The Untold Truth Of Jim Cramer

Stock traders use all the information and knowledge of market trends they've got when deciding whether to buy or sell securities. Jim Cramer's toolbox is much larger, because he's got connections and influence. According to Gawker, Cramer faced allegations that he's used his media platforms to bend the market to his will, increasing the odds that he'll make money. In other words, he doesn't have to guess how a stock is going to perform because he can just make that stock do what he wants it to do.

While writing for SmartMoney in 1995, he characterized "four stocks as good buys," and full disclosure, he'd already invested in one of them. Actually, not-so-full disclosure, because his company, Cramer & Co., held stakes in all four companies, as much as 10 percent in two cases. That led to an "informal" SEC investigation, and SmartMoney's parent company created new rules that barred "columnists from writing about securities they owned." 

Gawker also pointed out a 1998 episode of Squawk Box, when Cramer proclaimed that stock in the company WavePhone "was overvalued," and that he'd just personally "shorted 25,000 shares" of it. "Short" means to predict a stock will lose money, and after Cramer trashed WavePhone on TV (and then interviewed its CEO), its stock price fell 38 percent, meaning Cramer made a tidy sum that day. That led to a brief suspension of Cramer from CNBC and another SEC investigation (from which Cramer was cleared).

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