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Last year, James J. Cramer was treated like a deity by many day traders. As co-founder of TheStreet.com, he would write virtually nonstop analyses of how to play the market -- sometimes posting columns mere minutes apart. When not lambasting those on Wall Street who didn't meet his expectations, he would pontificate on TV. All in all, quite a show. As he put it in a recent column: "I am one of those linebackers that doesn't like people coming into my zone, and if you do, you should expect punishment if you are from the other team."
Like football, though, picking stocks, can be a grueling game. Since April, Cramer's stocks are down about $146,000 or more than 5% of his personal portfolio, according to the paid portion of TheStreet.com Web site, which tracks his equity holdings. That doesn't include his mutual funds or his 11.6% stake in TheStreet.com, now trading at around a buck, a far cry from its 1999 high, when it briefly topped $70.
Plus, he no longer manages his $400 million private investment fund, having quit late last year to end the complaints by critics of possible conflicts of interest. Today, as an added buffer, he holds all his stocks for four months, and he has agreed not to buy or sell anything he speaks about on TV for at least five days. For someone who excoriates readers who act too slowly on market shifts, that has to hurt.
DREAM PORTFOLIO. So is Cramer feeling a little humbler these days? No way. In fact, the goateed market guru was as confident as ever on Aug. 6, at his annual Fall Forecast seminar in New York City. Decked out in a lilac-colored shirt and gray suit, Cramer predicted that interest rates would drop another full point, to 2.5%, before yearend, the dollar would start heading south, and oil would ultimately drop to $15 a barrel. With this scenario in mind, he then gave attendees a dream portfolio of 20 stocks that he promised would boost their bank accounts.
The message: Hey, investors. Forget tech! Those still holding out for a tech-stock rebound, are acting "like children at the mall, waiting for their parents to come back," said Cramer. "Tech isn't going to come roaring back." Instead, people should reach for higher-yielding stocks that benefit from a dive in interest rates, energy prices, and the dollar. For Cramer, that means such "delightfully dull" selections in such smaller unsung areas as utilities, insurance companies, banks, and even a few media plays.
The three-hour talk, which cost up to $400 a ticket, wasn't quite the affair it used to be, according to one attendee, who estimated the crowd to be about a fifth the size of Cramer's powwow last summer. Twenty two of the 150 or so in attendance were from the University of Dallas Graduate School of Management. The group's leader said they received a generous discount off the price. A spokeswoman for TheStreet.com declined to give out previous attendance rates, noting only that the conference "met expectations despite market conditions."
WAITING FOR PAYDAY. Although several participants said they had seen their wealth dwindle in the dot-com bust, most people interviewed still regard Cramer as their market mentor. As Dan Pence, a investor from Basking Ridge, N.J., put it: "He's the only guy out there trying to help people like me." Still, Pence added that his recent Cramer-inspired picks had yet to pay off. He thinks it's only a matter of time before they do.
Consultant Michael Tayyabkhan of Princeton said his stock investments have shrunk because "many times I took his advice too late." Then there's Karen Ghormley, a homemaker who flew in for the talk from northern Oklahoma. She said she has read Cramer but never taken his advice. "I did a lot on my own and lost a lot of money," she said. Ghormley now plans to look closer at Cramer's advice and maybe take the plunge again in the markets.
Since stepping down from his fund, Cramer has tried to ramp up his image as the Pied Piper of personal investing. He is willing to suffer losses through restricted trading, he says, so that his writing can help the little guy make money. "I wish I could invest in these stocks myself," he said, shaking his head over the gems in his so-called People's Choice Portfolio. The company doesn't want the list revealed because it plans to sell videos of the talk through the site for $99.95. Cramer's personal portfolio is now posted on TheStreet's RealMoney.com premium section, which costs $200 a year and whose subscriber base shrank to 66,000 in the second quarter, down from 71,000 in the first quarter.
"VALUE PROPOSITION." Cramer's advice will increasingly cost users, however. Despite the failure of most sites to make money selling content over the Internet, Cramer is determined to make his premium site pay off. He stopped writing his mutual-funds column for the free section of TheStreet.com on Aug. 6, so all of his writing will be available to subscribers only. That means going from 3 million monthly visitors to the tiny core that's willing to pay for a couple of hundred dollars a year for content.
Cramer is unfazed. As he stated in his Aug. 6 column on RealMoney: "I would rather have 10 paid subscriptions than 1,000 page views. A page view is worth nothing." Asked to clarify his stance after the conference, he said, "it's really time to clarify the value proposition." In short, if you want his insights, you'll have to pay.
Still, Cramer's penny-pinching fans will be able to catch his thoughts on CNBC, where he remains a market commentator. He also has a new syndicated radio show that runs for an hour every day. The company even held a drawing at the conference, giving two lucky participants a chance to sit at TheStreet.com's headquarters and watch Cramer in the radio studio. With the slowdown in trading these days, after all, this may be one group with some time on their hands. By Diane Brady in New York