Verbatim transcript (partial) of Jim Cramer on Wall Street Confidential, Dec. 22, 2006:

You know, 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. It doesn't take much money. Similarly, if I were long, and I wanted to make things a little bit rosy, I would go in and take a bunch of stocks and make sure that they're higher. Maybe commit $5 million in capital, and I could affect it. What you're seeing now is maybe it's probably a bigger market. Maybe you need $10 million in capital to knock the stuff down.

But it's a fun game, and it's a lucrative game. You can move it up and then fade it—that often creates a very negative feel. So let's say you take a longer term view intraday, and you say, "Listen, I'm going to boost the futures, and the when the real sellers come in—the real market comes in—they're going to knock it down and that's going to create a negative view." That's a strategy very worth doing when you're valuing on a day-to-day basis. I would encourage anyone who's in the hedge fund game to do it. Because it's legal. And it is a very quick way to make money. And very satisfying.

By the way, no one else in the world would ever admit that. But I don't care. And I'm not going to say it on TV.

In the next section of the interview, Cramer is discussing what hedge funds that are struggling do to improve their performance before the end of the year.

It's really vital these next six days because of your payday, you've really got to control the market. You can't let it lift. When you get a Research in Motion, it's really important to use a lot of your firepower to knock that down, because it's the fulcrum of the market today. So, let's say I were short. What I would do is I would hit a lot of guys with RIMM.

Now, you can't "foment." That's a violation. You can't create yourself an impression that a stock's down. But you do it anyway, because the SEC doesn't understand it. That's the only sense that I would say this is illegal. But a hedge fund that's not up a lot really has to do a lot now to save itself.

This is different from what I was talking about at the beginning where I was talking about buying the QQQs and stuff. This is actually blatantly illegal. But when you have six days and your company may be in doubt because you're down, I think it's really important to foment—if I were one of these guys—foment an impression that Research in Motion isn't any good. Because Research in Motion is the key today.

Cramer goes on to talk about the actual mechanics of what one would do to knock Research in Motion down. Then he continues:

What I used to do was called— If I wanted it to go higher, I would take and bid, take and bid, take and bid, and if I wanted it to go lower, I'd hit and offer, hit and offer, hit and offer. And I could get a stock like RIM for maybe—that might cost me $15 to $20 million to knock RIM down—but it would be fabulous, because it would beleaguer all the moron longs who are also keying on Research in Motion.

So we're seeing that. Again, when your company is in survival mode, it's really important to defeat Research in Motion, and get the Pisanis of the world and people talking about it as if there's something wrong with RIM. Then you would call the Journal and you would get the bozo reporter on Research in Motion, and you would feed that Palm's got a killer that it's going to give away. These are all the things you must do on a day like today, and if you're not doing it, maybe you shouldn't be in the game.

Cramer talks for a while in considerable detail about how, if he were short Apple's stock today, he would knock Apple's stock down. Then he says:

What's important when you're 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.

A minute later, when talking about how company fundamentals don't matter, Cramer says:

The great thing about the market is it has nothing to do with the actual stocks. Now, maybe two weeks from now, the buyers will come to their senses and realize that everything that they heard was a lie, but then again, Fannie Mae lied about their earnings for $6 billion, so there's just fiction and fiction and fiction.

I think it's important for people to recognize that the way that the market really works is to have that nexus of: Hit the brokerage houses with a series of orders that can push it down, then leak it to the press, and then get it on CNBC—that's also very important. And then you have a kind of a vicious cycle down. It's a pretty good game. It can pay for a percentage or two.