled madness that gripped the markets for so long, you sense he's talking about an old, trusted friend who succumbed to senility. How could it happen? "We had always thought the market was pretty bright," Cramer said.
Then suddenly, in 1998, the unthinkable happened.
Small, start-up e-commerce companies with catchy names, no revenues and shaky business plans started going public and all hell broke loose. All the rules changed.
Companies that were losing money hand over fist doubled, tripled, quadrupled in value.
"Could the market be wrong?" Cramer asked himself, time and again. "The market had never been THAT wrong before. It had never been that stupid. So suddenly you start to doubt yourself."
But it turned out the market really was as screwed up as Cramer suspected. He didn't have to look very far.
"I didn't think TheStreet.com should have opened where it opened," Cramer said. "I was fighting with brokers over the phone saying, `Find some sellers. This is ludicrous.' There was one day when I was worth like $250 million. It was completely ridiculous. I wasn't worth that."
Still, he has not sold a single share, even as he watched TheStreet.com's stock drop, taking his fortune down to a little under $9 million.
"I got bombarded by hate mail, nasty e-mails, calling me a traitor."
His fans didn't take it lightly when Cramer first turned cold on tech stocks in March.
"And I said, 'Well, I'm a candid guy and I'm an emotional guy and not everything is good and I can't pretend.' "
Cramer is highly critical of the stock analysts and market strategists who continued to tout tech stocks long after the Internet bubble had burst.
"If you've lost people a lot of money, that's bad. It's not right to act as if everything is fine. You can't pretend."
"I'm getting out of the hedge-fund business at what I think is the top and going into the dot-com business at what I think is the bottom."
Cramer was glued to his television set four weeks ago, watching the Oakland Raiders battle the Seattle Seahawks.
Suddenly, the Seahawks' Ricky Watters, of the former Philadelphia Eagles, was caught from behind by Oakland cornerback Charles Woodson after breaking a long run. Watters lost the ball.
Cramer's mouth dropped.
Once upon a time, Watters had been his hero - the only running back in NFL history to rush for 1,000 yards for three teams.
"I said to my wife, `Oh my God. Ricky Watters got old. He got old! Woodson caught him. He's like me. I can't do it anymore and he can't either!' I realized I just couldn't do it anymore."
Cramer was talking about his career as a hedge-fund manager.
On Jan. 1, after 14 years with Cramer Berkowitz, the firm he founded in 1987, Cramer said goodbye. He started the year with a few simple resolutions: to spend more time with his family ... to coach fifth-grade soccer ... to read to his daughters at night without falling asleep ... and, of course, to focus only on TheStreet.com.
"I like the fact that the expectations are incredibly low in the dot-coms. It's a challenge." |
