An auctioneer and her assistants scan the crowd for bidders.

An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. In economic theory, an auction may refer to any mechanism or set of trading rules for exchange.

History[link]

Auction Room, Christie's, circa 1808

Artemis, Ancient Greek marble sculpture. In 2007, a Roman-era bronze sculpture of "Artemis and the Stag" was sold at Sotheby's in New York for US$28.6 million, by far exceeding its estimates and at the time setting the new record as the most expensive sculpture as well as work from antiquity ever sold at auction.^[1][2]

An 18th century Chinese meiping porcelain vase. Porcelain has long been a staple at art sales. In 2005, a 14th century Chinese porcelain piece was sold by the Christie's for £16 million, or US$28 million. It set a world auction record for any ceramic work of art.^[3]

The word "auction" is derived from the Latin augeō which means "I increase" or "I augment".^[4]

For most of history, auctions have been a relatively uncommon way to negotiate the exchange of goods and commodities. In practice, both haggling and sale by set-price have been significantly more common.^[5] Indeed, before the seventeenth century the few auctions that were held were sporadic and infrequent.^[6]

Nonetheless, auctions have a long history, having been recorded as early as 500 B.C.^[7] According to Herodotus, in Babylon auctions of women for marriage were held annually. The auctions began with the woman the auctioneer considered to be the most beautiful and progressed to the least. It was considered illegal to allow a daughter to be sold outside of the auction method.^[6]

During the Roman Empire, following military victory, Roman soldiers would often drive a spear into the ground around which the spoils of war were left, to be auctioned off. Later slaves, often captured as the "spoils of war", were auctioned in the forum under the sign of the spear, with the proceeds of sale going towards the war effort.^[6]

The Romans also used auctions to liquidate the assets of debtors whose property had been confiscated.^[8] For example, Marcus Aurelius sold household furniture to pay off debts, the sales lasting for months.^[9] One of the most significant historical auctions occurred in the year 193 A.D. when the entire Roman Empire was put on the auction block by the Praetorian Guard. On March 23 The Praetorian Guard first killed emperor Pertinax, then offered the empire to the highest bidder. Didius Julianus outbid everyone else for the price of 6,250 drachmas per Guard^{[citation needed]}, an act that initiated a brief civil war. Didius was then beheaded two months later when Septimius Severus conquered Rome.^[8]

From the end of the Roman Empire to the eighteenth century auctions lost favor in Europe,^[8] while they had never been widespread in Asia.^[6]

In some parts of England during the seventeenth and eighteenth centuries auction by candle was used for the sale of goods and leaseholds. This auction began by lighting a candle after which bids were offered in ascending order until the candle spluttered out. The high bid at the time the candle extinguished itself won the auction.^[10]

The oldest auction house in the world is Stockholm Auction House (Stockholms Auktionsverk). It was established in Sweden in 1674.^[11][12]

During the end of the 18th century, soon after the French Revolution, auctions came to be held in taverns and coffeehouses to sell art. Such auctions were held daily, and catalogs were printed to announce available items. Such Auction catalogs are frequently printed and distributed before auctions of rare or collectible items. In some cases these catalogs were elaborate works of art themselves, containing considerable detail about the items being auctioned.^{[citation needed]}
Sotheby's, now the world's second-largest auction house,^[11] held its first auction in 1744. Christie's, now the world's largest auction house,^[11] was established around 1766. Other early auction houses that are still in operation include Dorotheum (1707), Mallams (1788), Bonhams (1793), Phillips de Pury & Company (1796), Freeman's (1805) and Lyon & Turnbull (1826).^[13]

During the American civil war goods seized by armies were sold at auction by the Colonel of the division. Thus, some of today's auctioneers in the U.S. carry the unofficial title of "colonel".^[9]

The development of the internet, however, has led to a significant rise in the use of auctions as auctioneers can solicit bids via the internet from a wide range of buyers in a much wider range of commodities than was previously practical.^[5]

In 2008, the National Auctioneers Association reported that the gross revenue of the auction industry for that year was approximately $268.4 billion, with the fastest growing sectors being agricultural, machinery, and equipment auctions and residential real estate auctions.

Types[link]

Primary[link]

Tuna auction at the Tsukiji fish market in Tokyo

Fish auction in Honolulu, Hawaii

• English auction, also known as an open ascending price auction. This type of auction is arguably the most common form of auction in use today.^[4] Participants bid openly against one another, with each subsequent bid higher than the previous bid.^[14] An auctioneer may announce prices, bidders may call out their bids themselves (or have a proxy call out a bid on their behalf), or bids may be submitted electronically with the highest current bid publicly displayed.^[14] In some cases a maximum bid might be left with the auctioneer, who may bid on behalf of the bidder according to the bidder's instructions.^[14] The auction ends when no participant is willing to bid further, at which point the highest bidder pays their bid.^[14] Alternatively, if the seller has set a minimum sale price in advance (the 'reserve' price) and the final bid does not reach that price the item remains unsold.^[14] Sometimes the auctioneer sets a minimum amount by which the next bid must exceed the current highest bid.^[14] The most significant distinguishing factor of this auction type is that the current highest bid is always available to potential bidders.^[14] The English auction is commonly used for selling goods, most prominently antiques and artwork,^[14] but also secondhand goods and real estate. At least two bidders are required.
• Dutch auction also known as an open descending price auction.^[4] In the traditional Dutch auction the auctioneer begins with a high asking price which is lowered until some participant is willing to accept the auctioneer's price.^[14] The winning participant pays the last announced price.^[4] The Dutch auction is named for its best known example, the Dutch tulip auctions. ("Dutch auction" is also sometimes used to describe online auctions where several identical goods are sold simultaneously to an equal number of high bidders.^[15]) In addition to cut flower sales in the Netherlands, Dutch auctions have also been used for perishable commodities such as fish and tobacco.^[14] In practice, however, the Dutch auction is not widely used.^[4]
• Sealed first-price auction, also known as a first-price sealed-bid auction (FPSB). In this type of auction all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant. The highest bidder pays the price they submitted.^[4][14] This type of auction is distinct from the English auction, in that bidders can only submit one bid each. Furthermore, as bidders cannot see the bids of other participants they cannot adjust their own bids accordingly.^[14] This kind of bid produces the same outcome as Dutch auction.^[16] Sealed first-price auctions are commonly used in tendering, particularly for government contracts and auctions for mining leases.^[14]
• Vickrey auction, also known as a sealed-bid second-price auction.^[17] This is identical to the sealed first-price auction except that the winning bidder pays the second highest bid rather than his or her own.^[18] This is very similar to the proxy bidding system used by eBay, where the winner pays the second highest bid plus a bidding increment (e.g., 10%).^[17] Although extremely important in auction theory, in practice Vickrey auctions are rarely used.^[14]
• Multi-unit auctions or Commodity Auctions, sell more than one identical item (homogenous commodities) at the same time, rather than having separate auctions for each unit. This type can be further classified as a uniform price auction (all buyers and sellers transact at a single auction clearing price) or a discriminatory price auction (commodities bought and sold at various prices in the same auction). More than one buyer may be successful in the same Multi-Unit Auction. Derivatives of a Uniform Price Auction include the Emanuel Uniform Price Auction which fine tunes the methodology for establishing the uniform price by discovering the true shape of the demand curve at each price increment. The Emanuel Uniform Price Auction will always yield a higher Uniform Price than a standard Uniform Price Auction since the demand pyramid is broadened.

