(FORTUNE Magazine) – In the small town of Mediaville, Howard Kurtz is the chief of police. The longtime media reporter for the Washington Post, Kurtz has fashioned a career--quite a nice career, actually--out of exposing the foibles of his fellow journalists. When a reporter gets caught in a conflict of interest, Kurtz is always among the first to arrive at the scene of the crime. When news stories are hyped or distorted, he raps knuckles. Did the media overplay this story? Was it manipulated on that one? This is the territory that Kurtz patrols, and it's an all-consuming beat. When he's not banging out stories for the Post, he's hosting his CNN talk show, Reliable Sources--or writing books about hot media topics. His 1998 book, Spin Cycle, was about the many ways the Clinton White House manipulates the political media. In his new book, The Fortune Tellers: Inside Wall Street's Game of Money, Media, and Manipulation, Kurtz has turned his spotlight on the financial media--and on the many ways Wall Street manipulates the business press. Or at least that's what he claims to be writing about.

On the face of it, Kurtz's choice of subject could not be more timely. Just as sports reporting was forced to change with the rise of televised sports in the 1950s and '60s, so has financial reporting been forced to change in the 1980s and '90s, during the longest bull market in history. For starters, there is simply a lot more of it. Not long before the bull market began in 1982, there was no CNBC, no CNNfn, no separate New York Times business section, no TheStreet.com. The Wall Street Journal was a one-section paper. None of the network news shows bothered to report the Dow's daily progress.

Just as important as the explosion of coverage, though, has been the shape that coverage has taken. The stock market, long viewed as the worst beat a reporter could have, is now soaked in journalistic prestige. Publications that once disdained market coverage (such as--let's be honest here--FORTUNE) now can't get enough of it. Such reporters as Maria Bartiromo, Lou Dobbs, and our own Andy Serwer have become mini-celebrities. The financial press turned stock market coverage, once deadly dull, into something quite exciting. Where will the market go today? What will Greenspan do? Will a company that's reporting earnings beat "expectations"? Will an analyst's downgrade hurt a company's stock? Twenty years ago, few financial reporters cared about such questions. Today you can hear them asked 100 times a day if you keep your TV tuned to CNBC.

To hear Kurtz tell it, this has led to a rather scandalous state of affairs. He has three essential charges. First, he says that there is now so much financial information and advice out there that it no longer has any real value. Financial news has become a kind of white noise, rendered meaningless by its sheer volume and speed. Second, he claims that because financial reporters now have such a voracious appetite for stock market news, they are easy prey for Wall Street insiders who want to tout a stock or spread a rumor. Journalistic standards, he believes, have fallen shockingly. "In business," he writes, "unlike politics, the reporting of rumors is deemed fair game. Journalists...are used every day by CEOs, by Wall Street analysts, by brokerage firms, by fund managers."

Finally, Kurtz says that financial reporters have become, in his phrase, "players." He continues: "They make things happen instantaneously, and their impact is gauged not by subjective polls but by the starker standard of stock prices. A single negative story, true or not, can send a company's share price tumbling in a matter of minutes. ...The clout of financial journalists affects not just the corporate bottom line but the hard-earned cash of millions of average investors." Here, then, is Kurtz's bottom line: Financial reporting harms investors.

This is a serious charge. And as much as I'd like to say that Kurtz is completely wrong, I can't. There is no question that the sheer amount of information thrown at investors can seem overwhelming, and there is also no question that financial reporters can sometimes get manipulated by Wall Street guys (and gals) who are looking to pump up a stock. In his prime, a decade ago, Dan Dorfman was criticized for airing rumors that turned out to be untrue--rumors apparently leaked to him by sources who would then sell into the subsequent run-up.

The problem for Kurtz is that his main example of a reporter being manipulated by Wall Street insiders is...Dan Dorfman! But Dorfman exited the mainstream media a few years ago, after Business Week exposed one of his sleazier sources. He now writes for a Website called JagNotes--where few pay him much attention. Try as he might, Kurtz can't come up with a single newer or better example. Which suggests that the alleged manipulation of journalists is perhaps not as rampant as he claims.

In fact, from my perspective--as someone who has been writing about the market since the mid-1980s--financial journalism hasn't gotten worse; it's gotten much better. And if you doubt me, I offer a powerful piece of evidence: Kurtz's own book. His own reporting supports my thesis a lot more than it does his own.

Kurtz gathered his material for The Fortune Tellers by hanging around some of the new stars--both in the media and on Wall Street--who have come to the fore during the past few years. Mark Haines, David Faber, and the gang at CNBC play a big role in the book. So does the ubiquitous Jim Cramer, the hedge fund manager and co-founder of TheStreet.com. Lou Dobbs is in the book. And so are Henry Blodget, Abby Cohen, and Ralph Acampora, among others. (Full disclosure: I'm friends with some of Kurtz's subjects, especially Cramer, whom I've known for 15 years. I've also known Kurtz for years. And I'm mentioned twice, in passing, in The Fortune Tellers. See? I told you Mediaville was a small town.) With this jumble of characters, by the way, Kurtz's narrative is largely incomprehensible--but let's put that aside.

The point here is that what he discovers by hanging around the financial press largely contradicts his claim that financial journalism is in decline. For instance, Kurtz continually bemoans the fact that Wall Street analysts pull their punches because they have investment banking relationships with the companies they cover--and that journalists never point this out. But then he's got scene after scene in which Faber and Joe Kernan discuss that very fact on CNBC. Indeed, at TheStreet.com, reporters are required to ask sources whether their firms have investment banking relationships with the companies they are talking about. Another example: Kurtz scoffs at Ralph Acampora's constantly changing stance--one week the Prudential strategist is a bull, the next week he's a bear. Again, Kurtz charges that reporters don't call him on his about-face. Again, we see someone at CNBC--Mark Haines, in this case--doing exactly what Kurtz says nobody does.

And then there is the supposed power of the financial press to move stocks. On one hand, Kurtz's reporting shows that the TV reporters in particular are acutely conscious of the effect they might have on stock prices and try hard to minimize their clout. When they do move a stock--and this is true for most of the financial press--it is usually because they've uncovered something that changes the way a company is perceived in the marketplace. Yes, sometimes it's a mere rumor, but far more often it is some hard fact, some new piece of information that the market has to assimilate. That's what reporters are supposed to do, isn't it?

On the other hand, the movement Kurtz is describing is extremely short-term. Over the long term, reporters have zero influence over a stock's movement. "Over time," Kurtz writes in the truest sentence in his book, "good companies perform well and justify their stockholders' investment." In other words, the "white noise" doesn't matter if you have a long-term perspective.

Investing has never been easy, especially for the little guy. A generation ago, one of the things that made it difficult was the lack of timely information. Today, one of the things that makes it difficult is the plethora of information. It takes effort to wade through it all, to decide what is valuable and what is junk. The fact that many people can do so is proof that small investors are far savvier about the market than ever before. And for that, the financial press deserves at least part of the credit--police chief Kurtz notwithstanding.

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