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Jim Cramer: Simply Mad About MoneyA One-On-One InterviewSeptember 24, 2007 • by News at Marshall
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Jim Cramer, the host of CNBC's top-rated "Mad Money" program, sat down with USC Marshall MBA student Andy Tien, a finance columnist for the Daily Trojan, to talk about such subjects as investing as a college student, whether to pay off student loans right away and why he brought his show to USC Marshall. Cramer visited the school during the first week of September for a series of events, including a breakfast with 225 USC Marshall alumni, and to tape his show before about 600 enthusiastic USC fans in Bovard Auditorium.
Andy: Why and how did you get into the finance world?
Jim: I got into it in two stages. First, I actually was interested in stocks as a little boy just because I was fascinated by the prices. But when I was a reporter, I covered the Silicon Valley when it was still very much in its infancy. I saw that there were people talking about stocks and I said, "Geez, I was really into stocks when I was growing up, maybe this could be a way to augment my ridiculously small paycheck." I then got a new job at the American Lawyer Magazine, which was just starting, and it was there that I started investing my paycheck in stocks and I had tremendous success. I invested all through law school (at Harvard University). I was just fascinated by it and I ended up making a lot of money.
Andy: To what do you attribute your success?
Jim: I would attribute it to curiosity. The same kind of curiosity that I had about virtually every story I had reported as a reporter. See, one of the things to be good at the stock market is being able to ask a lot of questions, trying to figure things out, trying to solve puzzles, and that's pretty much what I was doing as a reporter. Obviously, it is much more lucrative to figure out the stocks. Even to this date, curiosity is what makes the differences between a good investor and a not-so-good investor.
Andy: Why do you think it's so difficult to get college students interested in their own personal finances?
Jim: I think a lot of it is that it's just the wrong time in their lives. It's the first break from a regimen. They have freedom. They are away from their folks and every college student I have met feels poor. So if you are poor, the last thing you want to be doing, unless you are maniacal like I was, is to buy stocks. I think that it has to do with the perception that if you have no money, why would you take the little money you do have and do anything other than to buy beer and meet girls or boys?
Andy: What do you think is the biggest mistake college students do with their money?
Jim: I think they don't understand that the student loan is a great thing. Students either want to pay it off or do not take advantage of it. Student loans have very low interest rates. It's important to realize that you have your entire life to pay them off… literally. It pays to invest in paying them off rather than paying them off. And I think there are people who are gripped by a belief that they will never get out of the college debt. My advisor from college at Harvard was adamant that people begin to invest early, that way they have the money to pay off the debt. He says the most important thing that you can do is to get these college kids investing.
Andy: If a student is interested in investing in stocks for the first time, where and how should they begin?
Jim: Well, you know I am partial to the CNBC and the Street.com. There are two types of money that can be invested, there is a retirement and there is your mad money. It would be best to start with a mutual fund. You got to get comfortable. I was a rarity when I bought individual stocks. I don't want people to begin buying individual stocks until after they begin putting away money for retirement.
Andy: Why should a student invest in this volatile market?
Jim: It's always volatile. I have never been in a market that is any good. I watch people all day say that this market is tough. It's never been easy. So what I urge people to do is to recognize that it is never good. What you got to understand is if you are going with the notion that it is always bad and you invest anyway, you will do fine. There's never been a good moment since I got involved in 1980, never!
Andy: There is a notion that you need money to make money. How can cash-strapped students overcome this?
Jim: The idea that you need money to get money is another fallacy. I have spent my career trying to destroy a lot of what we hear about the market. There's a lot of academic literature that says that people cannot pick stocks. What I say is, "I did it and I was able to nail it." And I feel strongly that there is a whole culture of people that tries to put you down. And another cohort of people that say you cannot do it without this industry. These are people that basically have vested interests in keeping you in your financial chains.
Andy: Why are you touring on college campuses?
Jim: This is totally in response to the lightning round, where almost 50 percent of the people were in college. I then went to Harvard Law, begged the dean who's a good friend of mine, and had our first show there. After a couple of colleges, it became clear that it'd be a feather in the cap for the school that would have me. I'm an oddity, an accidental celebrity.
Andy: Why visit USC and why the USC Marshall School of Business?
Jim: People from USC were probably most adamant about me coming here, including alums. I always felt that this is the school you go to in order to be great in business. I consider USC to be the powerhouse in California in the same way Wharton is in the East. I knew that when I lived here. For me, to go to school in California means to do it at USC.
Andy: How have you enjoyed your experiences here in California?
Jim: I lived here when I was incredibly poor. It's great to realize that this (Los Angeles) was a town that is always great to come back to and that I was right about. I then went back home to Philadelphia because I missed my family. If I could do it over, I should have lived here. I was the happiest I have ever been while I was here, even though I lived out of my car. The lifestyle for the market is fabulous; you're done at 1:30 or 2 PM and you can have a second life. Admittedly, if you go out late, you can't be that good. I couldn't scramble fast enough if I went out late. If I lived out here, I'd make sure to wake up at 4 AM and be ready.
Andy: Do you have any lasting advice for USC students?
Jim: I want people to look at employment opportunities in more than finance. I think the great opportunities in America are Procter & Gamble, Kraft, Clorox, Pepsi, and Reliant Steele among others. People tend to think that the only place is at Goldman Sachs. Consumer packaged-goods companies are where people can really move up. Why not go where you're really wanted, not where you have to beg?
About the USC Marshall School of Business
Consistently ranked among the nation's premier schools, USC Marshall is internationally recognized for its emphasis on entrepreneurship and innovation, social responsibility and path-breaking research. Located in the heart of Los Angeles, one of the world's leading business centers and the U.S. gateway to the Pacific Rim, Marshall offers its 5,700-plus undergraduate and graduate students a unique world view and impressive global experiential opportunities. With an alumni community spanning 123 countries, USC Marshall students join a worldwide community of thought leaders who are redefining the way business works.