Secondary[link]

• All-pay auction is an auction in which all bidders must pay their bids regardless of whether they win. The highest bidder wins the item. All-pay auctions are primarily of academic interest, and may be used to model lobbying/bribery (bids are political contributions) or competitions such as a running race.^[19]
• Bidding fee auction, also known as a penny auction, requires that each participant must purchase bids prior to placing them. When an auction's time expires, the last bidder wins the item and must pay a final bid price.^[20] An example of this type of auction is Madbid or Sweepola.
• Buyout auction is an auction with a set price (the 'buyout' price) that any bidder can accept at any time during the auction, thereby immediately ending the auction and winning the item.^[21] If no bidder chooses to utilize the buyout option before the end of bidding the highest bidder wins and pays their bid.^[21] Buyout options can be either temporary or permanent.^[21] In a temporary-buyout auction the option to buy out the auction is not available after the first bid is placed.^[21] In a permanent-buyout auction the buyout option remains available throughout the entire auction until the close of bidding.^[21] The buyout price can either remain the same throughout the entire auction, or vary throughout according to rules or simply at the whim of the seller.^[21]
• Combinatorial auction is any auction for the simultaneous sale of more than one item where bidders can place bids on an "all-or-nothing" basis on "packages" rather than just individual items. That is, a bidder can specify that he or she will pay for items A and B, but only if he or she gets both.^[22] In combinatorial auctions, determining the winning bidder(s) can be a complex process where even the bidder with the highest individual bid is not guaranteed to win.^[22] For example, in an auction with four items (W, X, Y and Z), if Bidder A offers $50 for items W & Y, Bidder B offers $30 for items W & X, Bidder C offers $5 for items X & Z and Bidder D offers $30 for items Y & Z, the winners will be Bidders B & D while Bidder A misses out because the combined bids of Bidders B & D is higher ($60) than for Bidders A and C ($55).
• Generalized second-price auction
• Japanese auction is a variation of the English auction. When the bidding starts no new bidders can join, and each bidder must continue to bid each round or drop out. It has similarities to the ante in Poker.^[23]
• Lloyd's syndicate auction.^[24]
• No-reserve auction (NR), also known as an absolute auction, is an auction in which the item for sale will be sold regardless of price.^[25][26] From the seller's perspective, advertising an auction as having no reserve price can be desirable because it potentially attracts a greater number of bidders due to the possibility of a bargain.^[25] If more bidders attend the auction, a higher price might ultimately be achieved because of heightened competition from bidders.^[26] This contrasts with a reserve auction, where the item for sale may not be sold if the final bid is not high enough to satisfy the seller. In practice, an auction advertised as "absolute" or "no-reserve" may nonetheless still not sell to the highest bidder on the day, for example, if the seller withdraws the item from the auction or extends the auction period indefinitely,^[27] although these practices may be restricted by law in some jurisdictions or under the terms of sale available from the auctioneer.
• Reserve auction is an auction where the item for sale may not be sold if the final bid is not high enough to satisfy the seller; that is, the seller reserves the right to accept or reject the highest bid.^[26] In these cases a set 'reserve' price known to the auctioneer, but not necessarily to the bidders, may have been set, below which the item may not be sold.^[25] The reserve price may be fixed or discretionary. In the latter case, the decision to accept a bid is deferred to the auctioneer, who may accept a bid that is marginally below it. A reserve auction is safer for the seller than a no-reserve auction as they are not required to accept a low bid, but this could result in a lower final price if less interest is generated in the sale.^[26]
• Reverse auction is a type of auction in which the roles of the buyer and the seller are reversed, with the primary objective to drive purchase prices downward.^[28] While ordinary auctions provide suppliers the opportunity to find the best price among interested buyers, reverse auctions give buyers a chance to find the lowest-price supplier. During a reverse auction, suppliers may submit multiple offers, usually as a response to competing suppliers’ offers, bidding down the price of a good or service to the lowest price they are willing to receive. By revealing the competing bids in real time to every participating supplier, reverse auctions promote “information transparency”. This, coupled with the dynamic bidding process, improves the chances of reaching the fair market value of the item.^[29]
• Silent auction is a variant of the English auction in which bids are written on a sheet of paper. At the predetermined end of the auction, the highest listed bidder wins the item.^[30] This auction is often used in charity events, with many items auctioned simultaneously and "closed" at a common finish time.^[30] The auction is "silent" in that there is no auctioneer selling individual items,^[30] the bidders writing their bids on a bidding sheet often left on a table near the item.^[31] At charity auctions, bid sheets usually have a fixed starting amount, predetermined bid increments, and a "guaranteed bid" amount which works the same as a "buy now" amount. Other variations of this type of auction may include sealed bids.^[30] The highest bidder pays the price he or she submitted.^[30]
• Senior auction is a variation on the all-pay auction, and has a defined loser in addition to the winner. The top two bidders must pay their full final bid amounts, and only the highest wins the auction. The intent is to make the high bidders bid above their upper limits. In the final rounds of bidding, when the current losing party has hit their maximum bid, they are encouraged to bid over their maximum (seen as a small loss) to avoid losing their maximum bid with no return (a very large loss).^[32]
• Top-Up auction is a variation on the all-pay auction, primarily used for charity events. Bidders must pay the difference between their bid and the next lowest bid, whether they win or not. Only the winning bidder does not have to pay the "top-up" fee, but does have to pay for the item.
• Walrasian auction or Walrasian tâtonnement is an auction in which the auctioneer takes bids from both buyers and sellers in a market of multiple goods.^[33] The auctioneer progressively either raises or drops the current proposed price depending on the bids of both buyers and sellers, the auction concluding when supply and demand exactly balance.^[34] As a high price tends to dampen demand while a low price tends to increase demand, in theory there is a particular price somewhere in the middle where supply and demand will match.^[33]
• Auction by the candle. A type of auction, used in England for selling ships, in which the highest bid laid on the table when a guttering candle expires wins.
• Other auctions: Other auction types also exist such as Simultaneous Ascending Auction,^[35] Anglo-Dutch auction,^[36] Private value auction,^[37] Common value auction

