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?

by Ben Steverman

Mad Money's Jim Cramer
Evan Agostini/Getty Images

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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.