As part of a special “Frequently Asked Questions” edition of his radio show Monday, Jim offered a different kind of show, where he said he wanted to “loosen the tie, sit at the corner table and take your questions.” After 25 years in the market, Jim said he has seen a lot that has gone on and has pretty much held every job there is. “There are some questions people ask me regularly,” he said. For one, people like to ask him about the most he has ever lost. Jim said he lost close to $300 million in 2000. However, that same year he made $450 million. He lost $15 million in one day with Cendant Corp (CD) while he was on vacation. It was a miserable experience, he said. Another question people like to ask is whether or not college courses in business and finance are worth taking. Most professors have not made a dime, and they believe stocks are priced perfectly, which is not true, Jim said. Many times, stock prices diverge from their fundamentals, but that’s when the money’s made, he said. When a stock is down, but the company’s fundamentals are good, people are likely to make money. In response to the question “What does ‘Booyah’ mean?” Jim said the word stems from a listener who made a lot of money in KMart. Another frequently asked question: “What are the factors that most affect the price of a stock?” Jim said that 50% of a stock’s move is due to its sector, while the other 50% is based on the individual workings of a company. A company’s sector matters so significantly because it is generally influenced by larger forces like the Fed. When the Fed tightens rates, some sectors do better, and some don’t, he said.

Working Wall Street

Looking back at his years of experience in the market, Jim said he first got into this business by managing his own account, and then he moved on to managing other people’s money. He worked at Goldman Sachs Group Inc (GS), and now he handles his charitable trust. The best job on Wall Street is the job of being a full-time trader, he said. The trader is the guy that makes the meeting of the minds occur. He is the one that brings the seller and the buyer together and negotiates the price. The second-best job is that of a broker, he said. This is the person who finds the client that wants to do the stock trade. As a broker, Jim said he got his clients by taking them out to shows and dinner every night.. The reasons Jim believes this is the best job on Wall Street is because: a) you’re paid a fortune and b) you get in at 8:30 a.m. and are out by 4 p.m. “When I was a trader I entertained four times a week and it made me a lot of money,” he said. Another job one can have on Wall Street is that of an analyst. They would try to find companies that are private and try to convince them to become public. But it was corrupt, and New York State Attorney General Eliot Spitzer found out, Jim said. Now analysts have to actually be good at what they do, since only a few survive, and some of them have gone over to the buy side, which are the hedge funds, he said. A terrible job that used to be great is that of a floor trader. Floor traders used to be able to clip you and take a little extra money from your pocket, but because of wiretaps and cameras and other ways of checking this behavior, this job is no good, he said. “When everybody else is having a great family life, you are working,” he said. “You’re sitting in that linoleum cafeteria and trying to drink a little scotch in between making deals on the weekends.” But at the same time, you make $10 million if you’re bad, and $20 million if you’re good at your job, he said. In the end, all jobs have upsides and downsides, he said. Now that you have the menu, maybe you’ll decide to stay away from all these jobs, or maybe you’ll make a move to Wall Street, where there is big money. Either way, Jim said, he couldn’t blame you. Another area to work is in mergers and acquisitions. These people are slaves to their work, Jim said.

CEO Size-Up

Another question Jim gets asked a lot is what CEOs are like, and what makes them good.
“A CEO is like a politician,” he said. “He has to be able to talk the talk and make you believe in the company.” A CEO is 50% operator and 50% promoter, because if they can’t sell the company, what good are they? he asked. At the same time, they need to act as an operator, too, and know what’s going on in the company otherwise it “might mess up.” An example of a bad operator is 3M Company (NYSE:MMM) CEO George Buckley, he said, adding that James McNerney, the company’s former CEO and current CEO of The Boeing Company (NYSE:BA), is an example of a good operator. CEOs should be gregarious and tireless, and give up their personal life while they hold the position. While some people might call this heartless, it’s just business, Jim said. “In business there’s no touchy-feely,” he said. “If you’re not going to put in the time and make the company great, then give it to someone else.” In response to another frequently asked question, “Can the market ever crash like it did in 1929?” Jim said that while it is unfortunate, it could happen. We could also have a multiday decline. It crashed in 1987. However, it is unlikely, he said. The characteristic of a bad stock is when it gets good news it barely goes up, and when it gets bad news it gets hammered, Jim said. A bad stock is one that goes nowhere when everything in the market is going up, and when everything is going down, it plummets. A bad stock has no buyback in place, so when everyone comes to sell it, it gets annihilated, he said. In this case, you must sell a little, Jim advised. In response to another question, Jim said the most he has made in one day is $18 million. He said it hurt his family life, because the day it happened he was supposed to go on vacation with his family to Mexico, but then he decided at the last minute not to go. It was in April 2000, when the market had declined for two straight weeks. In terms of life, it was a mistake, but in terms of business, Jim said he ended up making a lot of money. “I missed the vacation, but I do know that sometimes you have to be there and get it right, and that time I nailed it,” he said.