Time requirements[link]

This unreferenced section requires citations to ensure verifiability.

Each type of auction has its specific qualities such as pricing accuracy and time required for preparing and conducting the auction. The number of simultaneous bidders is of critical importance. Open bidding during an extended period of time with many bidders will result in a final bid that is very close to the true market value. Where there are few bidders and each bidder is allowed only one bid, time is saved, but the winning bid may not reflect the true market value with any degree of accuracy. Of special interest and importance during the actual auction is the time elapsed from the moment that the first bid is revealed to the moment that the final (winning) bid has become a binding agreement.

Characteristics[link]

This unreferenced section requires citations to ensure verifiability.

Auctions can differ in the number of participants:

• In a supply (or reverse) auction, m sellers offer a good that a buyer requests
• In a demand auction, n buyers bid for a good being sold
• In a double auction n buyers bid to buy goods from m sellers

Prices are bid by buyers and asked (or offered) by sellers. Auctions may also differ by the procedure for bidding (or asking, as the case may be):

• In an open auction participants may repeatedly bid and are aware of each other's previous bids.
• In a closed auction buyers and/or sellers submit sealed bids

Auctions may differ as to the price at which the item is sold, whether the first (best) price, the second price, the first unique price or some other. Auctions may set a reservation price which is the least/maximum acceptable price for which a good may be sold/bought.

Without modification, auction generally refers to an open, demand auction, with or without a reservation price (or reserve), with the item sold to the highest bidder.

Supply auction

Demand auction

Double auction

Common uses[link]

Auctions are publicly and privately seen in several contexts and almost anything can be sold at auction. Some typical auction arenas include the following:

Farm clearing sale, Woolbrook, NSW.

Grass-fed cattle at auction, Walcha, NSW

Wool buyers' room at a wool auction, Newcastle, NSW.

• The antique business, where besides being an opportunity for trade they also serve as social occasions and entertainment
• In the sale of collectibles such as stamps, coins, classic cars, fine art^[38] and luxury real estate
• The wine auction business, where serious collectors can gain access to rare bottles and mature vintages, not typically available through retail channels
• In the sale of all types of real property including residential and commercial real estate, farms, vacant lots and land.
• For the sale of consumer second-hand goods of all kinds, particularly farm (equipment) and house clearances and online auctions.
• Sale of industrial machinery, both surplus or through insolvency.
• In commodities auctions, like the fish wholesale auctions
• In livestock auctions where sheep, cattle, pigs and other livestock are sold. Sometimes very large numbers of stock are auctioned, such as the regular sales of 50,000 or more sheep during a day in New South Wales.^[39]
• In wool auctions where international agents purchase lots of wool^[40]
• Thoroughbred horses, where yearling horses and other bloodstock are auctioned.^[41]
• In legal contexts where forced auctions occur, as when one's farm or house is sold at auction on the courthouse steps.
• Travel tickets. One example is SJ AB in Sweden auctioning surplus at Tradera (Swedish eBay).
• Holidays. A variety of holidays are available for sale online particularly via eBay. Vacation rentals appear to be most common. Many holiday auction websites have launched but failed.^[42]
• There are a varity of television shows based on auctions such as Auction Kings and Storage Wars.

Although less publicly visible, the most economically important auctions are the commodities auctions in which the bidders are businesses even up to corporation level. Examples of this type of auction include:

• Sales of businesses
• Spectrum auctions, in which companies purchase licenses to use portions of the electromagnetic spectrum for communications (e.g., mobile phone networks)
• Private electronic markets using combinatorial auction techniques to continuously sell commodities (coal, iron ore, grain, water...) to a pre-qualified group of buyers (based on price and non-price factors)
• Timber auctions, in which companies purchase licenses to log on government land
• Timber allocation auctions, in which companies purchase timber directly from the government Forest Auctions
• Electricity auctions, in which large-scale generators and consumers of electricity bid on generating contracts
• Environmental auctions, in which companies bid for licenses to avoid being required to decrease their environmental impact. These include auctions in emissions trading schemes.
• Debt auctions, in which governments sell debt instruments, such as bonds, to investors. The auction is usually sealed and the uniform price paid by the investors is typically the best non-winning bid. In most cases, investors can also place so called non-competitive bids, which indicates an interest to purchase the debt instrument at the resulting price, whatever it may be
• Auto auctions, in which car dealers purchase used vehicles to retail to the public.^[43]

Bidding strategy[link]

This unreferenced section requires citations to ensure verifiability.

Bid shading[link]

Bid shading is placing a bid which is below the bidder's actual value for the item. Such a strategy risks losing the auction, but has the possibility of winning at a low price. Bid shading can also be a strategy to avoid the Winner's curse.

Chandelier or Rafter Bidding[link]

A practice, especially by high-end art auctioneers, of raising false bids at crucial times in the bidding process in order to create the appearance of greater demand or to extend bidding momentum for a work on offer. To call out these nonexistent bids, auctioneers might fix their gaze at a point in the auction room that is difficult for the audience to pin down.

In the United Kingdom, this practice is legal on property auctions up to but not including the reserve price, and is also known as off-the-wall bidding.^[44]

Collusion[link]

This unreferenced section requires citations to ensure verifiability.

