the audit

Mad Money, Bad Blood

Why CNBC threw Barron's off its air
February 15, 2008

Last summer, Barron’s published a tough story on Jim Cramer, concluding that the manic and popular star of CNBC’s Mad Money program did not, for all his bluster to the contrary, beat the broader market with his stock picks.

While the story didn’t make much of a splash at the time, it sparked a quiet but surprisingly fierce feud between the two business-news organizations, one that seems out of proportion to the story that caused it. Within days of publication, for instance, CNBC officials told Barron’s reporters who had appeared as on-air guests for years that their presence was no longer desired.

Ed Finn, Barron’s editor and president, says no one told him so, but he believes CNBC banished his reporters from on-air appearances in response to the disputed August 20 piece, “Shorting Cramer” by senior editor Bill Alpert.

“They stopped putting us on pretty much from the day after that story ran,” Finn says. “We made our assumptions.”

Mike Santoli, the Barron’s reporter and a regular on CNBC’s Squawk Box and other programs, who was the most frequent on-air guest, had no comment.

The clash shows what happens when one business-news outlet goes after another: bad blood. In a recent interview with me, a visibly distraught Cramer displayed an emotional intensity entirely different from his ranting but comical on-air persona. “It was just so outrageous, so Kafkaesque,” he says of being a Barron’s target.

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CNBC says it did not actually banish Barron’s, though it says its experience with the Alpert piece left it questioning the magazine’s integrity and basic fairness. Officals say Alpert approached the story with single goal—to get Cramer on something—and wrote his piece accordingly. “It was never a search for truth,” snaps CNBC spokesman Brian Steel.

For his part, Alpert says CNBC was bent on preventing any independent analysis of Cramer’s picks, then behaved truculently when it didn’t like the result. “They don’t want anybody to test their proposition that you can get rich from watching his show,” he says.

Business editors and reporters have been skeptical of Mad Money since it went on the air three years ago, and there are good reasons why. Wall Street has long been a magnet for hustlers, penny-stock impresarios, tout-sheet publishers, boiler-room operators—charlatans of all stripes. Many business reporters consider exposing Wall Street phonies to be at the heart of their mission. Cramer’s bent for self-promotion, not to mention the show’s format—it resembles a gameshow—make Mad Money one big, red flag.

There’s also a journalism culture clash at work: print reporters are rightly skeptical of televised stock chatter. An on-air remark about some stock – was that a recommendation or just a mention? – disappears into thin air, while a print reporter’s stock recommendation is set in cold type. CNBC officials believe this kind of literalism misses the point of Cramer’s show, which is primarily educational and was never intended to recreate a mutual fund portfolio. And if viewers are entertained while learning, they say, so much the better.

“Mad Money,” which airs weeknights at 6 p.m., is unabashed about its showmanship. For an hour, Cramer appears on a garish set and basically plays the clown. He fools with dolls, blows off sound effects, mugs for the camera, all the while offering commentary that is basically serious, about Fed policy, underappreciated stocks, the economy, you name it.

To see Cramer in person on Mad Money’s closed set is to observe a man deeply absorbed in his work. On a recent visit to CNBC’s studios in Englewood Cliffs, New Jersey, I arrived to find Cramer calm, chatting casually off-camera with a guest, Mike Farrell, chief executive of Annaly Capital Management Inc., a tallish fellow who (like a lot of guests) looms over the diminutive star. Cramer politely introduces himself to me, even adding a little bow, and returns to the set where he studiously scribbles notes and checks an on-set computer, trading remarks about the market with Regina Gilgan, the show’s executive producer who strolls behind the cameras with a headset and clipboard.

When a roving camera blinks on, Cramer goes into character, stomping around the set, sleeves rolled up, waving his arms, stopping to stare deeply into the camera with red-rimmed eyes. Touting Petrobras, a Brazilian energy company, he pours Pabst Blue Ribbon into a plastic bathtub and tosses a doll around, a play on the baby-and-bathwater cliché. He is reminding viewers of the stock symbol, PBR, and not to dismiss the company even if other energy companies seem too expensive. The gag doesn’t quite work, but viewers get the idea: Buy Petrobras or at least look into it. (If you’re curious, Petrobras is up eight percent since then.)

