Rule Breaker Portfolio

Fool Portfolio Report
Tuesday, December 9, 1997
by Paul Larson (TMF Parlay@aol.com)


CHICAGO, IL (Dec. 9, 1997) -- The Fool Port caught a little bit of a cold in this chilly market day. The portfolio sneezed away 0.94% of its value while the Nasdaq got frozen for a 1.88% loss today. The S&P 500, however, remained relatively healthy by only losing 0.67% of its value.

As many of us are busy shopping for new calendars, the port is a little over four-percentage points away from outperforming both market indices for the fourth year in a row. Let's hope we have a good couple of weeks since the end of the annual performance race is nearing. The Nasdaq is already at our back, but the blazing S&P is yet to be caught. There are only 15 trading days left in the trading year. Yes ma'am, only fifteen days left to rope in the S&P 500 for bragging rights. And in the realm of cosmic and completely baffling coincidences, there are also only 15 shopping days left this holiday season. Scary thought, no?

Even if the Fool Port falls on its face in the snow this December, there is always next year. And if not next year, the year after that. We're a patient bunch of Fools here and practice what we preach -- keeping a long-term outlook. While we may report with baited breath these next few weeks about our race with the market, in reality, it's the longer term that counts and is what we *really* care about.

Let's now turn an eye to the landscape of stocks that make up the portfolio. As I scan the headlines of the companies the portfolio owns, nothing unusual catches my eye. Trois Coms, which has been surprisingly strong of late, chimed in on the news wire to announce, "3Com Corporation Teams with AutoNet for Enhanced Remote Access Network Services to End Users." America Online, on the other hand, let the world know that "America Online Inc. CEO Steve Case Delivers Keynote Address at Internet World on Wednesday, Dec. 10." That's about the best I could come up with for substantive news in the portfolio. Sometimes, there just is not a whole lot happening with the stocks we own.

The stock with the best move north was the 2.7% jog forward by Innovex. It's a nice little move considering the rest of the technology sector seemed quite feeble today. The weakest stock of the bunch happened to be one of our other technology stocks, KLA-Tencor, which coughed up 4.8% of its value today. Losing another 4.0% of its value today, Trump was the second worst performing stock of the basket. Trump hit another all-time low today and closed at its lowest point ever. This is good news for those who are short the stock.

This portfolio's short of Trump last April is actually in the black, which is no small feat considering that it was a position that was down close to 50% at one point. Concerns about a competitive winter in Atlantic City, anemic reported monthly gaming wins, and renewed worries about Trump's ability to service its debt are all behind the stock's recent weakness. Trump added another $100 million of debt to its balance sheet last week and was consequently slapped with a credit downgrade by Standard and Poor's. As Fools, we don't like debt-heavy companies and view this as good news for our bet on the "Don't Pass" against Trump.

Trump also announced last week that it still plans on selling one of its three properties in Atlantic City -- Trump Plaza. However, I've just got to ask, why take out *more* debt when the company is planning on gathering a significant amount of dough from the selling of the property? It just doesn't make any sense to this Fool. In any case, the mean analyst estimate for the quarter ending in a few weeks looks for Trump to lose $0.68 per share.

One more thing... Prepare yourself for a blatant, egregious, and entirely self-serving plug. We're pleased to announce the availability of our annual end of the year publication, this year titled Industry Focus 1998. In the publication, seven motley writers, myself included, take a look at the factors affecting companies in twenty diverse industries for the year ahead. As an added bonus, we also share our thoughts on what companies in these industries we think stand the best chance of succeeding in 1998. Put on your Hawaiian Shirts and surf on over to FoolMart if you are interested in reading more about it.

Remember, only 15 shopping days left!

Fool on!

-Paul Larson

Today's FoolWatch: all the latest in Fooldom.

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TODAY'S NUMBERS
Stock Change Bid ---------------- AMZN - 7/8 55.63 AOL - 5/8 86.50 T + 3/16 58.00 CHV - 7/8 78.50 DJT - 5/16 7.56 GM - 1/2 63.31 INVX + 7/16 23.75 IOM -1 29.00 KLAC -1 15/16 39.63 LU -1 13/16 80.13 MMM -1 1/2 94.50 COMS + 3/16 37.69

Day Month Year History FOOL -0.94% 2.66% 27.38% 239.96% S&P: -0.67% 2.13% 31.73% 112.87% NASDAQ: -1.88% 1.25% 25.52% 125.02% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 86.50 1089.35% 5/17/95 980 Iomega Cor 2.52 29.00 1050.79% 10/1/96 42 LucentTech 47.62 80.13 68.27% 8/11/95 125 Chevron 50.28 78.50 56.11% 8/12/96 130 AT&T 39.58 58.00 46.55% 9/9/97 290 Amazon.com 38.22 55.63 45.53% 8/12/96 110 Minn M&M 65.68 94.50 43.89% 8/12/96 280 Gen'l Moto 51.97 63.31 21.82% 4/30/97 -1170 *Trump* 8.47 7.56 10.70% 8/24/95 130 KLA-Tencor 44.71 39.63 -11.38% 6/26/97 325 Innovex 27.71 23.75 -14.29% 8/13/96 250 3Com Corp. 46.86 37.69 -19.57% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 30707.50 $28125.63 5/17/95 980 Iomega Cor 2509.60 28420.00 $25910.40 9/9/97 290 Amazon.com 11084.24 16131.25 $5047.01 8/11/95 125 Chevron 6285.61 9812.50 $3526.89 8/12/96 280 Gen'l Moto 14552.49 17727.50 $3175.01 8/12/96 110 Minn M&M 7224.44 10395.00 $3170.56 8/12/96 130 AT&T 5145.11 7540.00 $2394.89 10/1/96 42 LucentTech 1999.88 3365.25 $1365.37 4/30/97 -1170*Trump* -9908.50 -8848.13 $1060.38 8/24/95 130 KLA-Tencor 5812.49 5151.25 -$661.24 6/26/97 325 Innovex 9005.62 7718.75 -$1286.87 8/13/96 250 3Com Corp. 11714.99 9421.88 -$2293.12 CASH $32438.81 TOTAL $169981.56








Note
The Fool Portfolio was launched on August 5, 1994, with $50,000. It was renamed the Rule Breaker Portfolio in October 1998. The investing strategy began with the first investments of the Fool Port and has evolved with time and experience. In July 2001, the portfolio began adding $12,500 each quarter (We missed Jan. 2002, so we added $25,000 in April 2002). We skip a quarter if we have enough uninvested cash or cash available in stocks we would prefer to sell to make new investments. All transactions are shared and explained publicly before being made, and returns are compared in each week's column to the S&P 500 (including dividends where noted) and the Nasdaq composite. For a history of all transactions, please click here.