Whenever bidders at an auction are aware of the identity of the other bidders there is a risk that they will form a "ring" and thus manipulate the auction result, a practice known as collusion. By agreeing to bid only against outsiders, never against members of the "ring", competition becomes weaker, which may dramatically affect the final price level. After the end of the official auction an unofficial auction may take place among the "ring" members. The difference in price between the two auctions could then be split among the members.

A ring can also be used to increase the price of an auction lot, in which the owner of the object being auctioned may increase competition by taking part in the bidding him or herself, but drop out of the bidding just before the final bid. In Britain and many other countries, rings and other forms of bidding on one's own object are illegal. This form of a ring was used as a central plot device in an episode of the British television series Lovejoy (series 4, episode 3) in which the price of a watercolour by the (fictional) Jessie Webb is inflated so that others by the same artist could be sold for more than their purchase price.

In an English auction a dummy bid is a bid made by a dummy bidder acting in collusion with the auctioneer or vendor, designed to deceive genuine bidders into paying more. In a First price auction a dummy bid is an unfavourable bid designed so as not to become the winning bid. (The bidder does not want to win this auction, but he or she wants to make sure to be invited to the next auction).

In Australia a dummy bid (shill, schill) is a criminal offence but a vendor bid or a co-owner bid below the reserve price is permitted, if clearly declared as such by the auctioneer. These are all official legal terms in Australia, but may have other meanings elsewhere. A co-owner is one of two or several owners (who disagree among themselves).

In Sweden and many other countries there are no legal restrictions, but it will severely hurt the reputation of an auction house that knowingly permits any other bids except genuine bids. If the reserve is not reached this should be clearly declared.

Suggested opening bid (SOB)[link]

This section may require cleanup to meet Wikipedia's quality standards. No cleanup reason has been specified. Please help improve this section if you can; the talk page may contain suggestions. (July 2007)

There will usually be an estimate of what price the lot will fetch. In an ascending open auction it is considered important to get at least a 50-percent increase in the bids from start to finish. To accomplish this, the auctioneer must start the auction by announcing a suggested opening bid (SOB) that is low enough to be immediately accepted by one of the bidders. Once there is an opening bid, there will quickly be several other, higher bids submitted. Experienced auctioneers will often select an SOB that is about 45 percent of the (lowest) estimate. Thus there is a certain margin of safety to ensure that there will indeed be a lively auction with many bids submitted. Several observations indicate that the lower the SOB, the higher the final winning bid. This is due to the increase in the number of bidders attracted by the low SOB.

A chi-squared distribution shows many low bids but few high bids. Bids "show up together"; without several low bids there will not be any high bids.

Another approach to choosing an SOB: The auctioneer may achieve good success by asking the expected final sales price for the item, as this method suggests to the potential buyers the item's particular value. For instance, say an auctioneer is about to sell a $1,000 car at a sale. Instead of asking $100, hoping to entice wide interest (for who wouldn't want a $1,000 car for $100?), the auctioneer may suggest an opening bid of $1,000; although the first bidder may begin bidding at a mere $100, the final bid may more likely approach $1,000.

Terminology[link]

This section requires expansion.

• Appraisal
• Auction block
• Bidding
• Buyer's premium - fee paid by the buyer to the auction house
• Buyout price
• Commission
• Consignee
• Consignor
• Dummy bid
• CMD (Caution Money Deposit)
• Dynamic closing
• EMD (Earnest Money Deposit)
• Escrow
• Hammer price - nominal price at which a lot is sold; on top the buyer pays buyer's premium and taxes
• Increment
• Job lot
• Knocked down to
• Lot - A single item or group of items that are bid on as one unit.
• Minimum bid - The smallest opening bid that will be accepted.
• No reserve - An auction in which the seller must honor the winning bid, regardless of its amount.
• Outbid - To bid higher than another person.
• Opening bid - First bid placed on a particular lot.
• Proxy bid (aka absentee bid) - A bid placed by an authorized representative of a bidder who is not physically present at the auction. If the proxy is outbid, he/she may increase the bid in increments up to a pre-arranged maximum.
• Registration deposit
• Relisting
• Reserve price - A minimum acceptable price that is established by the seller prior to the auction; may or may not be disclosed to the bidders. If the winning bid is below the reserve price, the seller has the right to withdraw the lot.
• Sniping - Placing a bid just before the end of a timed auction, thus giving other bidders no time to enter new bids.
• Vendor
• Vendor bid

JEL classification[link]

The Journal of Economic Literature (JEL) classification code for auctions is D44.^[45]

See also[link]

• Types of auction:
  • Art sale
  • Auto auctions
  • Car dealer auctions
  • Chinese auction
  • Estate sale
  • Bidding fee auction

• Other topics:
  • Tendering
  • Auction school
  • Auction theory
  • Auction chant
  • Auction Network
  • Auction sniping
  • Dollar auction
  • Foreclosure
  • Game theory
  • Online auction
  • Online auction tools
  • Online auction business model
  • Monopoly (game),a game in which auction is sometimes used

Notes[link]

References[link]

Wikimedia Commons has media related to: Auctions

• Krishna, Vijay (2002), Auction Theory, San Diego, USA: Academic Press, ISBN 0-12-426297-X 
• Milgrom, Paul (2004), Putting Auction Theory to Work, Cambridge, United Kingdom: Cambridge University Press, ISBN 0-521-55184-6 
• Shubik, Martin (March 2004), The Theory of Money and Financial Institutions: Volume 1, Cambridge , Mass., USA: MIT Press, pp. 213–219, ISBN 0-262-69311-9 

Further reading[link]

• Klemperer, Paul (2004), Auctions: Theory and Practice, Princeton, N.J.: Princeton University Press, ISBN 0-691-11925-2  Draft edition available online.
• Smith, Charles W. (1990), Auctions: Social Construction of Value, University of California Press, ISBN 0-520-07201-4 
• http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1727409

For Real was an American R&B and soul quartet, that formed in 1993.^[1] In the latter part of that decade they were nominated for a Grammy, Billboard Music Award, and Soul Train Music Award.