Mad Money is split into segments. He talks at length about a single stock or two that he has researched. Then he may interview an executive of a company he likes (that’s why Farrell was there). Then, controversially, he rattles off recommendations in the “lightning round,” in which callers ask about a specific stock. Sometimes, he hits a button and two cartoon bulls (or bears) cross the screen accompanied by a “moo” over the sound system (or a “rrroawer”). His “buy” calls often send stocks spinning up in price the next day—the phenomenon has a name, the “Cramer bump”—only to settle back. The night I was there, Cramer said he liked Arch Coal Inc., (“ACI is good”), Ford’s preferred shares, and to a lesser degree, engineering firm Foster-Wheeler Corp., but didn’t like Intel right now. (And yes, it was hard to keep track; picks can be found on CNBC’s Web site.)

Cramer kids a lot but he is not kidding, I believe, when he says he is fighting for small investors. Many viewers seem to appreciate it and like him. The crew likes him. I like him, despite my firm belief that trying to beat the market at home is a fool’s game. That’s just me. If people want to try, they should go make a million dollars.

Alpert, fifty one years old, is a Barron’s senior editor widely respected among his peers for his deeply researched work and willingness to take on the stickiest subjects. He has successfully weathered libel suits from angry and powerful subjects, including one who took his case all the way to the Australian Supreme Court. (Alpert’s piece held up, and the case settled for a nominal amount.) The Audit praised him in December for a solid piece that sharply, and justly, criticized a combative and unprofitable tech company, ParkerVision.

Over the summer, Alpert came across a study by Northwestern University business school students noting, among other things, that some of Cramer’s picks had moved up before Cramer mentioned them on the air. The early stock movements by themselves proved nothing, but raised questions—potentially explosive ones—about whether Cramer and CNBC were allowing information to leak before the show, or, worse, whether someone was using the show to profit illegally, a practice known as “front-running.”

Alpert’s investigation was relatively brief, as these things go, but no less bitter for that. It began on August 1, a Wednesday, when Alpert called Cramer at, the financial-news publication that Cramer co-founded.

Accounts vary as to what Alpert’s initial request was about. Alpert says he called asking simply for data, a list of Cramer’s stock picks suitable for analysis. He describes his demeanor in a way that recalls Marcus Welby, serious but non-threatening, just wanting to check the facts. CNBC describes Alpert as a kind of Elliot Ness on a steroidal rage, saying he had a story that centered on the leak angle and demanded a response, more or less immediately.

Early confusion led to a frantic series of phone calls on Friday, August 3, in which Cramer and CNBC officials called Alpert, lawyers at Dow Jones & Co., Barron’s publisher, even Dow Jones’s then chief executive, Rich Zannino, trying to head off what they characterized as a potentially libelous story that would cripple if not destroy Mad Money and ruin Cramer’s reputation.

“I needed that juggernaut to stop,” Cramer, still visibly upset, recalled.

Alpert was vague about the publication date of the story, which is standard practice for financial publications, but probably added to the confusion at CNBC. Barron’s is dated Mondays, but is printed early Saturday morning, so CNBC had some basis to fear the story was running that night.

Alpert’s leak questions triggered a full-on red alert at CNBC, which set to work to find alternative explanations for the stock movements in question, and hired outside counsel from Paul, Weiss, Rifkind, Wharton & Garrison, which ran up bills exceeding $100,000. Before it was all over, CNBC officials had zinged 570 e-mails to each other about the Barron’s probe. For our purposes, who said what when, and how it was said, during the early stages, don’t matter since the leak discussion came to nothing and were properly dropped.

