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I'm Not as Bad as Howie Kurtz Says

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From: Howard Kurtz
To: James J. CramerPosted Tuesday, Sept. 26, 2000, at 11:35 PM ET

I'm about ready to declare victory and go home.

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Well, not quite. But I'll take it as a significant concession that you're no longer insisting that The Fortune Tellers unfairly maligns you as a manipulator. You've now retreated to the notion that I "insinuate" that there are bad guys out there in the Wall Street jungle and have created the "impression" that you're one of them. Actually, I've been careful to say in interviews that you always disclose your holdings when you yak about your stocks, while occasionally noting your missteps (such as predicting a rebound in TheStreet.com stock on TheStreet.com show on the Fox News Channel, now off the air following a legal dispute. Did everyone watching know that you own a ton of TheStreet.com stock? Sure. Did it look cheesy? I'm afraid it did. But those are rare exceptions.). And the book also includes your scathing criticism of some of the financial hype-meisters.

As for the "cesspool" of Wall Street analysts, I don't see the world in quite the same black-and-white terms you do, Jim. Some analysts clearly keep banging the drum for stocks that are tanking, as Merrill Lynch's Henry Blodget did for eToys before it plunged 95 percent. Some are just afraid that if they're too negative they will become pariahs and lose their jobs, as in a couple of incidents I describe in the book. But I also shine the spotlight on unsung folks like Piper Jaffray's Ashok Kumar (hailed as a hero in yesterday's Wall Street Journal as the only guy willing to downgrade Intel before it blew up), who bravely criticizes tech stocks when necessary and takes the inevitable heat.

By the way, I also raise questions about the reporting of Gene Marcial, Dan Dorfman, Christopher Byron, Chris Nolan, even the usually dependable Steve Frank, who went on CNBC to tout secret talks between eBay and Yahoo! that turned out to have already collapsed (causing a big run-up, and then a dive, in eBay stock). But these are not "sons of bitches" who I should "nail," they're mostly well-meaning folks who operate in a high-pressure field where the usual rules of journalism (such as not reporting unconfirmed rumors) don't seem to apply.

If you had a magic wand, what would you do to crack down on shoddy reporting and manipulative analysts? Is there any way to stop journalists from playing the rumor game and unnamed sources from goosing their stocks with well-placed whispers? After all, even you, as a big-time trader, are forced to react to rumors.

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From: Howard Kurtz
To: James J. CramerPosted Tuesday, Sept. 26, 2000, at 11:35 PM ET

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James J. Cramer is president of Cramer Berkowitz, a $400 million hedge fund in New York, and a daily columnist for TheStreet.com, a financial Web site he co-founded. Howard Kurtz is the media reporter for the Washington Post and the author of The Fortune Tellers: Inside Wall Street's Game of Money, Media and Manipulation (click here for an excerpt and here to buy it). The author of three previous books, including the best seller Spin Cycle, Kurtz is also the host of CNN's Reliable Sources.

COMMENTS

Reader Comments from The Fray:

Cramer:
You are asking Kurtz to hit the sell-side harder when, in my view, your site, TheStreet.com, goes pretty easy on them. I'm aware that your writers want to make a specific point, but I don't think they should sacrifice facts to achieve that aim. Recently, one of your writers wrote about Blodget's internet sector downgrade and wrote that he was using the Neutral rating for the first time. That was untrue, but it made the downgrade sound like a bigger deal. In the past, I have been interviewed by your writers and provided background analysis of Merrill Lynch research calls. Re: the DCLK example in the book, you could have called Blodget to the mat if you had asked him why he was recommending internet stocks on which his price targets suggested negative returns.

Kurtz:
What's the big deal with ETYS? You are not providing the whole picture. Blodget recommended ETYS at a report price of $37.50 and with a 12-18 month price target of $50 (33% upside) and a near-term Accumulate/long-term Buy rating. Based on typical ML research guidelines, those specs would make the stock eligible for a downgrade at a price as low as $41.67. (The minimum appreciation threshold for a ML Buy rating is 20%.) ETYS actually went up more than 100% from $37.50. The problem was that when ETYS was trading in the $50s, $60s, and $70s, Blodget continued to recommend purchase even though he wouldn't raise the price target from $50. Even more puzzling is that ML let him continue to recommend it. If ML had enforced its own typical guidelines, ETYS would have been downgraded and you would have had to select among 20 or so other similarly bad performing stocks to highlight. By the way, in your book, you say that Blodget downgraded Amazon from Buy to long-term Accumulate. That is wrong. It was from Buy to Accumulate, both near-term (or in official ML language, intermediate-term).

--Bob Kim

(To reply, click here.)

Having read just the excerpt of The Fortune Tellers online, I have to admit that it looks like Cramer has a point. Howard Kurtz is probably right in general where insisting that someone trying to divine the vicissitudes of stock market aggregates or of the individual issues which comprise the aggregates from moment to moment is, more often than not, someone fumbling around in a blizzard--a raging storm of impossible-to-gauge elements which admit of very little visibility alone or in their concatenation.

But surely the more interesting story concerns not the impact of these "fortune tellers" or the conflicts and challenges they pose to market regulatory institutions but the personalities of the actors who have promoted themselves to a standing where pure visibility may equal or be confused with what power and elements drive markets in reality. Cramer is more interesting--and, not incidentally, more revealed--in his own words than he is in Kurtz's depiction.

--Mark S. Devenow

(To reply, click here.)

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