DRIP PORTFOLIO
In Store for 2000

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By Jeff Fischer (TMF Jeff)

ALEXANDRIA, VA (Jan. 4, 2000) -- The Nasdaq gained over 80% in 1999, most of it in the last three months, and then when it falls 5.5% (as it did today), we see the bears come out of the woodwork.

"See, I told you it was flying high."

Argh!

When did you tell us? At the peak yesterday? Or did you tell us one year ago, when the Nasdaq was 50% below its current price?

It's almost always the latter. Accountability can be "met" by using tricks if you focus on the short term. If today's decline in stock prices makes you believe a guy who said that prices would fall (one year ago!), then you're not thinking with the right perspective. Either way, today's move is another mere blip on the long-termer's radar screen. If stocks continue to fall, we may get a chance to buy more over time at increasingly attractive valuations. In our situation, that wouldn't be so horrible.

If you own stocks already and you don't like to see them fall, the very fact that you own stocks should mean that you don't plan to sell them for at least five years, so it shouldn't matter that they fall in the near term. Think big picture when you think "stocks," or don't think at all; head out instead and enjoy an unseasonably warm January. Good long-term investments take care of themselves.

Today in Drip Port, let's nail down some things that we will do in 2000:

1) We will continue to keep a close watch on our companies. Every quarter, we'll look at the results of Intel, Johnson & Johnson, Mellon, and even Campbell Soup. We scrutinize quarterly results in order to better understand our companies and in order to see, as well as possible, what is coming down the pipeline.

2) We will continue to look for new investments. It is a market of stocks, not a "stock market." No matter what the stock market does, we should be able to find companies that outperform and garner us strong returns over the long run.

3) We will be looking well beyond the traditional pastures when we consider our investments -- the traditional pastures being companies with direct investment plans. Due to services like BuyandHold.com and Sharebuilder (which George and I will review next week), we have a much larger universe of companies that we can invest in at very low cost.

4) There are industries that are growing dynamically and that promise to grow over the next 18 years much more than traditional, older industries. Eighteen years from now, we may kick ourselves if we're not aggressive right now, here in 2000. Sprucing up this portfolio with one or two investments sporting higher-than-average risk but much-greater-than-average potential may make sense for us. That doesn't mean that it will make sense for you, too. That's something you'll need to decide. Just realize that we may be less than "traditional" in some of our decisions this year. We want to take advantage of the changing world around us, and having 18 years to invest, we can stomach some near-term risk for larger-than-normal long-term potential.

5) We will aim to be more community-driven and interactive than ever before. I believe that the Drip message boards are among the best on the Fool (and others have written that they are the best direct investing boards anywhere on the Web). We want to highlight and leverage our community (that's you, and me) in order to help everyone as much as possible in their investment decisions and in their portfolio upkeep. One way to spotlight the community is to have you actually write columns. I asked for volunteers on the Drip board yesterday. If you're interested in writing a Drip Port column, please see this post.

6) We will try to resolve our position on Campbell Soup. The company obviously hasn't performed as we hoped, and we're not even inclined to buy more shares during this downturn because the company's direct investment plan is so expensive. Thus, this holding is sort of dead in the water for us for two reasons. That's not pretty. As much as we want to be long-term investors and buy and hold (and hold, and hold, and hold), if we can find a way to replace Campbell with something superior in which we'll actively invest, we just may.

7) We will work to keep these columns highly relevant to you and comprehensive about important topics. You can help by posting topic suggestions on the boards. Also, as we write, we realize that you're likely busy and that there is a great deal to read on the Fool, let alone on the Internet. We will work to keep our columns as concise as is realistic (but not at the expense of jokes).

8) We want to think of ourselves here in Drip Port as the "low-cost investing solution," more than just the Drip or direct investment portfolio. The investment world has changed dramatically the past two years and it continues to change. There are new ways to invest. Our mode of operation has always been to buy stock in small amounts at zero to very low cost; plus, we buy fractional shares and we reinvest all dividends. We can invest in this way outside of direct investment plans now, so we can broaden investment horizons. The investment solution that we aim to demonstrate is one of low-cost success for the average Fool (that's most of us) who has a modest amount of money to sock away every month.

As always, please visit the message boards linked below for discussion or to ask questions.

Until next time, Fool on!

Drip Portfolio

1/4/00 Closing Numbers
Ticker Company Dly Pr Chg Price
CPBCAMPBELL SOUP-1 3/8$35.88
INTCINTEL CORP-4 1/16$82.94
JNJJOHNSON & JOHNSON-3 3/8$88.81
MELMELLON FINANCIAL CORP-2 3/16$30.00

  Day Week Month Year
To Date
Since
7/28/97
Annualized
Drip -4.78% -4.15% -4.15% -4.15% 24.53% 9.41%
S&P 500 -3.83% -4.75% -4.75% -4.75% 49.07% 17.78%
S&P 500(DA) -3.83% -4.75% -4.75% -4.75% 51.69% 18.63%
S&P 500(DCA) n/a n/a n/a n/a 25.37% 9.71%
NASDAQ -5.55% -4.12% -4.12% -4.12% 148.58% 45.25%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
9/8/9722.3909INTC44.603$82.9485.95%
11/14/9711.292JNJ80.007$88.8111.01%
11/5/9828.3741MEL34.416$30.00-12.83%
4/13/988.174CPB54.586$35.88-34.28%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
9/8/9722.3909INTC$998.70$1,857.05$858.35
11/14/9711.292JNJ$903.44$1,002.87$99.44
11/5/9828.3741MEL$976.51$851.22($125.29)
4/13/988.174CPB$446.18$293.24($152.94)
  Cash: $24.32  
  Total: $4,028.70  


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.