But for CNBC officials, it does matter, and they’re still sore about their integrity being called into question and being forced to scramble—and devote hundreds of hours—to prove a negative. Adding to their stress was the fact that the Barron’s query came as the network’s general counsel, Lauren Donovan, who had a central role in the discussions, was in the final stages of a battle with cancer, to which she would succumb in December. (Alpert, for his part, was undergoing treatment for prostate cancer, for which he would later have surgery. Neither side knew about the other’s health issues.)

On August 7, CNBC sent a letter to Barron’s that, among other things, reinforced the point that any Barron’s mention of leaks from the show would be “false and reckless” (CNBC’s emphasis), about the strongest legal language available. The reporting culminated in a tense, four-hour interview on August 13 that had all the trappings of a deposition. CNBC taped it, while its lawyers gave a presentation devoted to refuting any leak allegation and building a case that publishing such a suggestion would be libelous. The discussion about Cramer’s stock-picking prowess proceeded almost on a separate track and was clearly secondary to CNBC, if not to Alpert.

The story that ran on August 20 made no mention of leaks. To the ire of CNBC officials, a graphic headlined “10 Biggest Pops,” appeared with the story, listing some stocks that moved up before Cramer picked them. However, the caption concluded that Cramer “jumps on stocks that are in the news and moving up,” a perfectly innocent explanation.

The main story, though, is decidedly unfriendly to Cramer. Its tone is borderline contemptuous, and it describes CNBC as evasive to the point of being unprofessional, especially for a news organization.

When we asked Cramer and CNBC for their own records of Mad Money’s stock-picking performance, they had more excuses than a Tour de France cyclist dodging a blood test.

Cramer himself is shown as hostile to measuring his own picks. Alpert writes:

Hoping to get Cramer’s advice on how to measure his Mad Money picks, I called him a few weeks ago. He tore into me. “I’ve never read a single article that I thought wasn’t a massive distortion of what the show’s all about,” he said. When I said I just wanted to see Mad Money’s record, he replied: “I’ve never seen an analysis that I’ve regarded as honest, and I doubt yours is any different.”

And the story says that “a comprehensive and careful review” shows Cramer hasn’t beaten the market at all and in fact trails it badly, depending on the method of measurement and time period covered.

Faced with the fact that CNBC airs stock picks but keeps no official record of them, the story recounts, Barron’s found its own, one on a site called, that lists 1,200 picks, and a second on the Web site of, a company closely associated with Cramer, which contains more than 3,400 of his picks. (Pinpointing the latter list takes some doing, but it can be found at here, by clicking on the “stock screener” button, then “find these stock picks” without selecting any criteria.)

Alpert found that the market beat Cramer by at least four percentage points—a big number—when using the 1,200-stock list and was flat-to-down using’s broader list.

The story says CNBC countered with its own database, of 445 stocks, a fraction of Cramer’s total mentions, which number as much as 7,000 a year, but a list that it believed are fully researched, bona fide picks, not mere mentions. Using that list, the story says, Cramer appears to beat the market by 1.8 percent over two months. But Alpert found flaws in the database.

It turns out that CNBC did its analysis incorrectly, and that the stocks beat the S&P by … 1.2% over two months. CNBC measured the stocks’ performance against the average performance of the S&P year-to-date, instead of against the performance of the S&P from the date of each stock pick. Also, it included more than 100 recently recommended stocks that weren’t held for the full one- or two-month holding period that CNBC claimed.

The ban, if that’s what it is, on Barron’s reporters remains largely in effect, though Steel, the CNBC spokesman, notes that Barron’s reporters have appeared on at least two occasions since the dust-up. (While the dispute was going on, it should be noted, Dow Jones was bought by News Corp., which owns a rival business-news network, casting uncertainty over a content-sharing agreement between Dow Jones and CNBC.)

CNBC still feels aggrieved by the story, although, relieved to have eliminated the leak angle, it did not publicly challenge it. The network and Cramer today insist that he does beat the market and that Barron’s’s data were erroneous and its methods designed to make him lose.