Biography[link]

For Real secured their recording contract by accident. "We were picking up our manager from the airport. So we decided to greet him with an acappella song. Someone from A&M Records just happened to be in the airport and heard them perform. Not long after, they were signed," said Latanyia Baldwin.^[2]

The band released their debut album, It's a Natural Thang, with production from Brian McKnight on A&M Records in 1994, and it became a critical success, including a rare four stars from Rolling Stone magazine.^[3] Their first single, "You Don't Wanna Miss" hit #28 on the Billboard chart, courtesy of a danceable new jack swing remix by Steve "Silk" Hurley, which was featured in the song's video. A second single, "Easy to Love", peaked at #65 on the Billboard Hot 100 chart. The album scored another chart hit with the a cappella love song, "You Don't Know Nothin'", which was written and produced by Mervyn Warren, and which peaked at #27. The song peaked at #54 in the UK Singles Chart in July 1995.^[4] The album sold over one million copies worldwide, and peaked at #80 on the Billboard 200.

In 1995, the band appeared in Italian Vogue, modeling men's suits. They toured alongside Stevie Wonder,^[5] and lent their voices to the Martin Scorsese film project Grace of My Heart. The foursome also forayed into acting with appearances in the film Shake, Rattle and Rock! starring Renée Zellweger and Howie Mandel^[6] on Showtime.

They also hit the US Top 20 with the single "Freedom (Theme from Panther)" featuring Aaliyah, TLC, En Vogue, BlackGirl, SWV, and Vanessa Williams from the film Panther. They also recorded a duet with Stevie Wonder called "Stubborn Kind of Fellow", which appeared on the Marvin Gaye tribute album, Inner City Blues: The Music of Marvin Gaye.^[7] For Real also recorded songs for the soundtracks of the films Waiting to Exhale and Fled.

After a label change from A&M to Dallas Austin's Arista imprint Rowdy Records in 1996, For Real struck again with the Austin-produced, 60s-leaning single "Like I Do", from their second album Free. "Like I Do" hit #10 on the Billboard singles chart. The video also earned a Billboard nomination for Best R&B Clip; the album made the Top 100, and sold nearly 400,000 copies in the US. The album's next and last single was the Diane Warren-penned pop ballad "The Saddest Song I Ever Heard" which hit #65 on the Top 100 singles chart. The band performed "Saddest Song" on the TV series All That. Free included production from top R&B/pop producers like Babyface, Mario Winans, and Jon B..

The band also recorded three songs ("I Do", "Born to Love That Boy" and "Unwanted Number") and appeared in the critically acclaimed film Grace of My Heart. The film's soundstrack won a Satellite Award in 1997.^[9][10]

In January 1997, the band won an American Music Award for their work on the Waiting to Exhale soundtrack, in Summer 1997, the group earned a Soul Train Award nomination for Album of the Year (By a Group, Band or Duo) for Free.

In 1999, Wendi Williams lent her voice to the Emmy-winning film Introducing Dorothy Dandridge with Halle Berry, in which Berry plays a singer but Williams is behind her singing voice.^[11]

In 2002, their song "Love Will Be Waiting at Home" appeared in the film Two Can Play That Game, which starred Vivica A. Fox and Morris Chestnut.

In 2009, CoryLavel began to work with Josina Elder on her new album.

Discography[link]

• It's a Natural Thang (1994)
• Free (1996)

Awards and nominations[link]

References[link]

External links[link]

• SingingFool.com Streaming music videos for "Like I Do" and "The Saddest Song I Ever Heard"
• Allmusic^{[dead link]} Discography, biographies, and pictures
• IUMA Group photos, lyrics, message board, audio streams, and biography
• Google Album info, photos, and lyrics

Jim Cramer
Born	James J. Cramer[1] (1955-02-10) February 10, 1955 (age 57)[2] Wyndmoor, Pennsylvania, U.S.
Residence	Summit, New Jersey[3]
Alma mater	Harvard College (B.A.) Harvard Law School (J.D.)
Occupation	Television personality, author
Years active	1978–present
Known for	Hosting Mad Money Chairman of TheStreet.com, Inc., CNBC anchor, author
Spouse	Karen Backfisch-Olufsen

James "Jim" J. Cramer (born February 10, 1955) is an American television personality, a former hedge fund manager, and a best-selling author. Cramer is the host of CNBC's Mad Money and a co-founder and chairman of TheStreet.com, Inc.

Family[link]

Cramer married Karen Backfisch-Olufsen, a trader, in 1988,^{[citation needed]} and lives in Summit, New Jersey.^[4]

Early years[link]

Cramer was born to Jewish parents^[5] in Wyndmoor, Pennsylvania, a suburb of Philadelphia.^[6] One of his first jobs was selling ice cream at Veterans Stadium during Philadelphia Phillies games.^[7] Cramer went to Springfield Township High School in Montgomery County.^[8]

Biography[link]

Education and early career[link]

Cramer graduated magna cum laude from Harvard College with a B.A. in government.^[7]

He began his involvement with journalism in college, working for The Harvard Crimson, and rising to become its president. After graduation, Cramer worked in several entry-level reporting jobs. Dating back to March 1, 1978, Cramer worked for the Tallahassee Democrat in Tallahassee, Florida, where he covered the Ted Bundy murders. The then-executive editor, Richard Oppel, says "[Cramer] was like a driving ram. He was great at getting the story."^[9] He then worked as a journalist for The Los Angeles Herald Examiner. Around this time, his apartment was robbed and he was left with nothing more than his car and the things in it; he lived out of his car for about nine months.^{[citation needed]} He also worked for Governor Jerry Brown.^[6]

Cramer was one of the first reporters at American Lawyer.^[10] Cramer later earned a Juris Doctor degree from Harvard Law School.^[7] During his years at Harvard Law School, Cramer worked as a research assistant for Alan Dershowitz. He assisted Dershowitz's campaign to acquit alleged murderer Claus von Bülow despite the fact that Cramer admitted to himself that von Bülow was "supremely guilty".^[11] Cramer was admitted to the New York Bar in 1985, but his Bar status is currently listed as "suspended." ^[12]

Investing[link]

Cramer started investing in the stock market during his time at law school.^[6] Cramer began promoting his holdings by leaving stock picks on his answering machine, impressing The New Republic owner Martin Peretz, who gave him $500,000 to invest; Cramer earned Peretz $150,000 in two years.^[9]

