Jim Cramer: Mad No More?

The CNBC host and author is emphasizing long-term investing for his viewers and readers. What happened to the manic stockpicker?

After years of manic rants and crazy antics on live TV, you might think Jim Cramer's shock value has worn off.

How about this for a new surprise? Jim Cramer, sober-minded personal finance guru.

It creates some contradictions. The hyperactive stockpicker on CNBC's Mad Money has a new book out advising most readers not to buy individual stocks at all. The man who says colleagues called him "Reverend Jim Bob Cramer of the Church of What's Happening Now" is now patiently investing his charitable trust for the long term.

Proud of His Plea to Bernanke

But is Cramer giving up the props, the sound effects, the temper tantrums, and the lightning rounds of off-the-top-of-his-head stock opinions? Has he decided to become the next Jane Bryant Quinn? Not a chance.

His proudest moment of the year is an on-air tantrum in the middle of the summer's financial crisis, a plea to the Federal Reserve Chairman Ben Bernanke to take action. "He has no idea how bad it is out there. He has no idea!" he told CNBC's Erin Burnett in what's now a YouTube favorite.

Not long after a mostly calm interview with BusinessWeek in mid-December, Cramer was on TV sucking helium to demonstrate his enthusiasm for a gas distributing company. "I am trying to entertain," Cramer says. "I admit that." But, he adds, he's also trying to help people.

Don't Forget About Your Homework

The new book Jim Cramer's Stay Mad for Life is a primer for saving and investing. It advises readers to pay off credit cards, make the most of 401(k) plans and individual retirement accounts (IRAs), and get the right kinds of insurance. The subtitle of the book, written with Cliff Mason: Get Rich, Stay Rich (Make Your Kids Even Richer).

Most people actually won't get rich by buying individual stocks, Cramer says. Unless you do your homework, namely spending an hour a week researching for each stock you own, "You won't beat the market, and you'll probably lose money," he writes.

For Cramerites willing to do the research, the book helps construct a long-term, diversified portfolio. For most people, however, he advises low-fee stock index funds.

Henry Blodget Is No Cramer Fan

The new approach might please Cramer's critics, who have worried his focus on trading your way to riches sets a bad example.

Henry Blodget, the former Merrill Lynch (MER) stock analyst who turned writer after being forced from the industry in a scandal, called Cramer a "chair-throwing, self-aggrandizing clown," who gives terrible advice. However, as Blodget wrote in Slate early this year, he's obviously a smart man who knows better. Cramer embodies "the essential conflict in the American financial industry; the war between intelligent investing (patient, scientific, boring) and successful investment media (frenetic, personality-driven, entertaining)."

Now, Cramer is echoing the financial advisers who have long warned that individual investors almost never beat the market. The more short-term trades investors make, the more they tend to lose.

The "Daily Struggle" to Save Money

But in his 14 years as a hedge fund manager, Cramer was a rapid trader, constantly moving in and out of different positions. Lessons from those years found their way into Cramer's previous books and onto many episodes of Mad Money.

Times have changed, he writes. Now, partly due to new regulations on how much information executives can reveal to fund managers, "trying to game short-term movements in stocks [is] almost impossible," he says.

To advise readers and viewers to trade short-term, Cramer says, is like telling them "you too can play in the NBA." A few might be able to do it, but the vast majority won't.

"I've evolved to the point where I see the daily struggle that people go through to just put away $100 a month," Cramer says. It's a more realistic approach. "I wish I wrote this book first," he adds.

Avoid the "Cramer Spike"

But just because Cramer writes a responsible book doesn't mean his viewers will refrain from using his advice in irresponsible, money-losing ways.

The worst example is the "Cramer spike," the jump in price that stocks often make right after they're mentioned on his show. Viewers who buy at these elevated levels will almost always lose money as inevitably the stock drops back to normal a few days later. Cramer warns against this. "I'm pleading with people not to participate in the Cramer spike," he says, urging them to wait before buying.

Cramer's critics might prefer he not do the show at all. "There is a component of people who are not going to listen," but there are many other people who are helped by Mad Money, he says. So the show will go on. "I'm not going to bow to the reckless people," he says.

Still Criticizing the Fed

Cramer bridles at those on Wall Street who say all his shouting and emotion are getting out of hand. Did he really need to flip out on CNBC last August, ratcheting up the fear and anxiety in an already skittish market? "I'm very proud of that call," Cramer says, saying the Fed really had no idea of the severity of the crisis. Arguably Cramer was proven right by the market turmoil that followed. "I subsequently heard from people at the Fed that it had an impact," he says.

He's still criticizing Bernanke and the Fed, most recently blasting them for not cutting rates enough at their Dec. 11 meeting.

In a lot of ways, this is still the same old, excitable Cramer. The book may contain sober advice on bonds and disability insurance, but he also uses it to rail against a number of targets: 401(k) plans, both for their lame offerings and companies that promote "the most dangerous investment you could ever make"—buying your employer's stock; the high fees and lousy records of most mutual fund managers; and the journalists who criticize his record as a stockpicker.

A New Leaf?

Cramer says he tried hard to liven up the "stultifying" subject of personal finance. But writing about certain topics, Cramer doesn't try to hide his boredom.

"Investing in stocks can and should be engaging, interesting, and fun," Cramer writes. "Investing in bonds is something that will always be necessary and boring." The new Cramer may be turning over a new, more responsible leaf. But he's still a stock junkie through and through.

Check out the BusinessWeek.com slide show for a review of "Cramer's Craziest—and Craftiest—Calls."

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