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Cash-King Port

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

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Big Gains All Around
C-K news of the week
by Rob Landley
(landley@flash.net)

Austin, TX (Oct. 19, 1998) -- It's been a bit moist here in Texas recently, in a biblical sort of way. Luckily, I decided to avoid the floodplains. Living on top of a hill makes the flooding bearable. In their own natural disaster of sorts, the markets have been moving like Jello during an earthquake for the past few weeks. But living on The Hill of Long-Term Investing above the public markets makes it a lot easier to bear.

In fact, as a Cash-King investor who doesn't currently have much spare cash to add to his positions, I haven't been paying much attention to stock prices lately. So imagine my surprise when I typed in the numbers from last week!

 
 Cash-King  Last      This     Change 
 T Rowe     $24.13    $32.00  + 32.6% 
 Gap Inc.   $51.75    $61.06  + 18.0% 
 AmEx       $77.00    $88.88  + 15.4% 
 Cisco      $50.06    $55.38  + 10.6% 
 Microsoft  $96.88   $105.06   + 8.4% 
 Coca-Cola  $63.81    $69.06   + 8.2% 
 Pfizer     $93.00    $98.50   + 5.9% 
 S Plough   $94.69    $97.88   + 3.4% 
 Intel      $83.81    $83.75   - 0.0% 
  
 Fool Four  Last      This     Change 
 GM         $50.88    $59.00  + 16.0% 
 Exxon      $70.75    $75.94   + 7.3% 
 Chevron    $85.69    $86.94   + 1.5% 
 Kodak      $82.06    $74.56   - 9.1% 
  
 S&P 500     984        1056   + 7.3% 
 Total C-K  $21,654  $23,476   + 8.4% 
 

For the week, five of our holdings gained more than 10%, with T. Rowe Price (Nasdaq: TROW) on a rampage, up 32.6% (and up again today). And now, since our inception in February, we're showing healthy numbers. Though the prices of our stocks have gone down, sideways, and all the way around, we're still up more than 7.7% and ahead of the market. We expect to have much worse years than this over the next twenty -- en route to beating the market.

Now, most of our Cash-King companies have been chugging along, earning money in a quiet and consistent way, which means that the interest rate move last week was only a blip on the long-term screen. At the same time, our companies have been making rather a lot of news, and it's rewarding to follow our businesses. So here's some of that news.

Microsoft's (Nasdaq: MSFT) legal troubles have finally made it to court, starting today. I intend to devote an entire article later this week to Microsoft bashi... ahem, a "more in-depth analysis of Microsoft's current situation." So I'll leave it for now. But have plenty of popcorn on hand; this looks like fun.

Intel (Nasdaq: INTC) had a busy week -- busier than I can do justice to here. On Tuesday, it announced earnings that beat expectations, which of course immediately drove the stock price down. It's a good thing we don't care about these short-term movements, because they often don't make sense to me. Take Gap (NYSE: GPS), for example, which was getting hammered as it posted one positive number after another (fears of worldwide recession hurting our low-priced retailer?). Yet last week, the stock bounced back 18%. Hmm.

At the Microprocessor Forum, Intel and its rivals gave out details about their new chip designs. Advanced Micro's (NYSE: AMD) new offering is apparently a very impressive chip with a very large die size, competing head to head with Intel's best chips in performance, but expensive and difficult to manufacture. Cyrix's new "Jalapeno" chip is a brand new design with a smaller die size and an integrated graphics subsystem. Both show companies that appear to aspire to the higher end, possibly leaving the ultra-low-end to Centaur Technologies' (OTC: CJAZ) WinChip. Intel isn't about to let the embedded device market get away, though; our guys are pushing StrongArm processors for use in embedded devices.

Intel also decided to invest half a billion dollars in memory manufacturer Micron Technology (NYSE: MU). This is a fairly obvious move for Intel. As CPU speeds have gotten faster, memory speed has become a bottleneck. If Intel wants to sell faster chips, it needs to remove such bottlenecks.

Pfizer's (NYSE: PFE) stock, like Intel's, also went down immediately following a report of increased earnings. Just read the headlines on these two articles, published the same day: Pfizer Reports Poor Earnings and Pfizer Doubles Its Profits. Amazing. And you wonder why I don't follow the news that closely.

By the way, the 1998 Nobel Prize in Medicine went to the discovery that led to Viagra, as well as new heart medications and a generally improved understanding of the circulatory system. This work discovered that gas nitric oxide dilates blood vessels. (Viagra simply inhibits the specific chemical reaction that ends an erection by neutralizing nitric oxide so the blood vessels can constrict.) Way to go Furchgott, Murad, and Ignarro. You deserve it.