His track record helped Cramer obtain employment in 1984 as a stock broker with Goldman Sachs' Private Wealth Management^[13] division. Cramer's success in this position led him to found his own hedge fund, Cramer & Co. (later Cramer, Berkowitz, & Co.), in 1987. The fund operated out of the offices of hedge fund pioneer Michael Steinhardt's Steinhardt, Fine, Berkowitz & Co., and early investors included Eliot Spitzer (a Harvard classmate, one of his oldest friends, and former Governor of New York who resigned),^[14] Brill, and Peretz.^[15]

During Cramer's tenure of the fund, from 1988–2000, he had one year of negative returns in 1998. The following year in 1999 the fund returned 47%, and in 2000 28%, beating the S&P 500 by 38 percentage points.^[9] Cramer retired from his hedge fund in 2001, finishing with a 24% average annual return over 14 years and having "routinely [taken] home $10 million a year and more."^[9] The fund was taken over by his former partner Jeff Berkowitz after Cramer's retirement. During that time, he was also an "editor at large" for Smart Money magazine, and was accused of unethically combining his investing and reporting activities when he bought more of stocks that he recommended just before the recommendation article came out, contributing to a $2 million personal gain.^[16] Today, Cramer is barred by CNBC from trading stocks with his personal funds although he makes picks and sells his recommendations.

In 1996, Cramer co-founded TheStreet.com, Inc. with The New Republic editor Martin Peretz, one of his hedge fund's original clients. Cramer is currently a market commentator and adviser to the TheStreet.com, and is its second largest shareholder.^[1] Cramer also manages a charitable trust stock portfolio which is tied to TheStreet.com through a paid subscription service called the Action Alerts PLUS Portfolio.^[9]

Cramer currently works on a new project as part of TheStreet.com called MainStreet.com.^{[citation needed]} An earlier project, TheRoad.com, was not successful.^{[citation needed]}

Cramer claimed to be worth $50 to $100 million in October 2005.^[9] In 2009, Cramer received earnings of $461,276 from TheStreet.com.^[1]

Television personality[link]

The cable television program Mad Money with Jim Cramer first aired on CNBC in 2005. According to CNBC's Web site in an article titled, "Mad Money Manifesto" by Jim Cramer, the show's mission statement and Cramer's job

"...is not to tell you what to think, but to teach you how to think about the market like a pro. This show is not about picking stocks. It's not about giving you tips that will make you money overnight – tips are for waiters. Our mission is educational, to teach you how to analyze stocks and the market through the prism of events."

To provide viewers with "the knowledge and the tools that will empower you to be a better investor," Mad Money features many segments, including: The Lightning Round, Game Plan, Execution Decision, Off the Charts, Sell Block, Market Marshmallows, Outrage of the Day, Mad Bull Disease, Am I Diversified, and Mad Mail.^[17]

After being a frequent guest commentator on CNBC in the late 1990s, Cramer co-hosted CNBC shows America Now and Kudlow & Cramer with Lawrence Kudlow in the early 2000s.

Cramer hosted a one-hour radio show, Jim Cramer's Real Money, until December 2006. "Take the money and run" by the Steve Miller Band was the opening intro to each of his radio shows. The show was similar to his Mad Money TV show. He also guest-hosted in the slot caused by the cancellation of Imus in the Morning (MSNBC and WFAN/Westwood One) in May 2007.

On November 13, 2005, Dan Rather did a sit-down interview with Cramer on 60 Minutes. Among the topics of discussion were Cramer's past at his hedge fund; for example, his violent temper, and what finally led him to come to his senses and "calm down."^{[citation needed]} Footage of Cramer at his family home with his daughters and wife was also included.^{[citation needed]} On November 15, 2005, Cramer mentioned on his program that he received hundreds of e-mails after his 60 Minutes interview. This report was taped before Cramer's radio show, Smart Money with Jim Cramer moved to WOR and became syndicated under the CBS Radio banner.

In 2005, Cramer appeared as himself in two episodes of the television series Arrested Development. He appeared to first announce that he had upgraded Bluth Company stock to a "Don't Buy" from a "Triple Sell", and then to say that the stock was not a "Don't Buy" anymore, but a "Risky".

Cramer has also made appearances on NBC's Today, NBC Nightly News, Live with Regis and Kelly, ESPN Classic's Cheap Seats, NBC's Late Night With Conan O'Brien, Comedy Central's The Daily Show with Jon Stewart, The Tonight Show with Jay Leno, Late Show with David Letterman, ABC's Jimmy Kimmel Live and NBC's The Apprentice (U.S. Season 7) called "The Celebrity Apprentice".

Cramer also appeared in the 2008 motion picture Iron Man spoofing Stark Industries on his show Mad Money.^[18] and appears in the movie Wall Street: Money Never Sleeps.^[19] He also claims to have consulted for the original Wall Street movie by telling the filmmakers how he would get through to Gordon Gekko.^[20]

On March 12, 2009, Jon Stewart interviewed Cramer on The Daily Show^[21] and challenged Cramer's recommendations of Bear Stearns.

On November 3, 2009, Cramer appeared on the Martha Stewart Show to promote his new book,Getting Back to Even. While baking wholewheat bread, he stated that it is a great time to invest in real estate and that he has recently purchased the Debary Inn in Summit, NJ.^{[citation needed]}

Action Alerts charitable trust[link]

In the timeframe of 2002 until May 2009 the performance of Cramer's charitable trust "Action Alerts PLUS" outpaced the S&P 500 and the Russell 2000; while the charitable trust accumulated a return of 31.75%, the S&P 500 had a return of 18.75% and the Russell 2000 has a return of 22.51%. On an annual basis, the trust outperformed the S&P 500 by 7.35% and the Russell 2000 Index by 3.33%. Paul Bolster explains that Cramer beats the market in part because of the excess risk in his picks. “If we adjust for his market risk, we come up with an excess return that is essentially zero,” Bolster said, adding that “zero,” in this case, means his returns are roughly in line with the risk he’s taking on.^[22]

CNBC does not permit Cramer to buy or sell any security he has spoken about on CNBC for the trust for five days following the broadcast. Whenever Cramer is acting within his portfolio or important news about his stocks occur he sends out e-mails to his paying subscribers on TheStreet.com. Whenever mentioning a stock that he holds in his portfolio, he is required to disclose that he owns shares of such company on his CNBC show.^[23]