CNBC says (as it said in the Barron’s piece) that the list from was not authoritative and argues that the list on the Web site of is not valid, either. CNBC summed up its position in its August 7 letter to Barron’s:

Mad Money is produced entirely by CNBC. The “Mad Money Performance” section of is maintained by a contributor who has no ties with CNBC or Mad Money, and neither we nor Jim review his work.

Further, Cramer told me, Barron’s is unfair because it doesn’t eat its own cooking. It makes stock selections in its own pages, but starts counting the day before publication, allowing it to benefit from a “Barron’s bounce,” while denying that advantage to Mad Money.

In the end, I disagree with CNBC on almost all counts. Overall, the Barron’s piece is sound.

First, and foremost, CNBC is wrong to air a show that is centered on stock picking without tracking its own performance or even keeping a record, using whatever criteria it chooses, of the stocks it picks.

Alpert says as much in his piece. While CNBC officials maintain that the main goal of the show is educational and to give viewers insight into the thinking of successful trader, they acknowledge the problem and say they are working on it.

CNBC is also obviously wrong to dismiss the list posted by —a list endorsed by the Mad Money host of picks he made on the Mad Money show—as having nothing to do with Mad Money. Meanwhile, is closely tied to Cramer who is closely tied to CNBC. Readers and viewers should not be asked to sort through that linguine bowl of fine distinctions and overlapping interests.

Third, it borders on flimflammery for CNBC to put forward a list of sanctioned picks that eliminates 90 percent of the stocks Cramer talks about, including and especially mentions that are accompanied by cows and a “moo,” which occurs frequently in the lightning round.

And while viewers obviously know that words like “lightning round” and “sudden death” do not mean “meticulously researched,” in fact they do trade on those supposed non-picks, hence the next-day stock gyrations on all manner of Cramer mentions.

Finally, Cramer’s argument that Barron should measure him as it measures itself, while understandable from his point of view, is beside the point. Barron’s’s picks are another story. And since Mad Money picks are available to its viewers only after broadcast, that’s how they should be measured. In any case, Alpert’s story allowed CNBC its method (waiting five trading days after the pick) in measuring its list of 445 stocks.

That all said, I do see flaws in Alpert’s story.

First, while Barron’s could not of course mention the bitter struggle over the leak questions, it could have been more generous in describing Cramer and CNBC’s defensive posture. Their defensiveness stemmed in large degree from causes that readers knew nothing about.
Put another way: Would CNBC have been as defensive, absent the front-running questions? No way.

Second, Barron’s seems overly dismissive of CNBC’s (minor) victory using its database of 445 stocks. Yes, it is a highly selective collection based on unclear criteria of a fraction of Cramer’s total mentions. Still, given all that, he beat the market by 1.2 percent over two months, or, extrapolated over a year, 7.2 percent, which is good by any standard. Barron’s should have done more to deconstruct this list if it felt it was deliberately cobbled together to help Cramer win. Perhaps it is made up of Cramer’s researched picks. As it is, the reader does not know.

Also Barron’s unfairly moves the bar in discussing the performance of the CNBC list. After grudgingly conceding the 1.2 percent out-performance, Barron’s adds: “More important, the stocks fell short of the S&P by a statistically significant 2.2% through last week,” meaning August 18. But the period under review was January 1 through July 31, 2007.

That’s a gratuitous shot. Barron’s should have stuck to the parameters of the discussion.

Finally, the piece refers in passing to Cramer’s “then-wife, Karen;” the couple is still married. This gaffe is unrelated to the main thrust of the piece and was no doubt unintentional, but explains some of the lingering animus in the CNBC camp.

In the end, was the Barron’s piece a hatchet job, as CNBC contends? No, it really was not.

So, was CNBC wrong to throw Barron’s off the air? Actually, no. It’s its air.

Did CNBC behave unprofessionally, as Barron’s contends? No—except to the extent that its own policies force it into disingenuous arguments about what is and isn’t a “pick.”

This is the contradiction that the Barron’s story, and the subsequent fallout, have exposed. It’s up to CNBC to resolve it.

Dean Starkman Dean Starkman runs The Audit, CJR’s business section, and is the author of The Watchdog That Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.