THE CASH-KING PORTFOLIO
by Tom Gardner (TomG@fool.com)
Alexandria, VA (Nov. 24, 1998) -- As we inch closer to Thanksgiving, the Cash-King bus slows down, pulls into a rest area, and takes a pause so we can all stretch our legs. Observing the rustic beauty, let's all come 'round the campfire as Fool Taylor R. Wilson lets us know that it's not just ghost stories that come out of these gatherings...
Libations, Liberation, and Security?
by Taylor R. Wilson
This past summer I was on a weekend vacation camping in the woods with a bunch of my high school girlfriends. After a few drinks, we got onto the topic of investing. (Okay, I started the discussion.) There we were, ten women, with twenty-six children between us, and it turns out that none of them really knew where their families' cash was stashed and how it was "working for them."
Their husbands took care of all that.
"Hmmm, that's not good," I thought, as I mixed them another drink. After some careful prying, another bottle, and snippets of my Gloria Steinem liberation speech by the campfire, their stories about money started flowing. Did you hear what happened to so and so after her husband left? Did ya hear Jane's aunt had to declare bankruptcy after her husband died? She was totally clueless. How about what's her name's husband squandering away all of their money at the casino? No kidding. What would happen if? Would we know what to do? Would everything be frozen -- would we be homeless?
Every one of these women had thought about money along the way, and had serious concerns, but none had thought to talk about it much. And what were the consequences of that? It turns out that Lori had her extra cash in a coffee can in the cupboard. Three thousand dollars of it! It was her emergency fund. Vonda had her own secret savings account in another bank. Four thousand bucks! Elizabeth had her mother hold her "safe" keepings. One thousand five hundred dollars! The stories kept coming.
I fixed myself another drink. This was bizarre. I knew I could help. "Have you guys ever heard of The Motley Fool?" No. Not one of them had heard of it (come on, Motley Fools, get the word out more!). So I started in: Coke this, Gap that, Dell and America Online. "They're all good companies with products you've heard of," I said. "All you need to do is get a discount broker, open up a money market account, and start investing. I do it online. It's easy. It would literally cost you less than $20 to get started with your first stock. And over the long term, the--" I got cut off.
"My husband would kill me."
The conversation pretty much ended there.
Two months passed and I got an unexpected call from Lori (three thousand bucks in the coffee can). Could I help her? She'd been thinking about what I said by the campfire ever since. She talked to her husband and he actually never knew she felt concerned about their money and their investments. Furthermore, he was shocked to hear that she'd been hiding her bonus money in the cupboard. He agreed. It was time to invest.
Per my recommendation, Lori bought and read The Motley Fool Investment Workbook. And, within a week, she marched into a discount broker, plunked down her $3,000 and bought Gap and Microsoft. So far, she's up $420. And she and her husband are getting a good chuckle out of her race for the business pages in the morning.
A couple of days after talking to Lori about her good fortune and how she's actually loving the subject of business and investing, Vonda called. The two of them had obviously just chatted. Vonda ($4,000 in a secret savings account) then asks if I could help her, too? I send over The Motley Fool Investment Workbook to her mother's house. (I find this so funny. Vonda actually has her mother's address on the secret savings account.) She reads the book and hops online to The Fool web site. She reads some more. She then goes on down to that same discount broker and plunks her $4,000 into a money-market account and proceeds to buy Dell and America Online. As of last week, she was up 30%. But, as of last week, she still hadn't told her husband. Hmmmm. There is some work left to do with Vonda.
A month after those two high-school pals started investing, Elizabeth called. Same story; I won't bore you. Only she decides to buy Bebe Clothes. She loves their stuff, knows she's taking more of a risk, but is prepared to keep track of their quarterly reports between changing the twins diapers. Her husband put some of his money into Bebe, too. Go Bebe. It's up $5, or 33%, in the past week.
I think there are three lessons to the story: 1) The market won't always go up, but if you find good companies that you know about, and hold them, you can make your money grow a heckuva lot over time. 2) The Motley Fool needs to do a better job of spreading the word about this service. 3) Libations Plus Liberation = Financial Security. (And ten years ago we thought it was a one night stand.)
**The names have been changed to protect the characters -- because I'd like to get invited back to the Girls' Weekend Retreat next year!**
Order your copy of David and Tom Gardner's new book, Rule Breakers, Rule Makers, in advance. This Simon & Schuster beauty doesn't arrive until January, but you can reserve your copy today! The first half of the epic book, on Rule Breakers, elucidates the Fool Port's investment style; the second half, on Rule Makers, further explains Cash-King investing.
Day Month Year History C-K -1.59% 10.46% 22.77% 22.77% S&P: -0.44% 7.67% 17.59% 17.59% NASDAQ: -0.58% 10.98% 17.98% 17.98% Cash-King Stocks Rec'd # Security In At Now Change 2/3/98 24 Microsoft 78.27 121.69 55.47% 5/1/98 37 Gap Inc. 51.09 71.63 40.19% 2/3/98 22 Pfizer 82.30 115.13 39.89% 6/23/98 34 Cisco Syst 58.41 76.19 30.44% 2/13/98 22 Intel 84.67 110.44 30.43% 8/21/98 22 Schering-P 95.99 106.44 10.89% 2/27/98 27 Coca-Cola 69.11 73.44 6.27% 2/6/98 56 T. Rowe Pr 33.67 35.38 5.05% 5/26/98 18 AmExpress 104.07 104.50 0.42% Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Eastman Ko 63.15 75.88 20.16% 3/12/98 20 Exxon 64.34 72.69 12.98% 3/12/98 17 General Mo 72.41 72.88 0.65% 3/12/98 15 Chevron 83.34 79.63 -4.46% Cash-King Stocks Rec'd # Security In At Value Change 2/3/98 24 Microsoft 1878.45 2920.50 $1042.05 5/1/98 37 Gap Inc. 1890.33 2650.13 $759.80 2/3/98 22 Pfizer 1810.58 2532.75 $722.17 6/23/98 34 Cisco Syst 1985.95 2590.38 $604.43 2/13/98 22 Intel 1862.83 2429.63 $566.80 8/21/98 22 Schering-P 2111.7 2341.63 $229.93 2/27/98 27 Coca-Cola 1865.89 1982.81 $116.92 2/6/98 56 T. Rowe Pr 1885.70 1981.00 $95.30 5/26/98 18 AmExpress 1873.20 1881.00 $7.80 Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Eastman Ko 1262.95 1517.50 $254.55 3/12/98 20 Exxon 1286.70 1453.75 $167.05 3/12/98 17 General Mo 1230.89 1238.88 $7.98 3/12/98 15 Chevron 1250.14 1194.38 -$55.77 CASH $120.62 TOTAL $26834.93 *Please note: On 8/4/98 $2,000 cash was added to the
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