Selected controversies[link]

Fox News Channel lawsuit[link]

In 2000, Cramer settled a lawsuit with Fox News Channel in which Fox had claimed Cramer reneged on a deal to produce a show for them. Their conflict began when Fox complained that Cramer promoted TheStreet.com's stock on the air.^[24]

Market manipulation[link]

In March 2007, a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast stirred controversy after it appeared on YouTube.com.^[25] In the video, Cramer described activities used by hedge fund managers to manipulate stock prices – some of debatable legality and others illegal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, "A lot of times when I was short at my hedge fund...When I was positioned short—meaning I needed it down—I would create a level of activity beforehand that could drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money".^[26]

Cramer stated that everything he did was legal, but that illegal activity is common in the hedge fund industry as well. He also stated that some hedge fund managers spread false rumors to drive a stock down: "What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction."^[26] Cramer described a variety of tactics that hedge fund managers use to affect a stock's price. Cramer said that one strategy to keep a stock price down is to spread false rumors to reporters he described as "the Pisanis of the world". The comment was a reference to CNBC correspondent Bob Pisani, who reports from the trading floor of the New York Stock Exchange. "You have to use these guys," said Cramer. He also discussed giving information to "the bozo reporter from The Wall Street Journal" to get an article published.^[27][28] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."^[29] During the interview Cramer referred to himself as a "banking class hero."^[30]

SEC subpoena[link]

In February 2006, an investigation by the U.S. Securities and Exchange Commission (SEC) into allegations of collusion between short-sellers and a stock research firm led to the serving of subpoenas to TheStreet.com and Cramer, as well as journalists for Dow Jones and Marketwatch.com. The SEC then began to back away from the subpoenas, indicating it had no intention of enforcing them after lawyers for Dow Jones said they would not comply. SEC Chairman Christopher Cox rebuked the SEC's staff attorneys for filing subpoenas on two Dow Jones reporters without first consulting him or the other top commissioners. Cox issued a statement saying neither he nor any of the SEC's four other commissioners were aware of the subpoenas, which he called "highly unusual."^[31]

The allegations had been raised publicly and in a lawsuit against Gradient by Overstock.com chief executive Patrick M. Byrne. In May 2007, it was revealed that the SEC had subpoenaed Byrne in May 2006, in connection with an investigation of the company.^[32]

Market performance[link]

Cramer is the founder, former owner and former Senior Partner of Cramer Berkowitz, a hedge fund where Cramer reported a compounded annual "rate of return of 24% after all fees for 15 years" at Cramer Berkowitz. He retired from his hedge fund in 2001, where he finished with a self reported 36% return in 2001.^[33]

On August 3, 2007, Cramer made a plea for Federal Reserve Chairman Ben Bernanke to cut interest rates supposedly because of comments he was getting from investment banks, and their concern about adjustable-rate mortgage borrowers increasing loan rates.^[34]

On July 8, 2008, in an article on TheStreet.com entitled, "Look At The Facts"^[35] Cramer said, "The losses are increasing, the auction-rate preferreds are now biting, the mortgage implode-a-meter now measures how many home-builders are going under."

On "Hardball with Chris Matthews" for September 19, 2008, Cramer stated "It's not too late to be on the pom-pom...the sideline" in regards to home teaser loans.^[36] Cramer spoke again on the Today Show on October 6, 2008, suggesting to investors, "Whatever money you need for the next five years, please take it out of the stock market."^[37]

On September 22, 2008, Wall Street Journal best-selling author Eric Tyson, criticized Cramer's stock picks and his performance in general.^[38]

An August 20, 2007, article in Barrons stated that within the select time frame of the previous two years, "his picks haven't beaten the market. Over the past two years, viewers holding Cramer's stocks would be up 12% while the Dow rose 22% and the S&P 500 16%."^[39] CNBC disputed the magazine's findings.^[39] In a February 9, 2009, story, Barrons further reported that betting against Cramer's Buy recommendations using options in the short term could yield 25% in the initial month.^[40]

Cramer's responses to criticism[link]

The White House[link]

On March 2, 2009, Cramer drew the attention of some critics after his evaluation of President Obama’s spending plans and the administration’s handling of the banking crisis. Cramer’s name came up on March 3 during a White House press briefing after Cramer said that Obama was responsible for “the greatest wealth destruction I have seen by a president.”^[41] An offended White House shot back.^[42] Press Secretary Robert Gibbs said, "If you turn on a certain program it's geared to a very small audience. I'm not entirely sure what he's pointing to make some of the statements." When pressed further by NBC's Tom Costello, Gibbs said, "You can go back and look at any number of statements he's made in the past about the economy and wonder where some of the backup for those are, too."

On March 5, 2009, Cramer responded to the White House.^[43] He said, "Huh? Backup? Look at the incredible decline in the stock market, in all indices, since the inauguration of the president, with the drop accelerating when the budget plan came to light because of the massive fear and indecision the document sowed: Raising taxes on the eve of what could be a second Great Depression, destroying the profits in health care companies, tinkering with the mortgage deduction at a time when U.S. house price depreciation is behind much of the world's morass and certainly the devastation affecting our banks, and pushing an aggressive cap and trade program that could raise the price of energy for millions of people."

Cramer questioned criticism he received which he explained makes him "uncomfortable being in the crosshairs of columnists and comedians I enjoy."^[44] Cramer asked, "So, why after toiling in the cable wilderness for four years with Mad Money am I the target of the wrath of the Obama clan, and the darling, albeit surely momentary, of the Obama-critics? After all, my criticism of Obama's handling of the economic crisis is a lot less pointed than my withering August 2007 'They Know Nothing' meltdown^[45] against Ben Bernanke^[46] and the previous administration's handling of the economic crisis."

Frank Rich[link]

Referring to March 8, 2009, charges leveled against Cramer by New York Times columnist Frank Rich, Cramer said that he does not understand how Obama and his staff plan to raise taxes, institute cap-and-trade limitations and rework the health-care system all during a recession.^[47] The article says: "It isn’t that Cramer disagrees with Obama’s vision for the country – he even agrees with taxing the rich – but now is not the time to put those plans into action. The president needs to solve our housing, employment and financial problems, and only then turn his attention to health care and changing the mortgage deduction."

