Commodity Traders

CONFESSIONS OF A STREET ADDICT by James J. Crmer Simon & Schuster, $26.00

TRADING WITH THE ENEMY: Seduction and Betrayal on Jim Cramer's Wall Street by Nicholas W. Maier HarperCollins, $22.95

JAMES J. CRAMER IS SO THOROUGHLY A MAN of his age that the Museum of the City of New York ought to stuff him now for future exhibition. The bedrock of the Bozo-haired, gruff-talking, Harvard-educated Cramer's reputation is the highly profitable Wall Street hedge fund he ran from 1987 to , but he is much more: investor, gambler, tout, journalist, celebrity. Just as Edith Wharton's characters perfectly exemplify the Gilded Age, Cramer will represent to future generations all our splendid contradictions: brilliant and short-sighted, vain and confessional, mean and sentimental, likable and frightening.

Like Bill Clinton, Cramer characterizes the Baby Boomer wait of wanting to prove to everyone that he's smarter than they are, and at the same time be loved for it. It is an elusive objective. Cramer, who on tumultuous trading days has been known to post his pensees on his Web site up to 12 times a day, is clearly a man who values his own opinions (as, obviously, do his investors, subscribers, bookers, and various television executives, most recently CNBC, where he co-hosts the program America Now with Lawrence Kudlow).

Now, presumably at mid-career, he has given us a memoir, Confessions of a Street Addict. It's an entertaining book, as far as it goes. Cramer has had many adventures and triumphs, and he is a considerate and often amusing guide to what the Wall Street game looks like from perches high and inside. At the same time, the book often feels like an iceberg: It still seems like the bigger chunk of the story, whether about the man or the arena, remains beneath the surface.

Cramer's first claim to fame, his hedge fund, is essentially a legally sanctioned stock gambling club. Because the law considers hedge funds to be high-risk propositions, they are set up so only the very rich can play. Some number of them form a limited partnership under the leadership of a sharpie like Cramer, who invests funds on their behalf, not by identifying and backing good, well-managed companies, but by finding out information, from sources far and wide, published and whispered. It doesn't matter to hedge fund managers whether the news is good or bad; they just as happily bet against companies as for them, hoping to wring a profit from the short-term ups and downs. Either way, they spend their days frantically buying and selling, selling and buying, holding onto little for very long, squirreling away the profits.

I don't know if one has to be monomaniacal to be good at this, but Cramer was top-notch, and he suited up for work every day as if it were up to him and Mel Gibson to drive the English out of Scotland. ("I couldn't bear to be down for a day, let alone a month or a quarter.") Doing the job required not only a vast amount of preparation--Cramer says he got up at 3:30 a.m. daily to start reading--but also, once the wading day commenced, a fanatically single-minded determination to wring the maximum profit it out of each wade. Cramer had to make dozens of million-dollar judgments before lunch every day; and he wanted to be right about each one.

Running such a demanding fund in such a demanding way would be load enough for most men. Not Cramer. Even as he was running his fund, he became a financial pundit, writing articles for Smart Money, Time, and other publications, as well as appearing on CNBC, Good Morning America, and elsewhere. If that wasn't enough, in 1996 Cramer tried to get in on the Internet. He and Martin Peretz, co-owner of The New Republic and the cornerstone investor of Cramer's hedge fund, founded the financial Web site

In this process of becoming rich, successful, and famous, Cramer also became a jerk. He admits to juicing stocks and flipping IPOs, stuff that one shouldn't do, dismissing it as so much everybody-does-it "chicanery." He admits that he talked stock at his mother's funeral. When his daughter was being rushed to a hospital, he told his wife he couldn't go because he was shooting a commercial. (He came to his senses a few moments later.) He talks about feeling so guilty about being investigated for not disclosing his holdings in stocks he was writing about (inadvertently, he insists) that he started drinking so much that he got completely blotto and puked volcanically all over his guests at a surprise birthday party.

We also know this side of Cramer from another new book, Nicholas W. Maier's Trading with the Enemy: Seduction and Betrayal on Jim Cramer's Wall Street, whose tendentious, oversold title tips its contents. In 1994, Maier was a largely directionless college graduate with a mild interest in the market, fairly unexceptional in every respect except in having parents who were neighbors of Martin Peretz. In the easy, seigniorial way rich people and Mafia dons have of dispensing favors, Peretz sent Maier to Cramer, who hired young Nick at a station at once menial and above his abilities. Maier eventually grew competent and then, later, fed up. He describes Cramer as a mean, volatile, abusive, nasty boss, given to tantrums emphasized by the heaving of computer equipment.

The book is incredibly naive--somewhere there may be a man who is a hero to his valet, but there is no boss whose tender, callow, insecure junior staff feels that he or she really recognizes their great pools of talent and ability--but that doesn't mean it isn't credible. I believe Cramer behaved like a jerk; he admits he was, though obliquely and screened with self-justifications ("To make the hired folk feel the pain when they botch the job and go long on a bum stock ... to me there is no stronger way to drive the point home than writing out the symbol of the piece-of-garbage stock on a Post-It and making the poor slob who picked it stick the Post-It on his forehead and wear it all day until I felt the shame had registered.") But it is the nature of bosses to behave this way--well, not this exact way--at least sometimes. Maier made a lot of money working for Cramer. Few of us are as well subsidized when we learn our life lessons. He should shut up.

It's Cramer who should talk more. He's clearly embarrassed by a lot of his excessive behavior. He rationalizes some of it and excuses some of it and simply regrets some more, but never does he really explain why he drove himself to behave the way he did. He often looks like a nearly out-of-control person whose only limit was what he thought he could get away with. In one especially dark story, the editor-in-chief of (who Cramer later discovers is "an alcoholic [who] had to be fired immediately") suggests to Cramer that they cut Peretz--Cramer's partner and patron--out of the decision-making process. Cramer, apparently without hesitation, agreed; eventually, he reaped the whirlwind. Cramer makes no effort now to justify his bad behavior, but he also doesn't explain why he committed such a rash, risky, treacherous act. Though he calls himself an addict in the book's title, the term is treated mostly as a metaphor. Yet the book is filled with examples of self-destructive behavior, which Cramer treats more as crosses to bear or inexplicable mistakes than as a pattern of pathologies justified because the perpetrator kept malting money and TV appearances.

It's in light of these transgressions that we must view Maier's more sensational charges. He originally alleged that Cramer used inside information to profit by trading in shares of a company called Western Digital, and that he was investigated by securities regulators. Maier also wrote that Cramer manipulated CNBC reporters by giving them information about a company whose stock he wanted to trade. When Cramer threatened to sue for libel, Maier's publisher, HarperCollins, pulled the book from the stores and printed a new edition that deleted only the material about Western Digital, saying that it stood by the rest of the material. In an interview, Maier says his big mistake was simply confusing the names of two companies. Well, whatever. The odd thing is that the accusation gains no special credibility from what Maier says about Cramer, but from what Cramer says about himself. "Who would come in and handle the pressure when I [said] `Let's see how fast we can make him cry?' ... Who could take my incessant badgering about how I would never forgive them or their children for losing my partners' money? ... Only someone who knew I paid $10,000 bonuses on the spot for good ideas ... Only someone who knew I paid my assistant a half million bucks to take the abuse I dealt out ... Someone who wanted to be right and be paid more than he would be anywhere else on earth to be right."

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