By Jerry Knight
Monday, May 8, 2006
Watching Jim Cramer on CNBC, ripping the head off a toy bear, then raking his audience with machine-gun sound effects, left me longing for the days when Louis Rukeyser was considered "too showbiz" to be talking about stocks on television.
Rukeyser, who died last week at 73, invented business broadcasting, a field into which I, too, have strayed.
"Wall Street Week with Louis Rukeyser" went on the air in 1970. At its peak, it had 6 million regular viewers and was the most-watched show on public television, easily the best thing ever to come out of Maryland Public Television.
Killing it in the spring of 2002 may have been the dumbest decision ever made at MPT headquarters in Owings Mills because for years Rukeyser was a cash cow, supporting other programming.
Once considered too cute because he cracked puns and too radical because he actually expressed opinions about stocks on TV, Rukeyser created a generation of market-moving multimedia mavens.
He opened the door to Lou Dobbs, whose protectionist preaching on CNN almost justifies calling Fox News "fair and balanced." He was the intellectual godfather of Maria Bartiromo of CNBC, who last week rattled the stock market by reporting Fed Chairman Ben S. Bernanke's party chat about Wall Street misreading some of his remarks.
Even Jim Cramer credits Rukeyser with turning him on to investing.
"I didn't know the difference between stocks and bonds until I watched him," Cramer said in a phone call last week. "He was unbelievable. He got a lot of people started on successful strategies."
But that was a different era. While the erudite Rukeyser drew people in by emphasizing the "pun" in pundit, Cramer works a sound-effects board, literally tooting his own horn. Laugh tracks, wails of pain and gunfire punctuate his stock picks.
Cramer said the big difference between him and Rukeyser is that "he never bit the heads off bears or threw chairs."
Washington area companies such as Blackboard Inc., Under Armour Inc. and ManTech International Corp. have experienced the sudden, if transitory, bump in share prices that follows on-the-air praise from Cramer.
As former "Wall Street Week" guest Jim Grant recalled in the New York Times last week, columnist Russell Baker once described himself as a typical "Wall Street Week" viewer, sitting in a Louis Quinze armchair sipping "a calming infusion of brandy."
The young men who watch Cramer's daily "Mad Money" on CNBC seem to have slammed a couple of shooters, chased with a calming infusion of Budweiser, before calling in and shouting "Booyah!" -- Cramer's not-so-secret password for getting to ask a question on the air.
"Things have changed," Cramer said. "Today the average guy owns stocks. When Lou hit the air, only the rich owned stocks. And the moderately rich. Today there's a tremendous cohort of people who own stocks and are not all that sophisticated about it.
"You've got to get those people, too," he said. "You've got to go beyond punditry and draw people in who were never drawn in."
Rukeyser was a long-term bull who showed his distain for bearish predictions by disinviting guests he deemed too negative. Cramer shares that viewpoint, although he expresses it by decapitating teddy bears.
Rukeyser was a buy-and-hold kind of guy, but so was most everyone in those days. Now that most people can trade at home over the Internet, Cramer caters not to the 401(k) crowd but to people who think their nest eggs are secure and have a little "mad money" left over to play the market.
Both built respectable track records.
The fan Web site YourMoneyWatch.com calculates that since "Mad Money" went on the air last summer, Cramer's stock picks are up about 13.5 percent, while the Dow is up about 8.1 percent and the benchmark Standard & Poor's 500-stock index is up about 6.6 percent.
Another Web site, CramerWatch.org, scores it differently, pitting Cramer against a mythical monkey named Leonard who flips a coin to decide whether to buy or sell stocks mentioned on the show. "At CramerWatch.org we show how you would be better picking 'buy' or 'sell' at random, which is pretty much how our monkey, Leonard, picks stocks. And Leonard is right more often then Jim. With a lot less noise."
The monkey, however, evaluates only stocks mentioned on the "Lightning Round," a one-man quiz show in which Cramer evaluates stocks requested by callers.
There were no bloggers following Rukeyser when he was on the air, so "Wall Street Week" was not subject to instant analysis. But two academics who looked at the show's picks over a two-year period in the 1990s compared stocks mentioned on "Wall Street Week" with companies considered their peers, based on the size and nature of their businesses.
"Wall Street Week" stocks outperformed their designated peers by 15 to 17 percent, the professors said. "The show had information value and not just entertainment value," they concluded.
Others also documented the Rukeyser Effect.
Stocks mentioned on "Wall Street Week" on Friday evenings tended to rise on the Monday after the shows, then drift downward for the rest of the week. Over time, the effect wore off, so buying on Monday was a sucker bet.
So too with people who rush to their computers to buy stocks mentioned on "Mad Money." You no longer have to wait for the market to open to make a sucker bet. You can place an instant order online in the "aftermarket" where stocks trade electronically even when Wall Street snoozes.
"If you buy in the aftermarket, you will get picked off," Cramer said -- picked off by someone who will gladly sell stock at top dollar to people too impatient to follow his advice to do some homework and wait for the bubble to pass before clicking on the "buy" button.
Though Cramer issues that warning several times a week, enough people keep doing it to perpetuate the morning-after phenomenon. After all, how can you hear such cautionary notes when the host is jumping around honking a horn? As big a fan as I am of Cramer -- and his Web site, TheStreet.com -- I prefer puns to whoopee cushions.
Which is to be expected. Demographically, "Wall Street Week" used to "skew old," as the TV marketers say. Rukeyser's audiences were affluent enough to buy stock but not the other stuff sponsors want to sell. Cramer takes his show on tour to college campuses, pitching it to the consumers TV craves most.
Footnotes and full disclosure: The syndicated radio version of "Mad Money" airs most weeknights on Washington Post Radio. And I've been a guest on Cramer's previous show and other CNBC programs.
Jerry Knight's e-mail address firstname.lastname@example.org.