Tim Russert Interviews Jim Cramer

Piggybacking on my last post, I caught another interesting interview with a famous money manager on TV tonight. Tim Russert had Jim Cramer on his show. Cramer was pushing his new book Jim Cramer's Mad Money: Watch TV, Get Rich.

I always like hearing about how successful people got their start doing what they did. Cramer, as it turns out, wanted to be a prosecutor, so he went to Harvard law school. When he got out of school, he was turned down for a job in Rudi Guliani's organization (at the time Guliani was a DA, or some other kind of state or city prosecutor- I don't remember). Feeling dejected, Cramer went to work for Goldman Sachs in sales and trading where he showed a flair for selling stocks to wealthy individuals, and made $750,000 in his first year. He was 28 or 29 years old at the time.

One thing that he said that struck me was he was getting out of a meeting to go to his sister's "prenuptual dinner." I am guessing that meant the rehearsal dinner for her wedding. A senior guy at Goldman pulled him aside as he was leaving and said "Make your decision right here. Are you a Goldman man?"

Cramer was a Goldman man, and he stayed at work, missing his sister's dinner.

I may be in the minority on this one, but I just don't think $750,000 a year is enough to pay me to take me away from my family. I like having dinner with my wife, and spending time with my brothers, sisters, and parents. There are many different ways to be rich. I consider myself a very rich person as far as family goes.

Anyway, Cramer had some other good thoughts on the markets. He said 100 people control $5 trillion dollars, and effectively control the stock market with it. I have mentioned the great concentration of wealth in this country on this blog before, and I have no doubt that Cramer's guess is in the ballpark. In the short run, these guys move stock prices.

In the long run, however, the underlying earnings power of the company is what will eventually show up in its stock market valuation. Even Cramer agreed with that.

Cramer closed the interview by saying that working for a company in most cases will not make you rich, and that he knows of no better legal way to get rich than investing in the stock market.

Before you get pumped up to transfer your savings over into your Schwab brokerage account, let me present the other side of that coin to you, my friends. The stock market is also a great, legal way to get poor if you end up making the wrong bets. When the 100 guys Cramer mentioned go sour on a stock, it drops 50% in a few weeks and you sell, you will feel pain if you have a considerable portion of your net worth invested in that stock.

One more piece of info to think about. Cramer does not make his money from buying and selling stocks. He makes it from advising other people what stocks to buy and sell. He is selling advice, and he is selling it to anyone and everyone who will buy it. Do you really think it gives you an advantage to get Cramer's stock tips?

I don't.