I'm Not as Bad as Howie Kurtz Says
From: James J. Cramer
To: Howard KurtzPosted Wednesday, Sept. 27, 2000, at 9:20 PM ET Analysts are worth what they can bring into the firm, which is the tragedy of their existence. They are not paid for their prowess in picking stocks or making money for brokerage clients. The weird notion that the film critics work for the industry has infected our business in a way that it has no other, and I wish that had been the real focus of The Fortune Tellers, because it is the most blatant example of conflicts I can see. In Howard's other world, that's the EPA head working for Exxon Mobil on the side during a Valdez oil spill—and why not, who's paying the bills here?
As far as the individual analysts, oddly, Blodget is not a good example of a shill, he is just a good example of an honest guy who got caught up! He never got any investment banking business from the companies he pushed, nor did he want any. The shame is that he actually believed and just got it wrong. He is the honest but wrong Fortune Teller. Acampora's tougher. He is in an unenviable position of having to call the market, which, believe me, is fine if you don't have to do it every day, but he does. Meeker? She tries. She's in a tough position, major investment banking firm trying to get a lot of business and be right. She, like me, tries to do her best.
For that I can't judge her harshly.
Alas, Howard, the real rub against me is that I won't expose here the people I know who are doing it wrong. I can't. I have to work every day and I am no Serpico. But I don't take the money either.
From: James J. Cramer
To: Howard KurtzPosted Wednesday, Sept. 27, 2000, at 9:20 PM ET 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.
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.)
(9/28)
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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.)
(9/28)