Wallowing in Ignorance

"Nobody knows anything," writes Howard Kurtz, claiming to identify the "inescapable problem" tormenting the relationship between the financial establishment, the press establishment and the public. The Washington Post media critic and host of CNN's Reliable Sources has critiqued America's newspapers (Media Circus: The Trouble with America's Newspapers, 1993), the political punditocracy (Hot Air: All Talk, All the Time, 1996), and the White House press corps (Spin Cycle: Inside the Clinton Propaganda Machine, 1998). Kurtz has now turned his attention to Wall Street and seems genuinely shocked at the incestuous relationship between analysts and companies, reporters and analysts, and traders and media stars.

"When journalists cover politics, their outsider role is clearly defined," bemoans Kurtz, in a bit of a distortion. Kurtz later adds, "In the business, arena, however, financial journalists are players."

Kurtz trades on being more of a well-connected reporter, than either a big thinker or an elegant writer. He organizes his book around some of Wall Street's central characters of the last decade, focusing most of his attention on the tumultuous period starting in the fall of 1998 through the spring of 2000. Hedge fund manager, journalist, and web-entrepreneur Jim Cramer, CNBC's "Money Honey," Maria Bartiromo, CNBC's Squawk Box gang, CNN's Lou Dobbs, gossip mongers Gene Marcial of Business Week and Dan Dorfman are some of the journalists probed. Analysts Henry Blodget of Merrill Lynch, Ralph Acampora of Prudential Securities and Abby Joseph Cohen of Goldman Sachs, stand in for the analysts and brokerage sages.

Anyone interested in the career of Jim Cramer should surely read this book, at least the significant portion that chronicles his constant feuds with benefactors, business partners and TV producers. And if one has a hunch that the key to being a top-tier analyst or talking head lies less in one's ability to predict anything with accuracy, than in being bold or even entertaining in one's predictions, than this book is worth the few days it takes to read. Kurtz uses Henry Blodget, who rose to fame by being bullish on Amazon to delve into the conflict of analysts, who are less prized for their skill at picking stocks than for their use at pitching their firms in the underwriting market. Just one example of Blodget's fickleness: Two hours after Blodget told Merrill Lynch clients that Amazon was no longer a "buy," he went on CNBC to assure viewers, "I think you can buy the stock now."

CEOs will even find themselves in Kurtz's tale, which devotes a chapter to the "Cult of the CEO." Kurtz chronicles how the press fell in love with Kim Polese of Marimba, how Microsoft's Bill Gates spun the press personally, if sometimes clumsily, ("Connie, I just can't believe how f__ing stupid you are," he screamed at Connie Chung, cutting short the interview), and how DoubleClick CEO Kevin O'Connor worked the media to establish credibility.

Yet for all the good gossip, Kurtz fails to craft a narrative to hold the general reader, one in which the details that may interest insiders--such as why CNBC's Ron Insana decided to take off his toupee--add up to a story with a beginning, middle, and end. He also fails to grapple with the ethical issues he raises in the introduction and finally returns to again in the afterword. What of the conflict ridden nature of the analysts? What if rumors are reported and move markets in the short term? What ought to be done about it?

In fact, a close read of Kurtz's book reveals that the players themselves, especially those in the media, with few exceptions, are well aware of their power, role, and responsibility. Maria Bartiromo says she reports rumors not to vouch for their veracity, but because she feels the individual investor ought to know what the institutional insiders are whispering. CNBC's Mark Haines thinks analysts are close to worthless, and dutifully busts their chops on his show. Sure CEOs try to use the CNBC for PR purposes.

But the anchors ask tough questions. And when lied to, as Haines felt he was by Kodak's CEO George Fisher, who claimed he wasn't going to cut prices but did the next day, they hold executives accountable. (In Fisher's case, he replayed the interview and pointed out the truth deficit.)

In the end, Kurtz's unintentional cautionary tale for America's CEOs is not how easily the financial press is manipulated but how fiercely it guards its credibility. So manipulate them at your own risk.