December 4, 2003 The Bottom Line 9 Coping with Success I.M. Cheap By Eli Rabinowich and third year, and basically mattered to me. Then my wife, worked at Goldman during best friend, sister, father and Welcome to “Profiles in my third year of law school. I partner all had an intervention Investing”, brought to you couldn’t wait to get started. I for me on Thanksgiving week- The Best Philly by The Bottom Line and didn’t know if I wanted to be end and said “Look its never The Heilbrunn Center for a trader or in sales. Decided to going to be this good for you. New York Graham & Dodd Investing. be in sales because I wanted to You are up huge. You are driv- Every week we will profile build my own business – which ing everyone crazy. You don’t a leading investor and get an is what I did and it was just ter- know your kids. You are just Cheesesteak Ever inside look into their invest- rific. a machine – You have to stop.” ment philosophy. By Matthew Wang them and marinates them giv- Up next, Jim Cramer. ing the onions more of a grill Professional History As some of you may have flavor. • Co-host of Kudlow guessed by now, I am not the Finally, to further differenti- & Cramer healthiest eater. I love the meat ate itself from a Philly chees- • Co-producer, “Real and grease that comes with esteak, BB’s adds a mixture Money with Jim Cramer” a fatty foods. There is nothing of ketchup, chili peppers and national radio program more satisfying then using a balsamic vinegar on the bread • Founder, napkin to wipe your face and to give the cheese steak a kick. thestreet.com PROFILES IN INVESTING having it soaked in oil. My All of this is wrapped in wax • Hedge fund man- culinary habits obviously make paper so there is no leakage and ager from 1987-2000, 24% Philly cheesesteaks one of my combined into a cheese steak compounded annual return favorite foods. that even Philly natives could after fees The problem with living in appreciate for under $5.00. • Author, Confessions New York City is that finding So next time you get a crav- of a Street Addict and You a good cheese steak is difficult. ing for a great sandwich. Hop Got Screwed. There are places like Tad’s down to the West 4th Street • Goldman Sachs, Steaks, Subway, and numerous stop, go past the playground Sales & Trading neighborhood delis, but they and McDonalds. Look for • Reporter, are pale imitations of the artis- the line of NYU students and Tallahassee Democrat and tic creations that Philadelphia Wall Street interns and order the Los Angeles Herald offers. a cheese steak and a drink. Examiner BB Sandwich Bar did some- Walk back to the playgrounds • Harvard College, thing about it. Opened in the and watch some street ball and Magna Cum Laude, Harvard spring of 2002 in a small store enjoy a New York original. Law School front with less than 10 seats, I would like to thank every- ER: How did you first get BB Sandwich Bar serves one one who offered comments started in the investment thing only, cheesesteaks. But about my review of Corner business? these aren’t your authentic Bistro. I received so many sug- JC: I started following the Philly-style cheese steaks, but a gestions about people’s favorite market in 3rd, 4th, and 5th New York “gourmet” variation burger places that I will write a grade and I was turned on to of it. If you are from Philly, let burger sampler in the spring. If it the way people are turned me warn you, the next several you have any places that you onto sports. I started mak- lines may sicken you. think must be on my list of ing money in my personal First, rather than using a hero places to go to, please write in. account in ‘79-‘80. In ‘81 roll, BB’s uses a round Kaiser I already have about five to six, when I went to law school roll. According to the owner but the more the merrier. I was leaving stock tips on Jim Cramer in a New York Times review BB Sandwich Bar (120 West my answering machine. A ER: How long were you at So I walked in on Monday and (May 2002), the Kaiser roll 3rd Street between Macdougal guy named Marty Peretz, who Goldman for? I quit… and I’ve been really absorbs the juices of the meat Street and Sixth Avenue, (212) owned the New Republic, was JC: I was at Goldman for 4 happy ever since. I don’t make better. 473-7500) Closest Subway trying to get a hold of me to years any money but I am really Second, instead of using Station: A,C,E, F, V train to write a book review. I didn’t ER: … and then you start- happy. I was making a lot of Cheez Whiz or provolone, BB’s West 4th Street. return his phone call for a long ed you own fund? money and I was unhappy. Its uses white American cheese, Are there any cheap places time. In the interim he made so JC: Yes amazing how much better it is claiming that the white cheese you want reviewed? I will be in much money off my answering ER: Then in 2000 you to me. It’s interesting. “has a higher fat content than New York during the holidays machine he said he had to meet decided to leave your fund, ER: Have you achieved yellow” and that “fat transfers and I will be reviewing a ton me at the Coffee Connection, can you tell me a little about that balance in your life flavor the best.” Provolone’s of places. Please e-mail me at a coffee house near Harvard. that decision? now? flavor “overwhelms the meat.” [email protected] When I got there he had a JC: I was a deeply troubled JC: Yeah. I’m really good. I Third, rather than only frying with your suggestions and check for half a million dol- figure in 2000. I was up huge take my kids to school every- the onions, BB’s caramelizes opinions. lars – and that’s what I’ve been in a bad year [36%]. Yet every- day now. I make them breakfast doing ever since. day I led my life as if they and