|You'll be happy to know that, while mediocrity on Wall Street is being
paid tens of millions of dollars in management fees, right here in The Motley
Fool we've tossed up The Fool Port and The Cash-King Portfolio, which have
both dramatically outperformed the S&P 500 during their tenure. These
features come to you free, Fool. Got to love that. We hope you'll take the
time to tell all of your friends and colleagues, who are loaded up on
poor-performing mutual funds, that Foolishness -- which will one day walk
about the orb like the sun, shining everywhere -- has presented clean and
simple models that are subverting high-priced financial advice.
Again, though, hey I dare not use this space to gloat since the future has
a way of toying with pride. Also, it's just not as much fun as taking the
time out to build a second portfolio of cash-rich companies. After publishing
the May 1st Fool Portfolio Report (cf.
The Simpleton Leads), I received a number of e-mails asking if
I would suggest investing in these same ten companies at their present prices.
This is an excellent question.
Given that the proposed model at the outset restricted out all trading and
demanded that the ten stocks be held for a decade, the underlying philosophy
says, "Yes." And I still believe in that underlying principle: Very wealthy,
very cutting-edge, very enterprising companies have a way of returning their
shareholders more and more money, and more.
To make that concept easier to grasp -- carry it over to human beings. Those
qualities travel well with individuals. In fact, all of the greatest lessons
about business are transferable to the people around us, and vice versa.
People who are greedy, intelligent, clever, disorganized, competitve,
bureaucratic, wealthy, adventuresome, leveraged, aloof, etc. Any of these
or, can't imagine it but, all of them. One way to train yourself as an investor
is to consider how fairly-, over-, or underpriced are the people around you
-- at work and at play. You needn't be harsh with this; it just provides
you a better context for understanding the businesses out there that people
run. People do run them, still.
For example, if you meet a young woman who has made a good deal of money,
is fascinated by the newest technology, and dares to aim for progress --
you might want to get in on any private financing she's trying to land.
Conversely, if you meet a young dude who just borrowed from four credit cards
to make downpayments on a hot new (depreciating) automobile, and who neatly
tucks five LottoBall tickets into his shirt pocket before work each morning,
you might want to ask him if, when he incorporates himself, there will be
any shares available for borrowing.
People run businesses. The same qualities that make our businesses great,
make our people great to invest in. For these reasons, yes, I think the ten-stock
Cash-King portfolio is still a buy for someone looking out ten years.
That said, the group was rather technology-heavy, and I'd like to submit
a second list of potentially-great investments. As I unveil the second group,
the MoneyHeavy portfolio -- a less technology heavy group -- it's important
that I lay out some ground rules and then explain broadly the reason behind
the ten selections.
The Ground Rules
Just as with the first group, the ten stocks will have cost bases set at
today's market-close prices. I'll agree not to make a single trade for ten
years -- come heck or high water. Though the market may fall 10% in total
over the next ten years, this group will remain untouched by anxious human
hands. The portfolio will, thus, hold commission costs down to a minimum
(on the order of $100-$150 for the total portfolio at deep discounters) and
the structure will require no capital-gains taxes for ten years.
Oftentimes it's the costs associated with investing that ruin the private
But what stocks will go in this? Click on the top entry in the listbox to
the right to begin the ride... please keep hands inside the car.
-- Tom Gardner (TomGardner@aol.com),
Oxford Health Plans