Have Cramer's Fortunes Reached Their Turning Point?

In the 1980s, it was Michael Milken, the now dethroned king of junk bonds, and Ivan Boesky, the arbitrageur-turned-insider-trader, whose fortunes loosely mirrored an explosive bull run that ended -- temporarily, at least -- in a stomach-churning stock market crash.

A decade later, it was individuals like Henry Blodgett, cheerleader to the dot-com era stars, and Bernie Ebbers, the now-imprisoned ex-chief executive of former high-flyer Worldcom, whose influence and popularity tracked the equity market's rocket-like trajectory into irrational exuberance and eventual crash-and-burn.

In recent years, it has been all Jim Cramer, the hyperkinetic hedge-fund manager turned one-man media conglomerate, whose audience appeal seems to have grown in lockstep with each leap and bound of a seemingly relentless four-year upswing in share prices.

Could Mr. Cramer's fortunes, like those of the U.S. stock market, have reached their inevitable turning point? Given the contagious interest in "Cramer Reveals a Bit Too Much," a report in yesterday's New York Post about a video interview the wild man of financial TV gave last December -- when the market was still rallying, interestingly enough -- maybe so.

Flamboyant Wall Street trader turned TV host Jim Cramer, not known for being the shy, retiring type, might have said too much in a video interview he did for a financial Web site.

The host of CNBC's daily program "Mad Money" had hedge fund-trading desks buzzing yesterday after he bragged about manipulating stock prices during his days as a trader.

In the video from TheStreet.com's "Wall Street Confidential" Webcast, Cramer boasts about manipulating the price of a high-flying stock down, and even acknowledges that doing so might have been illegal. The video is making the rounds on YouTube.

"A lot of times when I was short, I would create a level of activity beforehand that would drive the futures. . . . It's a fun game," Cramer said in the Webcast, which was moderated by TheStreet.com Executive Editor Aaron Task.

Cramer later said that "no one else in the world would ever admit that, but I don't care."

However, seconds later, he acknowledged, "I'm not going to say that on TV," referring to his show on CNBC.

A remarkably successful money manager when he ran the $450 million Cramer Berkowitz hedge fund, Cramer in the Webcast shared his "tips" on how to drive a stock price down so that a short-position - a bet that a stock price would drop - remains profitable.

He added that the strategy - while illegal - was safe enough because, "the Securities and Exchange Commission never understands this."

A call to Cramer was not returned.

Perhaps he was out looking for his booyah?

Get Jim Cramer's Picks by email -- it's free and takes only a few seconds to sign up.

Comments

[Mahesh Reddy:]

Its a honor for cramer...to be compared with the likes of milken,ivan and Ebbers..

I guess..time will tell...how the story of cramer will be written....

2007 Mar 21 05:00 PM

[Malkiel:]

For anyone who actually watches his show and reads his web site, Cramer often lets out broad hints of what kind of activity he took part in during his hedge fund days, and just as often hints that the reason he's doing so is because the SEC won't do anything to stop his viewers and readers from getting ripped off so he's letting us in on the secrets. This isn't a problem, it's why people love him. He's the politician who doesn't have to hint about "not inhaling", he could reminisce about getting stoned and people would respect him for his honesty...

2007 Mar 21 06:45 PM

[Panskeptic:]

If you are even slightly asthmatic, you don't inhale. Can we please put that canard about Clinton to bed once and for all? Given his lungs, he was absolutely right. Shame on you.

2007 Mar 21 10:49 PM

[joshua.laycock:]

To reiterate some of the above comments, in Cramer's book "Confessions of a Street Addict" he speaks to this tactic openly and identifies its efficacy as one of the market's great fallibilities. To suggest that market manipulation doesn't exist is laughable at best and downright frightening at its worst.

To the best of my knowledge, Cramer has always been forthright in his dealings and a strong proponent of disclosure. The fact the he is among the minority to admit he played the same game as everyone and realizes that this knowledge should be common just reiterates his status as champion to the unsophisticated investor.

2007 Mar 22 01:52 PM