lunch. I get back at seven ER: Why did you go to law were going to take it away. I everyday. I am trying to move school instead of business was increasingly too focused my show up so I can be back school? on business and not focused at six. I coached soccer for the JC: I wanted to be a prosecu- on the rest of my life. I had no last two years. I never miss a tor but I didn’t have the grades balance. I used to get to work game. I only missed back-to- in my first year to be accepted at three and when I got home school night because Grasso by Giuliani. Between by first my family was a distraction. got fired. I am ritualistic about and second year I worked as a All day all I could think about all the kids stuff. I don’t work summer associate on the take- was “I got to beat my 24%, I on any evening and haven’t over team at Fried Frank and I got to beat my 24%, I got to worked a weekend since. At despised it. It was horrible. It keep my compound rate.” I my old firm, I believed that a was really boring. I worked at was nuts. I was so driven for Continued on page 18 Goldman between my second performance that it was all that 18 The Bottom Line December 4, 2003 Profiles in Investing: Jim Cramer Continued from page 9 with it. It was nuts. There is and I was insecure. I think I her if she could believe it – and that. Then I said I’m going to such a thing as being too dedi- could have been kinder. I was she said – “Did you really say have fifty million dollars, my five day week was a mistake cated. There is such a thing in a mode where I felt that nice- he shouldn’t go to the stinking own firm, lots of employees, and we work six days. And you as making too much money. ties were a time consumption I play to see his stinking kid?,” and become really powerful – I could pick which weekend you Sometimes I think I was the couldn’t afford because there and I said “Yeah, Intel only did that. Then I said why can’t wanted to work – you could logical conclusion of every- were only so many hours in reports once a quarter.” And I make a hundred million dol- pick Saturday or Sunday. I thing you were supposed to do the day to succeed. What was that is when she contacted lars and start another company, didn’t care which day you took in your life. I went to the best important was to make money him and people were starting a public company brought pub- off for religious purposes, but schools and did my best to fin- for my partners – that was the to realize I was out of control. lic by Goldman – that’s a good the other day was mine. And ish first. I went to the best firm litmus test. And everything else The last thing anybody ever goal – and I did that. Well then I led that life myself. I felt if and tried to finish first. I was was a distraction. I remember thinks about when they are what do you do? Raise your everybody else was working the leading commission gen- screaming at my partner when starting out is what would hap- target to two hundred million. five days, it was imperative to erator at Goldman in ‘84, ‘85 he went to his kid’s play on pen if I made it. What would My original goal was fine – to work six days. If everybody and ‘86 even though I was kid. the day when we lost a mil- happen if everything that was get some money because I was else was working 12 hours, I went to my own fund. I was lion dollars. I said, “Your kid is supposed to happen happens? insecure about not having any it was imperative to work 14 everything you were supposed going to be the star of a million What if I succeed and got to money. But once I met that I hours. to be and it was awful. We are plays, Intel only reports once where I want to get to? What should not have ratcheted and ER: Any desire to go back not machines, we are people. I a quarter. And you’re going happens? No one prepares you ratcheted. There is a period to running a fund? was destroying myself. It must to your kid’s stinking play.” for that. You are prepared to when you are supposed to do JC: No. I like the process have been comical to watch This was right before I quit. fail. But I don’t think anybody this stuff – and I regard that of running money. I wouldn’t it as an outsider. I had all the He said to me, “One day you knows what to do once they period to be when you are in mind running money for a money in the world, great kids are going to be so embarrassed get there. your twenties and thirties. But couple of friends. Someday I and wife… and it didn’t mean about yourself.” I said, “Well I ER: What advice would when you get to your forties might do that. But the respon- jack. don’t care about that one day. you give to students? and you have kids and a fam- sibility of running money for ER: Could you have You told me Intel was going JC: I think you need to have ily – if you are single and don’t people where they are my achieved the proper balance to be fine and then you go to goals and when you hit those have kids it is different – but boss is never going to happen any earlier in your life or did your kid’s stupid play, and I’m goals you can’t raise your price [when] you go and get married again. I totally believed that you have to go through the stuck here managing the Intel target. I said “I’m going to be and have kids they trump this my investors were my bosses. process? position.” I went home and a millionaire” and I got that. other stuff. It was their money and that JC: I had to go through the described to my wife the tan- Then I said I going to have ten ER: Thank you very much was how I led things. I’m done process because I wasn’t rich trum my partner had and asked million dollars – and then I got Mr. Cramer Fringe Benefits Continued from page 10 organized crime and the com- The bus driver then got up ered. I hate