Bear Stearns recommendation[link]

On the March 11, 2008, episode of Cramer's show Mad Money, a viewer named Peter submitted the question "Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?" Cramer responded "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear."^[48][49] On March 14, 2008, Bear Stearns stock fell 92% on news of a Fed bailout and $2/share takeover by JPMorgan.^[50] On March 17, 2008, Cramer claimed his statements were made in regards to the liquidity of Bear Stearns brokerage accounts as opposed to Bear Stearns common stock.^[51] Cramer stated he was not recommending the common stock but allaying concerns about the account holder's liquidity held in a Bear Stearns brokerage account. Cramer later wrote about the incident: "I did tell an emailer that his deposit in his account at Bear Stearns was safe, but through a clever sound bite, (Jon) Stewart, and subsequently (Frank) Rich—neither of whom have bothered to listen to the context of the pulled quote—pass off the notion of account safety as an out-and-out buy recommendation. The absurdity astounds me. If you called Mad Money and asked me about Citigroup, I would tell you that the common stock might be worthless, but I would never tell you to pull your money out of the bank because I was worried about its solvency. Your money is safe in Citi as I said it was in Bear. The fact that I was right rankles me even more."^[52]

Michael Lewis, a journalist for the U.K.-based Evening Standard news Web site, states that TheStreet.com listed Bear Stearns as a "Buy" at $62 per share on March 11, 2008, which was the same day as the caller's question and a day before the collapse of Bear Stearns.^[53] However, TheStreet.com^[54]--the web site quote that shows the ratings history for actual changes that Cramer makes—indicates that Cramer changed Bear Stearns rating to a "Sell" on February 5, 2008. On his March 12, 2009 appearance on the Daily Show, Cramer admitted he made mistakes on his Bear Stearns calls.^[55]

Jon Stewart[link]

On March 12, 2009, Cramer appeared on The Daily Show with Jon Stewart.^[56] Stewart reiterated earlier claims regarding the CNBC host's "silly and/or embarrassing and/or stupid financial observations."^[57] Moreover, he claimed CNBC shirked its journalistic duty by believing corporate lies, rather than being an investigative "powerful tool of illumination."^[58] For his part, Cramer disagreed with Stewart on a few points, but acknowledged that he could have done a better job foreseeing the economic collapse: "We all should have seen it more." ^[59]

Stewart also discussed how short-selling was detrimental to the markets and investors. Cramer admitted to Stewart that short-selling was detrimental, stated his opposition to it, and claimed that he had never engaged in it, which contradicts earlier statements in which he described going short while managing a hedge fund. In a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast Cramer said, "A lot of times when I was short at my hedge fund...When I was positioned short—meaning I needed it down—I would create a level of activity beforehand that could drive the futures."^[26] He said, "I will say this: I am trying to expose this stuff, exactly what you guys do, and I've been trying to get the regulators to look at it."^[60] However, Stewart played several video clips from 2006 where Cramer discussed the spreading of false rumors to drive down stock prices and encouraged short-selling by hedge funds as a means to generate returns.^[61] At one point in a clip from December 22, 2006 he said, "I would encourage anyone in a hedge fund to do it." He called it a very quick way to make money and very satisfying. He continued, "By the way, no one else in the world would ever admit that, but I don't care, and again, I'm not gonna say it on TV." ^[59] Stewart responded, "I want the Jim Cramer on CNBC to protect me from that Jim Cramer."^[59] Cramer again admitted that he can do better, and that he should try to change. The interview ended when Stewart pointedly suggested: “Maybe we can remove the ‘financial expert’ and the ‘In Cramer We Trust’ and start getting back to fundamentals on the reporting, as well, and I can go back to making fart noises and funny faces.” Cramer responded: “I think we make that deal right here.”^[62]

Response to pundits[link]

"The pundits," Cramer explained on March 9, 2009, in a MainStreet article, "who haven't paid attention to anything I have been saying or writing for the past 18 months are all over me."^[63] Cramer said the pundits "won't engage in the merits of, say, favoring Tier 1 capital for the banks vs. common equity, or forbearing on the banks to work the situation out over time because the banks can be profitable if we have some patience. They just attack me."^[64] Cramer suggested, "It's time to get serious. It's time to take the issue from the pundits and from the left and right, and put it where it belongs: serious non-ideological debate to put out the real firestorm, the collapse of the economy from Wall Street to Main Street and the ensuing Great Wealth Destruction for all."

Bibliography[link]

• Jim Cramer's Getting Back to Even ISBN 978-1-4391-5801-2
• Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer) ISBN 978-1-4165-5885-9
• Jim Cramer's Mad Money: Watch TV, Get Rich ISBN 1-4165-3790-2
• Jim Cramer's Real Money: Sane Investing in an Insane World ISBN 0-7432-2489-2
• Confessions of a Street Addict ISBN 0-7432-2487-6
• You Got Screwed! Why Wall Street Tanked and How You Can Prosper ISBN 0-7432-4690-X

Notes[link]

References[link]

• Kurtz, Howard (2000). The Fortune Tellers: Inside Wall Street's Game of Money, Media, and Manipulation. New York, NY: Simon & Schuster. ISBN 0-684-86879-2. 

External links[link]

Wikiquote has a collection of quotations related to: James Cramer

Biographies[link]

• Jim Cramer biography on CNBC.com
• Jim Cramer biography on TheStreet.com
• Action Alerts PLUS on TheStreet.com

Notable Cramer sources[link]

• Mad Money w/ Jim Cramer Madcap Recap
• Mad Money TV show recapped Nightly Verbatim Recaps
• TheStreet.com, Cramer's investment website.
• Stockpickr Stock market social networking site.
• Articles written by Jim Cramer on MainStreet.com
• In the Money, continued, Balance Sheet, article about Cramer and other law alumni, from the online Harvard Law Bulletin
• Jim Cramer at the Internet Movie Database
• Betting on the Market – PBS Frontline interview with Jim Cramer
• Jim Cramer's Picks at Seeking Alpha
• To The Moon
• Maxim: Ask Jim Cramer, Maxim's interview with Cramer, and Top 2 Chinese Stocks Right Now
• Time's 100 Most Influential People of 2009 – Jim Cramer
• Jim Cramer on the Iraqi Dinar – on DinarProfits.com