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In fairness to the broker who recently called me, this Fribble is about a
warm call, not a cold call. He assured me that months ago I had given him
permission to call again. My recollection of the conversation was hazy enough
that it wasn't fair to challenge him on that point. So, we began what turned
out to be a very enjoyable conversation.
Having made a note in his first call that I follow the market, he asked if I
have ever heard of a company called Intel. (Even my wife, who does not follow
the market at all, laughed when I told her that.) Being a long-term investor
who makes my own decisions and doesn't want to be "sold" on an investment, I
was put off by his insistence that an investment in Intel today could return
33% or more in less than one year. Putting all of that aside, he did give
many good reasons to buy Intel now. His command of the issues he raised was
very impressive.
As I warmed up to this warm call, I became genuinely interested in his
opinion of Intel's obstacles. I wanted to know the challenges he thought
might get in the way of Intel's success. His reply: "There are no obstacles."
Uh oh. The warm call suddenly turned cold.
Andy Grove, Intel's CEO, says paranoia about competition is a healthy trait.
Tell him his company has no challenges!
I asked for clarification. Two more times I was assured Intel has no
obstacles. I even asked if it is likely that any company of any size
competing in any market is without obstacles to success. Again, he had no
reason to think there are any obstacles in Intel's way. I silently questioned
whether this broker was being up front with me, or whether he was honestly
naive about the nature of any business.
Sensing my skepticism, he wondered what I thought of Intel's stock. I told
him about my entertaining bet with a friend, a fellow Fool. The bet is that
Intel's stock won't outperform the S&P 500 by 20% from November 12, 1997,
through the last day of 1999. You and I know that kind of reasoning could
easily be construed as being bullish, not bearish. A bet that Intel's stock
won't outperform by 20% assumes it might outperform by as much as 19%. Using
that yardstick, Intel measures up as a great, market-beating stock. The
broker didn't have the presence of mind to make that compelling argument and
I didn't possess the generosity to give him a clue about it. At this point I
was leaning toward him being naive, not absent of scruples.
Turning the tables on me, he asked about the concerns that caused me to bet
against Intel over the next couple of years. I won't bore you with the
details. I'll only mention that I spent a few minutes speaking of set-top
boxes, network-centric solutions, thin clients and the Year 2000 problem.
Those who follow technology stocks such as Intel know this is the stuff that
appears in the business and investment news and Motley Fool folders almost
every day. When I was done, there was total silence on the other end.
Prolonged silence.
Finally, I caved in. "Do you know what a set-top box is?"
"No."
"Are you familiar with network-centric solutions?"
"No."
"Have you heard of fat servers and thin clients?"
"No."
Heck, we're all here to learn and I don't have a hint of a problem with
someone not knowing about those computer concepts. I didn't know diddly squat
about them a couple of years ago either. I especially appreciate that he was
openly honest about his lack of knowledge. Despite that, I can't dismiss the
huge problem that a broker doesn't recognize the lingo of the biz and has no
clue about some of the most important issues relevant to his touted
investment. After all, it's my money he's hoping to put on the line.
(Ironically, some of those issues he's unfamiliar with are reasons to feel great about Intel's future. So, please don't send me e-mail. I know about 'em
already, though I disagree.)
Just when I thought my warm call was over, he asked one more question. "Why
don't you want to buy Intel now?"
Sheesh!
For the record, my friend took my bet despite her agreement with me about
Intel's relative prospects over the next two years. She took it partly
because she hopes to egg me on for decades about how I lost the bet, and
partly because of the bet's payoff. The loser will contribute $100 to a
child's brokerage account. Because the payoff to the winning child comes at
the end of 1999, we think it's a very Foolish way to usher in the new
millennium!
About the broker, despite my disagreement with him, he was so genuine and
pleasant that I gave him the OK to call again. Maybe that call, no doubt an
even warmer one, will be the subject of another Fribble.
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