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Apple $200 Demands Scrutiny, Not Blind Praise

With false benchmarks, investors need to skip the rah-rahs and ask whether the stock is worth its price.

It is 2008, so let me start by doling out a very special Business Press Maven wish for health, happiness, profitability and safety before laying down a signature vow to spend another 12 months missing no trick of the business media.

I am normally more concerned with larger, thematic errors in business journalism, but during slow holiday times when many cub reporters are pressed into larger roles, the number and scale of errors becomes a subject in itself.

Let's review quickly what to look out for, and then I'll critique coverage of


(AAPL) - Get Apple Inc. Report

move to $200.

Speaking of Apple,


was very impressed that the

company expanded its operating system market share in December compared with November. Comparing December with any month other than a previous December is always dangerous.

They Just Don't Get it! - Monday, Jan. 02

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And the fact that the iPhone, a product newer than most of the competition's offerings, is helping Apple expand market share, should at least be mentioned. The iPhone is early in its growth cycle, and with encroaching competition it might not be grabbing market share for long. Moreover, the iPhone is a particularly good Christmas gift, especially compared with many of the competition's products.

The Financial Times

, in talking about

biotech in 2007, omits two important factors.

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"Credit squeeze casts cloud over biotech," screams the headline, blaming not the rain but the next best thing: subprime.

Do we hear a word about regulatory agencies' tougher approval standards? Negative!

We do get a raw count of initial public offerings in 2007 vs. 2006, but do we get a total dollar value? Negative!

Anyhow, these are just a few examples of the sort of sloppy oversights we'll see coming off a big holiday. Beware. And be doubly aware.

On the larger subject of Apple and $200, there is nothing like a random benchmark to get the business media going, even during a holiday season, and Apple's brief stay at $200 last week prompted plenty of commentary.

Here's the most important element of this coverage: Since $200 was no direct mark of business accomplishment, an investor needs the business media to be skeptical. A devil's advocate approach to this rise to $200 would serve investors best. That is not to say that reporters should trash Apple, one of the greatest companies in American history. But no one is perfect, and no move past a benchmark number should be automatically greeted with flowers and chocolate. That does no one good, least of all Apple shareholders, who I know from boatloads of emails are too prone to boosterim to begin with.

As any good investor will tell you, emotions, like love, are an enemy.

Let's quickly review examples of the good and the ugly.

Motley Fool all but struck up the band in tribute to Apple with

this effort. "Apple at $200 Is Just the Beginning," chirps the headline. Naturally, the Fool could be right; Steve Jobs will certainly go down in history. However, investors are best served by an article that questions a move in a stock they own and tests the reasons they invested in Apple in the first place. Would you buy the stock now?

And how, crooned Motley Fool, little hearts floating toward the heavens. But remember what I said above love being a dangerous emotion. In investing, you want to marry for money. When you see the word love, know that critical thought has probably fallen by the wayside:

"Lovers of round, juicy milestones can rejoice. Apple (Nasdaq: AAPL) hit the $200 mark in intraday trading yesterday.

"It closed a few ticks lower than that, but this doesn't mean you need to toss out the bundt cake and return the confetti to Party City. After all, is there any doubt that Apple will eventually surpass that mark and head higher, adjusted for the obviously pending stock-split announcement?

"Apple is cheap. Yes, even at $200."

Good reporters will put their own assessment to the test, but here we just get a throwaway line about how Apple "isn't perfect," before old news about Apple TV being a paperweight and a convoluted kicker about how Apple can't topple Microsoft but it will:

"One also shouldn't expect Apple's 2008 run to mirror its 2007 gains, because it would topple Microsoft at that point to reign supreme as the tech stock with the chunkiest market cap.

"Then again, isn't that where Apple is ultimately headed anyway? You know $200 isn't the end. It's only the beginning."

The article, which does little more than lay out the conventional thinking on Apple's best-case scenario, does not use the occasion of $200 to put investors' assessments to the test. It gets the dreaded Business Press Maven "Back of the Hand" award.

By contrast,



article also is not that good and leans positive, but it at least goes through the motions of asking questions, of throwing some real negatives out there, if only to see if they'll stick.

Not celebratory like Motley Fool, the article's headline is a question: "Is Apple Really Worth $200 A Share?"

Here's the second paragraph, which sets up a good discussion on the move past $200. A move like this should always spur open discussion, more so than a hard-news-related development such as a good earnings report or a declaration of bankruptcy. There: Underlying reality is more evident. Here: We should search for meaning.

"Most of the Apple watchers I talk to say achieving this level was just a matter of time, with some surprised it took this long. The naysayers say Apple's gains are getting way too ahead of themselves: that euphoria is replacing reason and that Apple bulls risk stampeding themselves."

The article does not split the difference. We are not idiots who need that. Reality itself will not walk down the middle, and the writer lets us know that he or she stands in the bull camp, dismissing the bear's case with a "I'm not so sure about that."

We then get a brief overview on market valuation, competition and coming products. Instead of ending with an "it's only the beginning" hurrah,


ended on a hedged note, saying that December earnings will put a lot of these questions to the test.

That is just what you Apple holders need, an occasional reality test. And in lieu of writing me irate emails, why don't you go out huntin' for business media oversights?

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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