Viagra Bound for Japan
by Tom Gardner
Alexandria, VA (July 27, 1998) -- The third week of July, humid across the nation, dropped the market 3.9% and the Cash-King Portfolio fell 4.0% with it. In the night, the bears came down from the Rocky Mountains and tore through our cake tins, ripped open two buckets of jam, and left a swath of saliva all over the stripped-open packet of Oreo cookies.
Rob, Al, Phil and I lay still in our tents, listening to the sounds of a sloppy feast in the night. One of the bears even pushed up against Rob's tent, scratched at it, and bellowed, like Janet Reno. The others pounded through our coolers of food, charged around our campsite three times, grunting, and then left. About fifteen minutes after the attack, the four of us lit a fire, toasted marshmallows from the untouched cooler, and smilingly looked up into the trees where we'd hung our essential food.
Yes, the Cash-King Portfolio fell 4% last week, down with the market. The bears had their feast. But, you see, we've already hung our essentials in the trees, fifteen feet up. If they come back again this week, and next, there will be increasingly less for them to take, as we'll continue hanging what matters most into our long-term bags in the trees -- always out of their reach.
Let's take a look at the performance of the portfolio, stock by stock.
Cash-King Last This Change Intel $83.06 $83.06 + 0.0% Cisco $99.69 $97.75 - 1.9% Pfizer $115.75 $113.50 - 1.9% Coca-Cola $86.13 $83.44 - 3.1% Microsoft $118.00 $113.81 - 3.6% AmEx $115.81 $107.06 - 7.6% Gap Inc. $65.06 $58.69 - 9.8% T Rowe $42.44 $37.63 - 11.3%
Fool Four Last This Change GM $69.88 $71.06 + 1.7% Chevron $82.81 $83.00 + 0.2% Kodak $86.25 $84.75 - 1.7% Exxon $72.38 $70.38 - 2.8%
S&P 500 1187 1141 - 3.9% Total C-K $24,390 $23,413 - 4.0%
In the news, two of our Cash-King stocks, Microsoft (Nasdaq: MSFT) and Cisco (Nasdaq: CSCO), announced the broadening of their alliance to pursue the development of streaming media on Internet-linked computer networks. Fools, it's time to begin moving away from an ongoing flow of text e-mails. Bringing in audio will turn the rage to V-mail -- away from E-mail. First, voice-mail. Then video is around the corner. We'll be watching our mailbox messages and viewing The Motley Fool message boards. Microsoft and Cisco want to make that happen.
Pfizer (NYSE: PFE) announced last week that it has applied for permission to sell Viagra in Japan, following mail-order madness from the East. Pfizer also announced last week that it will sell its urological devices maker, American Medical Systems, for $130 million to E.M. Warburg, Pincus & Co., a private equity investment firm. Pfizer is still on the prowl to sell another of its lower-margin subsidiaries, Howmedica, its Medical Technology unit.
Intel (Nasdaq: INTC), our only stable C-K stock last week, announced a new round of price cuts on its 450-MHz chip -- the fastest of all Pentium IIs. When it hits the market next month, the chip will now be priced at $665, down from $776. Intel also announced last week that it will delay shipment of its Pentium II Xeon chip until the end of July, as it repairs a second bug with a software fix in the complex processor.
All other C-K stocks -- from Coke to Gap, from American Express to T. Rowe Price -- were newsless last week. And outside of the General Motors dispute, there was no meaningful news from our Foolish Four stocks either. Nothing much of anything, really. To my eye, it seems that all of our businesses are still just as strong, pounding ahead into a democratizing world, a world hungry for commerce. Stock price fluctuations, overnight bear attacks, Alan Greenspan making market predictions, the flapping of a songbird's wings in Hunan -- these things aren't likely to force us out of ownership positions in businesses that we understand and believe in.
It all can get a lot worse, though.
A 4% one-week drop after three consecutive years of 20%-plus returns from our public markets doesn't count for much. The campsites are swollen with food; there are a lot of bears in the mountains; they're bound to have their day, their month, their year. It's not going to stop us from camping out our savings in the public markets. Investing is best framed as a lifelong endeavor.
I'll be back this week with reports on the Foolish Four, on the pharmaceuticals industry, and much more.
Tom Gardner, Fool
Day Month Year History C-K +1.73% 4.42% 19.09% 19.09% S&P: +0.57% 1.18% 14.58% 14.58% NASDAQ: +0.11% 2.03% 16.96% 16.96% Cash-King Stocks Rec'd # Security In At Now Change 2/3/98 24 Microsoft 78.27 116.69 49.09% 2/3/98 22 Pfizer 82.30 114.25 38.82% 2/27/98 27 Coca-Cola 69.11 84.94 22.91% 5/1/98 37 Gap Inc. 51.09 60.44 18.30% 6/23/98 23 Cisco Syst 86.35 97.50 12.92% 2/6/98 56 T. Rowe Pr 33.67 37.13 10.25% 5/26/98 18 American E 104.07 112.81 8.40% 2/13/98 22 Intel 84.67 86.06 1.64% Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Eastman Ko 63.15 84.00 33.02% 3/12/98 20 Exxon 64.34 71.44 11.04% 3/12/98 15 Chevron 83.34 85.50 2.59% 3/12/98 17 General Mo 72.41 73.13 0.99% Cash-King Stocks Rec'd # Security In At Value Change 5/26/98 18 American E 1873.20 2030.63 $157.43 2/3/98 24 Microsoft 1878.45 2800.50 $922.05 2/3/98 22 Pfizer 1810.58 2513.50 $702.92 2/27/98 27 Coca-Cola 1865.89 2293.31 $427.42 5/1/98 37 Gap Inc. 1890.33 2236.19 $345.86 6/23/98 23 Cisco Syst 1985.95 2242.50 $256.55 2/6/98 56 T. Rowe Pr 1885.70 2079.00 $193.30 2/13/98 22 Intel 1862.83 1893.38 $30.55 Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 15 Chevron 1250.14 1282.50 $32.36 3/12/98 20 Eastman Ko 1262.95 1680.00 $417.05 3/12/98 20 Exxon 1286.70 1428.75 $142.05 3/12/98 17 General Mo 1230.89 1243.13 $12.23 CASH $94.76 TOTAL $23818.14 *The year for the S&P and Nasdaq will be as of 02/03/98