A Message to My Enemies

Fighting words from an online financial journalist for his off-line competitors.

(We have received the following dispatch from James J. Cramer, the financial pundit, portfolio manager, and part owner of and columnist for

, a financial Web site.)

There’s a well-known online stock maven who calls himself TokyoMex. Like me, he manages money for clients and also writes publicly about stocks. As we reported last week in, TokyoMex is concerned the Securities and Exchange Commission is building a case against him for “pump and dump.” That means hyping a stock he owns so the price goes up, and then dumping his shares on the public.

Unlike me, TokyoMex has no formal disclosure policy about stocks he is writing about. In other ways–in my opinion, based on press reports–he is clearly less responsible than I am about the hazards of writing about small-capitalization stocks, which he can move. Yet not a single newspaper, magazine, or broadcast entity picked up’s scoop that the SEC is investigating him. His online following, judging from press accounts, is much bigger than mine. And my record of giving good financial guidance, publicly and privately, is better than his. So why the fuss over me while other portfolio managers write every day about their stock picks and get no heat?

Let’s establish some things up front. First, there is no difference between a portfolio manager who recommends stocks in an interview to a reporter–which is the meat and potatoes of financial journalism–and a portfolio manager who recommends stocks in a column of his own–which is considered controversial–except that the second portfolio manager reveals his holdings while the first one doesn’t have to.

Second, the public would much rather hear from managers with real money on the line than it would from journalists who are trying to talk about a market that they are actually forbidden to invest in. The success of Squawk Box on CNBC–the top-rated business show, which has real live managers as daily co-hosts–tells us this.

Third, journalists who take an oath never to invest can’t possibly be as good about the inner workings of the market as those who do invest. I am in the trenches every day. Journalists aren’t allowed in the trenches. If you think the trenches matter and, believe me, they matter as much in business as they do in war and in the NFL, then you want me to write. You aren’t going to get it another way.

On the Net there are hundreds of money managers writing every day. But in the off-line press there are very few. Why? The heat, the intense anger felt by the traditional off-line press as we invade their turf, is searing. One look at the horrible press I get from other business writers who are not portfolio managers would scare off almost anybody.

The off-line writers sincerely want to see me fail. They want to drive a wedge between my partners and me. They write with glee about my poor year last year–I was up 2 percent vs. much higher S&P results. What can I say? For 15 years I trounce the averages and I blow it one year. But I can tell you this: They don’t take your previous years’ gains away, and that is where my credibility comes from. I wasn’t the only hedge fund manager who did poorly last year, I was just the only one who was out front about it, constantly writing about how I blew the October bottom in an endless series in

The off-line journalists want me to stop writing and trading. OK, let’s say I stop trading. Would I be as good at writing about the market as I am now? No way. I would just be another journalist scrounging info. To these folks, the fact that I was editor in chief of my college paper more than two decades ago might be considered a plus, but the fact that I am actually doing this stuff is a big minus. Especially because in the third quarter of 1998 I lost money! Holy cow!!

OK, then how about if I stop writing? My wife and kids would like it. My legions of enemies would love it because it would leave them the playing field to themselves. Ah, but there is a problem. I don’t write for the money, and I don’t write for the notoriety, so giving them up wouldn’t hurt. So why not?

Because I believe that the public needs to know more about its own money. Because, until recently with online trading, the whole industry I work in was predicated on the ignorance of the client. The industry wants people to be kept in the dark so it can charge more for its services. The journalists who would stop me are complicit with that ignorance and are willing tools of those that would like the reader to have to rely on those who charge high commissions or high fees to unknowing, worried consumers of finance. I want to use my successful background as an insider to change that. In other words, I write because I think it is right.

Unless the established business journalist community wants to repeal my First Amendment rights, they are stuck with me. I am not going away on my own accord. Ultimately, what I say in my defense is completely meaningless. If my comments or reports from the trenches are worthless, nobody will read them and I will disappear from the writing firmament.

So then, what’s behind all the brouhaha about my writings? (See Alan Abelson’s column in the current Barron’s.) I believe it is because of their popularity that I draw such heat and it is the fear of the marketplace that drives my journalist opponents to such distorted attacks against me. They could care less about my ethics.

(Conflict alert: The editor of Slate is an investor in Cramer’s fund. The amount is small for Cramer but large for the editor of Slate. competes, to some extent, with Slate’s sister MSN site MoneyCentral and even, to a lesser extent, with Slate itself. Etc. Etc. Etc.)