Cisco (Nasdaq: CSCO) decided to breathe down Lucent's neck a bit with the acquisition of Selsius Systems Inc., a maker of telephone equipment. With the convergence of internet/phone/cable/cellular, the world is beginning to see the development of one big market for digital data transportation. Cisco is King of the fastest growing segment: internet routers, but apparently it doesn't intend to be left out of the rest of the data-transport business.

In other news, the Gap sold some clothing, The Coca-Cola Company sold a lot of fizzy brown liquid, TROW received commissions for investing somebody's money, AMEX loaned out some other money, and Schering-Plough sold rather a lot of little pills. All week long, apparently. The same as in week's past. But with Greenspan's tending to the marketplace, the investing community went ballistic. They'll get depressed, ecstatic, obsessed, impatient, excited, and annoyed over and over again during the next twenty years. We'll just keep adding new savings as it comes through.

Tomorrow, Al Levit writes about the Motley Fool Radio Show and investing in Microsoft vs. Amazon.com. My response (and more about "Merchant-Kings" in general) follows on Wednesday. Until then... the sun'll come out, tooo-morrow, betcher bottom dollar that tomorrow...

From Austin Texas, Fool on!

- Oak (Rob Landley)

Cash-King Strategy Folder
Cash-King Companies Folder


10/19/98 Close
Stock  Change    Bid 
 AXP   +  5/8    89.50 
 CHV   -  5/8    86.31 
 CSCO  +  7/8    56.25 
 KO    -  7/16   68.63 
 GPS   -3 3/8    57.69 
 EK    -  5/8    73.94 
 XON   -1 1/16   74.88 
 GM    +  3/4    59.75 
 INTC  +1 1/4    85.00 
 MSFT  -2 1/8   102.94 
 PFE   -  15/16  97.56 
 SGP   +2 9/16  100.44 
 TROW  +2 15/16  34.94 
 

 
                  Day     Month   Year    History 
         C-K      +0.22%   2.22%   7.97%   7.97% 
         S&P:     +0.57%   4.46%   5.61%   5.61% 
         NASDAQ:  +1.71%  -2.66%  -1.06%  -1.06% 
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At       Now    Change 
     2/3/98   24 Microsoft     78.27    102.94    31.52% 
     2/3/98   22 Pfizer        82.30     97.56    18.55% 
     5/1/98   37 Gap Inc.      51.09     57.69    12.91% 
    8/21/98   22 Schering-P    95.99    100.44     4.64% 
     2/6/98   56 T. Rowe Pr    33.67     34.94     3.75% 
    2/13/98   22 Intel         84.67     85.00     0.38% 
    2/27/98   27 Coca-Cola     69.11     68.63    -0.70% 
    6/23/98 34.5 Cisco Syst    57.56     56.25    -2.28% 
    5/26/98   18 AmExpress    104.07     89.50   -14.00% 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Eastman Ko    63.15     73.94    17.09% 
    3/12/98   20 Exxon         64.34     74.88    16.38% 
    3/12/98   15 Chevron       83.34     86.31     3.56% 
    3/12/98   17 General Mo    72.41     59.75   -17.48% 
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
     2/3/98   24 Microsoft   1878.45   2470.50   $592.05 
     2/3/98   22 Pfizer      1810.58   2146.38   $335.80 
     5/1/98   37 Gap Inc.    1890.33   2134.44   $244.11 
    8/21/98   22 Schering-P   2111.7   2209.63    $97.93 
     2/6/98   56 T. Rowe Pr  1885.70   1956.50    $70.80 
    2/13/98   22 Intel       1862.83   1870.00     $7.17 
    2/27/98   27 Coca-Cola   1865.89   1852.88   -$13.02 
    6/23/98 34.5 Cisco Syst  1985.95   1940.63   -$45.33 
    5/26/98   18 AmExpress   1873.20   1611.00  -$262.20 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Eastman Ko  1262.95   1478.75   $215.80 
    3/12/98   20 Exxon       1286.70   1497.50   $210.80 
    3/12/98   15 Chevron     1250.14   1294.69    $44.55 
    3/12/98   17 General Mo  1230.89   1015.75  -$215.14 
  
                               CASH     $48.07 
                              TOTAL  $23526.70 
   
 *Please note: On 8/4/98 $2,000 cash was added to the
portfolio. $2,000 will be added every six months.

*The year for the S&P and Nasdaq is as of 02/03/98

</THE CASH-KING PORTFOLIO>

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