Jim Cramer -- Mad Money

How Jim Cramer Got Rich (the Man Behind Mad Money)

By Charles Joseph | Editor, Financial Affairs

In the world of investing, Jim Cramer is a veritable celebrity.

Whether you’ve come across his articles online, read one of his finance books, or watched his CNBC show Mad Money, chances are you’re familiar with his work — or at least his tremendous personality.

But are you familiar with the man himself?

Let’s trace Jim Cramer’s rise to financial stardom back to its roots — and find out just how much “mad money” he’s got in the bank.

Jim Cramer’s Rise to Riches

Creative Beginnings

Jim Cramer’s early childhood set him down a path that would define his career for life.

Born near Philadelphia in 1955, he was raised by an artist mother and an entrepreneur father. Inheriting his mother’s creativity and his father’s ambition and business sense, he was drawn to the stock market from a very young age.

Jim began studying stocks when he was in fourth grade, memorizing ticker symbols and compiling imaginary portfolios.

But when he enrolled at Harvard in 1973, he chose to study government rather than finance. While in school, he became editor-in-chief of its newspaper, the Harvard Crimson, and fell in love with journalism.

From Journalism to Juris Doctor

After graduating in 1977, Jim moved to Florida to be a newspaper reporter, covering the Ted Bundy murders and making just $15,000 a year. To put this in perspective, raising chickens during this time would have yielded him more money.

Shortly after that, he moved to Los Angeles and wrote obituaries for the Herald-Examiner. But it wasn’t long before his apartment was robbed, forcing him to live in his car for 9 months.

While in L.A., Jim became one of the first reporters at the American Lawyer, a newly-founded law magazine. He found himself captivated by the subject and decided to go back to school, enrolling at Harvard Law in 1981.

Cramer’s Calling

It was at Harvard Law that Jim’s interest in stocks skyrocketed. He initially began investing in order to pay his tuition, but soon grew obsessed with stocks as well as cable TV’s 24-hour business news channels.

Hoping to start investing money for others, Jim would regularly change his answering machine message to include his stock picks. This caught the attention of Martin Peretz, owner of the New Republic magazine, who invested in Jim’s phone picks — and won big.

Martin was sold on Jim’s investing skills and became his first client, giving him $500,000 to invest. In just two years, Jim increased that amount by 30%, to $650,000, solidifying his reputation as a stock market wizard.

And with both those gains and a degree from Harvard Law under his belt, Jim took a job as a trader at Goldman Sachs in 1984.

Jim Cramer: How He Used the Stock Market to Pay for Havard Law School (Video)

Beating Black Monday

Jim’s paternal entrepreneurial spirit never left him, and in 1987 he left Goldman Sachs to start his own hedge fund, Cramer & Co. His reputation as a trading genius convinced many wealthy investors to contribute upwards of $5 million each, raising $450 million in initial investing capital.

And shortly after starting the fund, Jim’s preternatural instinct for picking stocks saved him from total ruin.

Jim sold all of his stocks three days before Black Monday on October 19, 1987. On that day, the Dow Jones Industrial Average fell 22.6% — at that point, the largest single-day drop in history — but Jim’s holdings were still safe.

Building the Cramer Empire

Cramer & Co.’s investing strategy was high-risk, high-intensity: Jim slept just three hours a night, read 26 newspapers on his commute, and made trades that seemed insane to other investors.

He stored an encyclopedia’s worth of financial knowledge in his brain, analyzing any number thrown at him in a split second. And his expansive network of brokers and CEOs meant that he was the first to know about any market movements, giving him the upper hand against the rest of Wall Street.

The strategy paid off big, netting investors an average return of 24% a year — and that’s not counting Jim’s 20% cut of the profits. For all of his hard work, Jim took home around $10 million a year.

The Street Smarts

In the early ’90s, Jim got back into journalism, contributing articles to SmartMoney magazine. And in 1996, he teamed up with his original client, Martin Peretz, to create TheStreet.com: a website dedicated to financial news and investment advice.

Though the website was a smash hit, Cramer & Co. was heading for hard times. In 1998, it reported negative returns for the first time despite a bountiful market, causing many investors to back out.

Those who stuck it out, though, reaped the rewards. Under Jim’s skillful management, Cramer & Co. rebounded quickly, with returns of 47% in 1999.

That same year, TheStreet.com went public and was met with instant success. On its first day of trading, the stock price tripled to $60, and its market cap quickly grew to $1.7 billion.

Cramer Comes to CNBC

As his profile grew, Jim began landing guest commentator spots on CNBC. He also began feeling severe burnout from leading the hedge fund, where he had to earn upwards of $425,000 a day to keep his clients happy.

In 2001, he retired from the hedge fund, handing the reins over to his business partner Jeff Berkowitz. During his tenure there, he averaged an impressive annual return of 24% — beating even Warren Buffett, whose annual return averages 20.8%.

Jim’s new calling was in the realm of media. He began writing books and hosting a syndicated radio talk show, Jim Cramer’s Real Money, as well as a CNBC show, Kudlow & Cramer.

Mad Money, Mad Success

By 2005, Jim’s following had grown so devoted that he landed his own CNBC show, Mad Money with Jim Cramer. On the show, he dispensed investing advice, commentary and interviews, using unexpected props and his trademark booming voice to set him apart from other finance shows.

Mad Money propelled Jim into the mainstream, owing in no small part to his philosophy of teaching people to think like investors rather than telling them how to invest. Before long, he was appearing in everything from Arrested Development to the Apprentice to the Daily Show to Iron Man.

Jim Cramer: His First Big Break (Video)

Jim Cramer Today: His Assets and Net Worth

Today, Jim still hosts Mad Money, which earns him a salary of $5 million a year. It’s one of CNBC’s most popular shows, with a daily viewership of around 140,000.

Jim is also a co-anchor on CNBC’s most popular program, Squawk on the Street.

But because he hosts an investment advice show, he’s largely barred from trading stocks for personal gain. When he does trade, it’s done for his charitable trust, Action Alerts Plus, from which he makes no profit — and which regularly beats the S&P 500.

Jim and Martin Peretz sold TheStreet.com for $16.5 million in 2019. But he still retains his real estate investments, including a restaurant in Brooklyn, a summer house on Long Island, a 65-acre New Jersey estate, and a $1.15 million inn in New Jersey.

All of this adds up to a net worth of $150 million — a pretty sweet payoff for all those years spent teaching himself to invest and building his media empire.

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And though it’s not as high as it was at its peak of $255 million in 2000, that doesn’t matter to Jim. What does matter is helping others learn how to invest the Jim Cramer way: sharply, confidently, and unconventionally.

Jim Cramer at His Hedge Fund in 1997 (Video)

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