DRIP PORTFOLIO
Touchstone Focus
And circling like Santa

By Jeff Fischer (TMF Jeff)

ALEXANDRIA, VA (Dec. 17, 1999) -- Drip Port is circling the air like Santa Claus and his eight tiny reindeer. What the heck are we circling for? We're waiting. We're waiting to see future quarterly results from PepsiCo (NYSE: PEP), and we're waiting for an interview to be arranged with at least one Wrigley (NYSE: WWY) executive. Meanwhile, we're just chewing gum and snacking on potato chips. And we're doing some other things, too.

This week was filled with all kinds of importance. Day by day, importance rolled from the fingertips of your faithful Drip Port writers and (in much greater quantity) from your fellow Drip investors on the Drip message boards. On the Drip boards this week, you've discussed "how to begin investing," services like Sharebuilder and BuyandHold.com, Intel (Nasdaq: INTC), Disney (NYSE: DIS), and much, much more. Against the backdrop of a soaring Nasdaq, up 70% year-to-date, our message boards remain calm, collected, intelligent, and very long-term-oriented. As always, they're a pleasure to read.

Perhaps we should be talking about General Electric (NYSE: GE) out there, too. Hey, do many of you own GE? I hope so. The stock has been an absolute monster of reliability, rising in such a straight and steady line that it makes Coca-Cola (NYSE: KO) look crooked. When we launched this portfolio in 1997, we joked that we could just buy GE and go to sleep. We would own about two dozen industries via this one investment, and we could leave it at that. You know, this is not so unFoolish. Our initial commissions would be minimal, we would effectively be diversified, and we would have just one company (and its few dozen divisions) to track.

Sure, our risk would be concentrated in one STOCK, but truly it would be spread across many industries. Sure, a majority of GE's profits are derived from just a few of its major businesses, but even so, a Fool should never be ashamed to "Focus Invest." If you know a company extremely well, and you are investing in it for decades (or for as long as it continues to succeed), why not funnel your dollars into it? A steady, market-beating success is all that we seek, by whatever intelligent means possible -- and the simpler the better. GE alone has provided this. (Today GE announced an increased dividend payment and a 3-for-1 stock split on top of ongoing strong business results. Margins at the company are expected to continue to expand.) GE, one stock, has been enough to spell "investing success."

I grew up around relatives who owned only one stock. Foolish or not, my Great Aunt -- who is now 92 years old and currently running around Las Vegas and Illinois casino riverboats, going to Bingo twice a week, and I think keeping a boyfriend away from the family's knowledge -- began to work at Sears (NYSE: S) in Chicago at the age of 16, which was back in, oh, 1922. She received Sears stock beginning in 1922 and continued to receive it all her working life. She worked at Sears until the 1970s. Her cost basis must be a penny, given all the stock splits. She never invested elsewhere. She later received more stocks from spin-offs of Sears, such as Allstate (NYSE: ALL) and Dean Witter Discover. She sold the companies that she didn't understand and kept Sears.

Money is money, whether it comes from 10 stocks or one. All you really need in your financial life is one or two successful long-term investments. Diversification does spread your risk against the unknown, of course, but we like to diversify only modestly. Overdiversifying can be much worse than owning just a few well-chosen companies. (Our fairly recent Focus, Focus column discusses this topic further.)

All this is to remind us that we're not in a hurry to start buying something new -- much as we'd like to for added excitement. Our current investments, if not setting the world on fire, are also not likely to turn sour should the market turn cold. Intel, Johnson & Johnson (NYSE: JNJ), and Mellon Financial (NYSE: MEL) are all solid as ever. Meanwhile, Campbell Soup (NYSE: CPB), which we stopped buying in August of 1998, is down 25% this year. Even so, its business isn't bad (the economics behind it are strong), it just isn't growing right now. Meanwhile, "on again, off again" Intel was off recently, but it jumped back "on" this week, rising several dollars. All the short-term thinkers watch Intel's stock like a hawk; we lean back and look at the big picture.

Focus, and what you focus on, is key.

Touchstone Friday

A few of you asked us to write about Intel this week on the message board, but there didn't seem to be enough interest for us to change our planned agenda. We'll certainly discuss Intel soon. The company is putting out some very fast (even faster, I should say) processors -- 800 MHz.

On Monday, George shared his discussion with executives at Scientific-Atlanta (NYSE: SFA) regarding broadband. On Tuesday, we talked retirement. The Fool has a new retirement area and three new real-money Retiree Portfolios. Check those out. (In a way, the younger you are, the more important it is that you start to plan for retirement now!) On Wednesday, it was our duty to suggest holiday gifts to you while there was still time to buy them (there is still time now). Finally, on Thursday, right in line with Wednesday's thoughts, Vince reminded us that we shouldn't rack up credit card debt when buying gifts. (Then he and his ferret went fishing.)

All of this week's columns are linked below. Next week, we must talk about company share buyback offers, charity, and, oh yes, our investments, too.

Have a great, great weekend. See you on the boards.

Prepare for next week's charity discussion: Check out the Fool's charity drive now!

Drip Portfolio

12/17/99 Closing Numbers
Ticker Company Dly Pr Chg Price
CPBCAMPBELL SOUP1/4$39.00
INTCINTEL CORP13/16$82.06
JNJJOHNSON & JOHNSON1/4$94.88
MELMELLON FINANCIAL CORP-1/8$33.13

  Day Week Month Year
To Date
Since
7/28/97
Annualized
Drip 1.01% 3.40% -2.82% 13.84% 29.47% 11.41%
S&P 500 .16% .28% 2.30% 15.60% 51.37% 18.94%
S&P 500(DA) .16% .28% 2.30% 16.18% 53.99% 19.80%
S&P 500(DCA) n/a n/a n/a n/a 27.34% 10.64%
NASDAQ 1.02% 3.67% 12.50% 71.16% 139.11% 44.01%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
9/8/9722.3909INTC44.603$82.0683.98%
11/14/9711.258JNJ79.965$94.8818.65%
11/5/9828.3741MEL34.416$33.13-3.75%
4/13/988.174CPB54.586$39.00-28.55%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
9/8/9722.3909INTC$998.70$1,837.45$838.75
11/14/9711.258JNJ$900.24$1,068.10$167.86
11/5/9828.3741MEL$976.51$939.89($36.62)
4/13/988.174CPB$446.18$318.79($127.40)
  Cash: $24.36  
  Total: $4,188.60  


Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.

Note
Drip Port launched with $500 on July 28, 1997, adds $100 to invest every month, and the goal is to own $150,000 in stock by August of the year 2017. Due to the slow nature of dollar-cost-averaging and our relatively significant starting costs, we do not expect to seriously challenge the S&P 500 for the first three to five years as we build an investment base. The long-term advantages of dollar-cost-averaging still overcome the short-term disadvantages, however. Final note: our investment in Campbell Soup is frozen due to fees instituted in its investment plan. Click here for a history of all Drip Port transactions.