DRIP PORTFOLIO
Slow Down, Fool
And tell Drip Port where to focus next!

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By Jeff Fischer (TMF Jeff)

ALEXANDRIA, VA (Jan. 5, 2000) -- Oh yes, it is going to be an interesting year, a very interesting decade, and, what the heck, an interesting century!

The leading stock indices -- the Nasdaq Composite, the Dow Jones Industrials, and the S&P 500 -- have "decoupled" in the recent past. They used to mirror each other closely. The past three years, however, their performances have differed greatly, especially last year when the Nasdaq gained 85%, the Dow rose almost 27%, and the S&P 500 gained only 20%.

Today was more of the same differences. The Dow rose this morning while the Nasdaq tanked over 4.3%, at first. Yesterday, the Nasdaq fell 5.5%. This means that at one point today it had lost over 9.8% in two days. In Wise terms, that would justify calling the decline a "correction," because a correction is typically seen as a fall of 10% to 20%. (The term "correction" itself is idiotic, because it implies that something was incorrect to begin with, but we won't get into that now.) So, yes, it is going to be an interesting, volatile year, it appears.

Today's Focus

Today the topic is focus. What kind of focus? The kind of focus that you need in a fast-moving, volatile, and ever-growing world. The growing world we're speaking of includes the world of words (the Internet adds millions of content pages daily) and it includes stocks. Hundreds of new companies are going public annually. For an investor, the deluge of content and new investment opportunities can be, at times, overwhelming. Even The Motley Fool, a touchstone investment site offering clarity for many of us, has become an ocean of information, when in the past it was a river of information -- a river that could carry you fairly smoothly to investment decisions.

When the Fool began in 1994, it had message boards, a daily game, one main column (the Fool Portfolio, now called the Rule Breaker), and the Fribble. The advantages of expanding beyond this content are many, but there are a few disadvantages, too. The main disadvantage is that the Fool's relatively simple (and always refreshing) message can sometimes become clouded under our thick daily fog of new content. In light of this, occasionally we need to say to ourselves, "Slow down, Fool. I have only a handful of large stock investment decisions to make in my lifetime. I can't be distracted by everything happening around me that is tangential to my relatively few decisions."

Focus on where you hope to get with your investment career. Then focus on the various methods for getting there. Always take this one step at a time, and take your time.

Despite a much snazzier website now, the Fool's best program for grounding yourself and then getting to where you want to go remains the 13 Steps to Investing Foolishly. The 13-step "ladder" approach to reaching your goals acknowledges that you can (and should) do only one thing at a time, and so it takes you in the correct order, one by one, and allows you the opportunity to choose your own direction each step of the way.

There is so much happening. Dozens of finance websites and hundreds of stock "newsletters" churn out daily content, alongside a handful of stock television and radio programs, hundreds of investment books, millions of posts on message boards, and thousands of people in stock chat rooms. If you enjoy it, soak it up! If it is eating your time without extra reward, however, walk away from most of it, and realize that you only need to make a small handful of good investment decisions to make your entire investing career a success. Once you're on your way, you should keep up with your small handful of companies, keep on the lookout for new ideas if you're in the market for them (this is easier now than ever), and you can let all the other "noise" fall by the wayside.

Most importantly, you should enjoy your investing adventures. You should invest for the vague and distant future, but you should always focus on enjoying the present moment. Your dollars may be "waiting" for the future, but not you. Enjoy the present. That way, when the future finally arrives, you'll know how to enjoy it, too.

What Should Drip Port Focus on Next?

In the present, focus on simplifying your investing career if it seems too complex. For us, this means taking stock. Let's do so now.

We are happy with Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), and Mellon Financial (NYSE: MEL). (Lately, Mellon's dividend ratio has risen as the stock has fallen, so future purchases may reward us with a higher dividend yield.) We are unclear on Campbell Soup (NYSE: CPB). This fact hangs over our heads like drizzling rain. When you're happy with every holding in your portfolio, you know it, and it's a good feeling. Right now, we're not as happy as we should be.

Assuming that we'll eventually sell Campbell, thus solving that problem, the question arises as to what to do next. We are currently waiting for more information on Wrigley (NYSE: WWY) and PepsiCo (NYSE: PEP). That is simple enough and causes no worries. It is a question of waiting to see if we'll take action. But where do we want to invest next to round out the portfolio and take advantage of new opportunities? This is a large question. Telecom, wireless, and biotech opportunities jump to mind. All three have great potential for the next two decades, and although we have some sort of stake in them through J&J and perhaps Intel, for the most part we have no direct investment in these industries. And a well-chosen wireless or biotech investment has the potential to vastly outperform a traditional food and beverage investment the next two decades.

So, as 2000 begins in earnest, we in Drip Port need to ask ourselves: Where do we want to invest next? Almost anything on the stock market is now a possibility. We already have investments in:

  • Diversified Healthcare
  • Computers (to be as broad as Intel is becoming)
  • Financial Services

And, for now at least...

Food and Beverage

So where do we invest next? Post your thoughts on the Drip Companies message board right now. Post the one industry that you think we should consider next, or post a handful of key industries that we shouldn't bypass for the next two decades. We look forward to your posts.

Fool on!

A Drip Port related article:
Intel launching Web machines

Drip Portfolio

1/5/00 Closing Numbers
Ticker Company Dly Pr Chg Price
CPBCAMPBELL SOUP-5/16$35.56
INTCINTEL CORP11/16$83.63
JNJJOHNSON & JOHNSON15/16$89.75
MELMELLON FINANCIAL CORP-1/8$29.88

  Day Week Month Year
To Date
Since
7/28/97
Annualized
Drip .49% -3.68% -3.68% -3.68% 25.14% 9.62%
S&P 500 .19% -4.57% -4.57% -4.57% 49.35% 17.85%
S&P 500(DA) .19% -4.57% -4.57% -4.57% 51.98% 18.70%
S&P 500(DCA) n/a n/a n/a n/a 25.61% 9.79%
NASDAQ -.62% -4.71% -4.71% -4.71% 147.04% 44.82%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
9/8/9722.3909INTC44.603$83.6387.49%
11/14/9711.292JNJ80.007$89.7512.18%
11/5/9828.3741MEL34.416$29.88-13.19%
4/13/988.174CPB54.586$35.56-34.85%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
9/8/9722.3909INTC$998.70$1,872.44$873.74
11/14/9711.292JNJ$903.44$1,013.46$110.02
11/5/9828.3741MEL$976.51$847.68($128.84)
4/13/988.174CPB$446.18$290.69($155.49)
  Cash: $24.32  
  Total: $4,048.58  


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.