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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
 3: Allocating Savings
 4: Finding Ideas
 5: Getting Information
 6: Cash-King Criteria
 7: QuaVa & Flow
 8: Ownership
 9: Putting It Together
10: Retirement
11: Getting Answers

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Related Items

• Hall of Portfolios
• Rule Breaker Port
• Rule Maker Port
• Boring Port
• Drip Port
• Foolish Four Port
• Harry Jones


Friday, May 8, 1998

Cash-King Portfolio Report
by Phil Weiss
(pweiss@homemail.com)

Towaco, NJ (May 8, 1998) -- The weeks that I write in this space seem to go by too quickly. Since it's Friday, tradition dictates that we offer a financial lesson. I'm going to do that, but offer a bit of a different spin on it. I'd like to discuss something that I have often wondered about. It has to do with the fervor with which I usually follow my stocks in terms of checking for the latest quotes and the latest company news. I'm a consumer of large amounts of this information and a frequent one.

Believe it or not, I'm going to come up with a justification for this behavior -- even as a Cash-Kinger.

One of the basic tenets of this portfolio is that we're buying stocks today with a plan to hold them for ten years or more. We profess to not care at all about the short-term performance of our stocks, so generally, there's no need for us to be concerned about day-to-day price fluctuations. We even underrate the importance of most current events, preferring to focus on the forward merits of the total business. For example, while the media has been going nuts about Viagra, we see a full-bodied business beyond its new impotence drug.

The longer view is a broader view.

But, if you're like me, I'll bet that you still follow your stocks regularly. It's kind of similar to the way that I follow my sports teams. I know that it's really the end of every season that counts. But that doesn't stop me from checking out the box scores in the paper while I eat breakfast in the morning. It also doesn't stop me from watching or listening to at least an occasional game, catching some highlights on ESPN, or reading some of what the press says about my team's chances for the coming season.

There's another similarity between the way that I follow my stocks and the way that I follow my sports teams. Just like I don't trade my stocks, I don't trade my favorite sports teams. Whether my team is competing for a championship or struggling to make the playoffs, year in and year out I'll still be rooting for the Yankees, the New York Giants, the Blue Devils, and the New York Rangers. I follow them nearly every day. But I don't trade them. This doesn't mean that I can't assess their value. It doesn't mean that I don't make determinations on how much time and money to spend on them in a given year, but it does mean that I've settled on my core holdings for a long time to come.

For me, the same is true about investing. I love quoting my favorite stocks � two, three, four, five times a day. Believe it or not, I do. Since my job requires that I spend a lot of time in the office, whether I'm in between meetings or working towards a variety of deadlines, I usually get a few moments during the course of the day to check out my stocks. Sometimes I'll check on them just to take a break from some heavy-duty tax research -- too much of which can clog your brain. The Internal Revenue Code and many tax cases often seem to be written in a language that only remotely resembles English. The occasional check of my stock prices is a relief!

And the more I think about it, the more similar my favorite sports teams and stocks become. I like to see how my teams progress during the course of each season and I like to follow how my stocks progress during the course of each year. I also know my teams can't win the pennant every year. When you're like me, having your team win or lose doesn't make you give up on them and start rooting for a different team. I've also learned that it's not the end of the world when my team doesn't win. Just ask Tom, Al, and Rob. I watched Duke get knocked out of the NCAA Tournament with them this year. I was disappointed, but hey... life goes on.

Similarly, I know that I don't have to own the hottest stock this week, month, or year. It's the performance over the long haul that matters. A stock like Coca-Cola is a great example of this. As mentioned in our Coke buy report, including reinvested dividends the company's stock has grown an average of 16.6% per year since its IPO in 1919. With a long-term outlook and a business model that I believe in, it's easier to make it through the times when the stock underperforms the market.

The only downside to following my teams and my stocks each day is that it can be a little more stressful. For example, over the course of a season even the best baseball teams only win around sixty percent of the time. That means that there are a lot of days that I won't enjoy watching the game or finding out results after the game is over. What a great reminder, though, that the long-term matters most.

The same thing can be said for my stocks. During the time that I own them, they'll have down days, weeks, months, quarters, or even occasionally years. In the 11 Steps to Cash-King Investing we said that it's only necessary to check out the company's performance once a quarter. So, the intraday and daily price fluctuations have little significance. While that still doesn't seem to stop me from checking them out when I get a chance, it doesn't mean I'm following them with the intent of trading them. Nope. I'm tracking them for enjoyment and to learn more about their business. Tracking, not trading.

Thanks for tuning in this week. Have a Foolish weekend, and I'll see y'all again here three weeks from Monday.

Phil Weiss, Fool


TODAY'S NUMBERS
Stock  Change    Bid 
 ---------------- 
 CHV   +  3/8   84.88 
 KO    +  11/16 76.44 
 GPS   +  1/2   52.19 
 EK    -  7/16  71.50 
 XON   +  1/16  73.19 
 GM    +1 13/16 68.69 
 INTC  +3 1/16  84.06 
 MSFT  +2 5/16  85.69 
 PFE   +4 1/8   111.13 
 TROW  +  1/2   35.38 
 

                  Day   Month    Year  History 
         C-K      +1.45%  -0.56%   7.86%   7.86% 
         S&P:     +1.19%  -0.33%  10.67%  10.67% 
         NASDAQ:  +1.59%  -0.22%  12.79%  12.79% 
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At       Now    Change 
     2/3/98   22 Pfizer        82.30    111.13    35.03% 
    2/27/98   27 Coca-Cola     69.11     76.44    10.61% 
     2/3/98   24 Microsoft     78.27     85.69     9.48% 
     2/6/98   56 T. Rowe Pr    33.67     35.38     5.05% 
     5/1/98   37 Gap Inc.      51.09     52.19     2.15% 
    2/13/98   22 Intel         84.67     84.06    -0.72% 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Exxon         64.34     73.19    13.76% 
    3/12/98   20 Eastman Ko    63.15     71.50    13.23% 
    3/12/98   15 Chevron       83.34     84.88     1.84% 
    3/12/98   17 General Mo    72.41     68.69    -5.13% 
  
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
     2/3/98   22 Pfizer      1810.58   2444.75   $634.17 
    2/27/98   27 Coca-Cola   1865.89   2063.81   $197.92 
     2/3/98   24 Microsoft   1878.45   2056.50   $178.05 
     2/6/98   56 T. Rowe Pr  1885.70   1981.00    $95.30 
     5/1/98   37 Gap Inc.    1890.33   1930.94    $40.61 
    2/13/98   22 Intel       1862.83   1849.38   -$13.45 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Exxon       1286.70   1463.75   $177.05 
    3/12/98   20 Eastman Ko  1262.95   1430.00   $167.05 
    3/12/98   15 Chevron     1250.14   1273.13    $22.98 
    3/12/98   17 General Mo  1230.89   1167.69   -$63.20 
  
                               CASH   $3910.83 
                              TOTAL  $21571.77 
   
 *The year for the S&P and Nasdaq will be as of 02/03/98 
       

</THE CASH-KING PORTFOLIO>

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