Ports in a Storm
The Week in Review -- October 23, 1998
by Jerry Thomas (tmfcheeze@aol.com)

The stock market is a stormy sea. Waves crash violently and your ship is buffeted by hostile winds. You are tossed to and fro by angry waters (and once tossed to, can fro be far behind?). Your hapless schooner lurches up and about, sometimes taking on water, sometimes running near the shoals. But the ship, the ship of Fools, is seaworthy. The hull is sound, the rudder is sturdy, and the tide is rising.

Let's see. How far can I stretch this metaphor? Does your ship seek shelter from the storm? What harbor brings safe anchorage for the weary salt? If I go on to say something like, "Avast ye maytees," or "Yahrrr, shiver me timbers, ye scurvy seadog," might I risk being keelhauled?

The Motley Fool has several real-money portfolios -- "Ports in a Storm" -- that break the old Wise paradigms in many ways. These portfolios are much misunderstood -- and that is not surprising, given the decades of Wisdom that precede them. The whole industry reeks of hyperbole, of pump-and-dump scams, of punditry and profiteering. One can hardly blame the reader who looks on them with a cynical eye. Once raided by pirates, it is only prudent to be wary of the Jolly Roger. (And now, if you'll excuse me, I'm going to take this metaphor out and have it shot. It's a mercy killing.)

In a stark departure from the dubious Wall Street tradition of loading up on a stock, only to unload it while hyping it to the skies, the Fool portfolios announce their trades in advance. It can be a jarring realization to discover that the Fool portfolios were created not for profit, but for education. It is disorienting to some, a threat to those who have grown rich in the old paradigm, and refreshing to the rest of us, the Foolish millions.

I did enjoy the demonstration of this principle played out this week in back-to-back Cash-King Portfolio Reports. On Tuesday Fool Al Levit compared the relative merits of Microsoft (Nasdaq: MSFT) against those of online book retailer Amazon.com (Nasdaq: AMZN). Al, probably not surprisingly for a card-carrying Cash-Kinger, preferred the outlook for Softie. But the next day, in Wednesday's Cash-King Report, Fool Rob Landley argued precisely the opposite position.

I won't decide the winner of that fracas -- I'll leave that to those readers who will enjoy clicking on those enlightening links. I mention them here only to buttress my own argument -- that it's dang hard to play the ol' hype game when the Fools around here keep thinking for themselves right and left. In fact, in Monday's Fool Portfolio Report, Fool Jeff Fischer (TMF Jeff) offers still a third opinion on the world where Amazon competes, examining "offline commerce" as a way to understand the emerging possibilities of its online counterpart.

Getting Fools in line -- it's like herding cats. It's downright unWise to run our portfolios this way, without using the sneaky front-running advantages that fund managers and newsletter predators have been enjoying since equities began trading. But there we go: Using real money. Announcing our trades in advance. Accounting for trading costs in the reporting of total returns. And doing it all out in the open, for free. Only a Fool would run a portfolio this way.

In addition to the aforementioned Fool and Cash-King Portfolios, let me also mention our Drip Portfolio (which aims to turn $100 monthly investments into $150,000 over twenty years), and our Foolish 4 Portfolio, which uses a mechanical model to take advantage of the historically outperforming returns of high-yield Dow Stocks. Finally, there is the Boring Portfolio, which, being the performance laggard of the bunch, is undergoing an overhaul these days. New managers Dale Wettlaufer and Alex Schay are changing the focus of the portfolio one step at a time. Monday's Boring Report, by Alex Schay (TMF Nexus6) explains some of the changes being made.

Portfolios, of course, aren't all we do. One of the big highlights in Fooldom this past week has been Al Levit's four-part series on Social Security. Al gives an overview of the system and its problems and offers up his personal solution for fixing it. While I'm at it, let me also give a passing nod to Fool Michael Giudicissi, who, in a very entertaining Fribble, recounts the experience of kissing his broker goodbye.

The real pleasure for me in watching the Fool portfolios is the everydayness of it all. There are ups and downs, but little is at stake except my own interest in learning. I root for the stocks to go up, but if they go down, that's okay. Even if all the portfolios crash and burn, they would still be serving their purpose: to educate, even while entertaining. I like that. And if you think I'm gaga for the portfolios, look at David Gardner himself. In Tuesday's Fool Portfolio Report he indulges in an extended sports metaphor that is almost as labored as the nautical flights of fancy I used to introduce the overprecious little essay you are now reading. Even worse, in that report David reveals his unfortunate preoccupation with -- dig this -- the Washington Redskins. I mean, are we all not suppressing a resounding guffaw right now?

David, do yourself a favor and get yourself in line with a good manly man's team. Like -- need I say it? -- the Green Bay Packers.

Until next week,
Fool on!



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