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I'm Not as Bad as Howie Kurtz Says

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From: Howard Kurtz
To: James J. CramerPosted Wednesday, Sept. 27, 2000, at 8:00 PM ET

I'm a trifle surprised that Jim (I Have To Eat Lunch in This Town) Cramer is pulling his punches on these big-name analysts. The New York Times was tougher on itself for its "bad-as-the-Rosenbergs" Wen Ho Lee stories! I criticize journalists all the time, which doesn't make me real popular at media parties. You've never exactly been a striped-pants diplomat.

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In fact, you were tougher on Ralph Acampora in The Fortune Tellers than in your latest message. You wrote a column for TheStreet.com in which you made fun of the "raging bull" (as his close personal friends call him) for a somewhat bearish forecast. "Now we have to begin an Acampora watch. … How-many-days-until-Acampora-gets-back-on-the-bull," you wrote. "When it happens, you know what you ought to do? Send him a nasty e-mail."

By the way, plenty of people took your advice. And Ralph was really steamed.

I like Ralph Acampora, but he sure has bounced around. In the summer of '99, the Prudential Securities analyst said the Dow could hit 13,000 by summer's end. When that didn't happen, he said the milestone would be hit by year's end. But when the market hit some turbulence in September, he said the Dow could drop as low as 8,900. By the end of the year he was bullish again, predicting Dow 14,000 by the end of 2000. As I write, the blue-chip index is at 10,599. I guess we could still make it. Acampora tells me he's like a weatherman: If it's sunny for awhile and then storm clouds come in, he has to change his forecast. But he sure changes it alot.

It was also polite of you not to point out that since Henry Blodget recommended eToys late last year, the stock plummeted by 95 percent. Hey, we all make mistakes (though mine don't cost people a truckful of money). But the financial media machine insists on holding these analysts up as all-knowing, all-seeing gurus, in part so people will tune in for their get-rich-quick advice. Only a few ballsy journalists dare point out that these Wall Street emperors sometimes have no clothes.

Hey, what do you make of the 15-year-old kid busted by the feds as an online pump-and-dumper? Internet message boards have become a real force in the market, and corporations have gotten aggressive in going after smear jobs. I write in the book that Xybernaut (which makes futuristic computers you can wear on your wrist or other body parts) used the message boards to defend its stock after a negative Bloomberg report. But how can people trust what they read online when the latest posting from BigDog or DowWow could be from a stock manipulator, financial genius, ordinary moron, or hyperactive teen-ager?

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From: Howard Kurtz
To: James J. CramerPosted Wednesday, Sept. 27, 2000, at 8:00 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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