missing a joke. people outside. The Chinese petitive violence. and walked a few rows back One young woman outside driver had now taken to yell- maintenance costs, a Boston Regardless of the racketeer- to a woman and said, “You get said she had been there since ing, “Eleven! Eleven!” out the bus has to make approximate- ing, the buses are known for off now!” 7:30 A.M. waiting and she door, trying to get them to take ly 333 trips to pay for itself being cheap, clean, and fast, I turned around and the would not take “No” for an the next bus at 11am. After ten and a Washington bus has to making them ideal for bud- woman had her arms firmly answer. Finally, the driver more minutes of arguing about make around 143 trips. With get-conscious students. This is folded against her chest. offered her the very last pos- a refund, the bus driver told each bus making, on average, why I found myself standing “No! I’m not getting off!” sible seat on the bus: the tour them to wait for “the Boss” four trips a day on both routes, in front of the E&Y building she screamed at the top of her guide jump seat in the entry to come. He then closed the it takes 83 days to pay off a at 8:30am last Wednesday, lungs. stairwell. Her name was Ruchi door and we were finally on Boston bus and 36 days to pay waiting for my sweet deal to “You get off now! Wrong Kumar, a graduate student at our way. off a Washington bus. take me home. Eastern Travel company!” the bus driver Columbia’s Teacher’s College. We made good time getting While the Washington route is one of two companies that yelled in broken English. Oh, how her insistence would through the Lincoln Tunnel, (which is what I’ve taken) may run from New York to D.C., “I don’t care! The lady soon come back to haunt her. but as we got onto the New make a little more economic the other is the problem-rid- pointed to this bus so I got After yelling some more Jersey Turnpike, we immedi- sense, the Boston route’s $10 den New Century Travel. My on!” she screamed back. at the woman in back who ately pulled into the first ser- fare seems to be artificially bus had begun by picking up “I have a ticket, see!” The wouldn’t get off, the driver vice stop. I leaned down and low, and organized crime its first group of passengers woman waved a green piece was walking back up to the saw that the gas-gauge was may be part of the reason. On at 8:00am in Chinatown, and of paper, clearly not a ticket front of the bus when another firmly sitting on a big fat E. November 1, the New York it was a little late pulling in at for our bus, in the man’s face. young woman asked if there The line for the diesel pump Post reported on a knifing 42nd Street. “Wrong company! WRONG was a bathroom on the bus. looked like a mile long, and in front of the New Century Being a good New Yorker, COMPANY!” the driver The driver swirled around fifteen minutes had passed Travel bus company’s office I jumped into the front of the yelled back. shaking his head. before we found out that the in Chinatown. Reports are still line that materialized when The woman responded by “No, no! Broken! Broken!” truck driver in front had got- unclear on what happened, but the bus pulled up. I threw hunching further down in her he insisted, his eyes wide with ten his credit card declined. one report says a 31-year-old my bag underneath, gave the chair and pressing her arms what seemed like fear. Then, in This is when we found out Chinese man was stabbed to Chinese attendant my printed- more firmly against her chest. the trip’s piece de resistance, that the only fluent English death after trying to extort out e-mail receipt, and took My adventure had officially he made a “Sproooooosh” the driver spoke consisted of protection money from the a seat in the first row right begun. sound with his mouth and an the F-word and the S-word. owner, while another report behind the driver. My row- Meanwhile, the Chinese explosion motion with his Finally we pulled up to the says that the person killed was mate turned out to be Jeremy attendant outside had begun hands. In my head, the thought pump and the driver jumped the owner’s business partner. Flattau, a grad student study- screaming into his cell phone. of a four-hour bus ride with an out. Jeremy Flattau and I The New York Times reported ing International Affairs at the If I had only learned Chinese exploded bathroom elicited a watched in amazement as he on November 29 that two New New School. Oh the stories as a kid like my mother, silent “That’s not good.” took the hose from the pump Century buses mysteriously we’d have. who was from Shanghai, Then, as if reading my and jumped underneath the caught fire this summer, and When I had arrived at the had always wanted, I would mind, Jeremy Flattau, the guy bus, dragging the hose with in May a rival bus operator stop earlier, I had noticed that surely have understood him sitting next to me, said it out him. The nozzle, after all that backed his bus into an owner there were a lot of people screaming at someone down loud. We laughed and laughed time, was on the wrong side of of New Century and broke waiting already and the words in Chinatown about how and then settled back into our the bus. his pelvis. One bus company “over booked” had come to there were too many tickets miserable silence. The bus-trip from hell was owner says he moved his mind. Sure enough, the bus and too few seats. A Chinese It was now 9:15am and the now a full hour and a half offices from Chinatown to filled up and five people were lady across from me who had Chinese attendant had just left Continued on page 19 midtown because he feared still waiting outside for seats. learned Chinese as a kid snick- without resolving the unseated