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Cash-King Port

The Cash King Portfolio has been renamed the Rule Maker Portfolio.

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11 Steps:
 1: Philosophy
 2: Mastering Finances
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 5: Getting Information
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 7: QuaVa & Flow
 8: Ownership
 9: Putting It Together
10: Retirement
11: Getting Answers

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Wednesday, March 04, 1998

Cash-King Portfolio Report
by Tom Gardner (tomg@fool.com)

ALEXANDRIA, VA (Mar. 4, 1998) -- The CK Portfolio took a hit today, as our stocks fell with the broader market. Who knows? Today could mark the beginning of a protracted bear market, with stocks falling 24.6% over the next eighteen months. We'll plan to just continue buying right through any declines. We'll be methodically adding $2,000 in savings money to the portfolio every six months.

Today being Wednesday, it's Q&A Day in CashKing-dom. Before trying to sound expert about two Fool-member questions, I need to correct a glaring error in yesterday's report entitled: 319% Gain Since 1995. In speaking about the mutual-fund industry, I wrote:

Buying managed mutual funds today in hopes that they'll beat the market is like betting on the Boston Red Sox to win the pennant. It hasn't happened for decades.

New England, home to me for a decade of my short life, rose up to challenge me after last night's report was published. And they were right! Fool member Mark Selig represents the words of dozens of respondents last night with this note:

Tom,

FYI, the Red Sox win the pennant about every ten to fifteen years (e.g. 1946, 1967, 1975, 1986). It's the World Series that they haven't won since they traded away Babe Ruth in 1918!

Maybe you meant the White Sox or the Cubs?

Foolishly,
Mark Selig

Mark has it right. In the grand scheme of things, the Red Sox are fairly frequent winners of the American League pennant; it's the World Series they haven't mastered in eight decades. So, I now amend my cheap shot and compare the consistent and considerable underperformance of the managed mutual fund industry to the Chicago White Sox and the Chicago Cubs.

Hasn't it been a few decades since either won the pennant? (I await Foolish flames from Chicago!)

Ok, now to two questions that have rolled through the Fool site in the last week. The first comes from Craig Argyle who writes:

CK Guys,

When do you expect to have all of the stocks chosen for the Cash-King portfolio? You said at the end of January that it would be finished by mid-February. Also, is the Cash-King portfolio going to pick four Dow stocks or are we supposed to do it individually?

Thanks for all you do!
Craig

Craig reminds us of one of our shortcomings -- or actually, one of my shortcomings -- as long-term investors. The demands of daily life have slowed down our production of buy reports for the eight growth stocks and four Dow stocks we plan to hold. This is not because we lack ideas nor because we're trying to time the market. We've been slowed down by me and my schedule.

Craig et al., you can expect the remaining reports to trickle in over the next week. I believe the Dow-stock reports will be up in the next two days -- and there'll be an interesting ripple there, so check in. Then the next two buys for the CK stocks should come over the next week. Then we'll finish up with what we consider a very memorable selection of our 8th growth stock. The final tally will look something like this:

 
      8 Cash-King Stocks: ~ $1875 each 
      4 Fool-Four Stocks: ~ $1250 each 
          Total Invested: ~ $20,000

We'll have 75% of our portfolio (or $15,000) in Cash-King growth stocks and 25% of our portfolio (or $5,000) in Dow turnarounds. Of course, every six months, we'll be adding a new $2,000 in savings, so you can expect a couple new buy reports each year. Thanks for the question, Craig, and I apologize for the delay.

The second question comes in from a Fool named "Skip" who writes:

Tom,

Yesterday, you mentioned a financial author in your column named Martin Fridson. Which book by Fridson do you like and recommend reading?

Thanks,
Skip

Thanks for the post, Skip. Martin Fridson is a managing director at Merrill Lynch who has inked a few highly-readable, informative guides to stock-market investing. My preference is his book Investment Illusions, published in March of 1996.

Fridson did come out with a new book this year, which I look forward to reading, entitled It Was a Very Good Year. The new book details the common themes in the financial markets during the ten best years in the 20th century. He covers everything from the short-term popularity of stocks to Charlie Chaplin's approach to the market. The book was reviewed rather Foolishly by Washington Post business columnist Jim Glassman in a recent column entitled, Have and Hold, or Buy and Trade? That's a fine, fine article -- just click through that Web link and then click the link in his introduction to the full column.

In addition to Fridson, I also mentioned financial writer Philip Fisher. Regular readers of this column should pick up a copy of Common Stock, Uncommon Profit by Fisher. It's a wonderful book. I'd enjoy discussing its finer points in our CK message folder.

So, restating the two answers -- the remaining CK and Fool-Four buys really should be coming in the next week. I have to get them done before going into hibernation for the NCAA Basketball Tournament next week. And as for the Fridson book I enjoyed, it is titled Investment Illusions and was published in 1996.

Have a great evening, Fools. I'll be back tomorrow to discuss why I think a great lesson can be learned from the Beardstown Ladies' accounting snafu -- though it's a pretty contrary take. I might actually be praising them for reminding us of an important principle on accumulating wealth.

Fool on!

Tom Gardner


TODAY'S NUMBERS
Stock  Change    Bid 
 ---------------- 
 KO    +  9/16  68.75 
 INTC  +1 3/16  86.44 
 MSFT  -2 3/16  82.25 
 PFE   -2       85.00 
 TROW  -1       68.88 
 

                 Day   Month    Year  History 
         C-K      -0.41%  -0.61%   1.14%   1.14% 
         S&P:     -0.45%  -0.19%   4.60%   4.60% 
         NASDAQ:  +0.15%  -0.61%   6.46%   6.46% 
  
     Rec'd    #  Security     In At       Now    Change 
    2/3/98    24 Microsoft     78.27     82.25     5.09% 
    2/3/98    22 Pfizer        82.30     85.00     3.28% 
    2/6/98    28 T. Rowe Pr    67.35     68.88     2.27% 
    2/13/98   22 Intel         84.67     86.44     2.08% 
    2/27/98   27 Coca-Cola     69.11     68.75    -0.52% 
  
  
     Rec'd    #  Security     In At     Value    Change 
    2/27/98   27 Coca-Cola   1865.89   1856.25    -$9.64 
    2/3/98    24 Microsoft   1878.45   1974.00    $95.55 
    2/3/98    22 Pfizer      1810.58   1870.00    $59.42 
    2/6/98    28 T. Rowe Pr  1885.70   1928.50    $42.80 
    2/13/98   22 Intel       1862.83   1901.63    $38.80 
  
                               CASH  $10696.94 
                              TOTAL  $20227.32 
  
  
 *The year for the S&P and Nasdaq will be as of 02/03/98 
       

 

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