Rule Breaker Portfolio

<THE RULE BREAKER PORTFOLIO>

Say It Ain't So, Po!
The financial outing of a Teletubby

by Rick Aristotle Munarriz (tmfedible@aol.com)

MIAMI, FL (February 16, 1999) -- Tonight, fellow Fools, I'm going to expose one of the popular Teletubbies characters for what he truly is. I hate to be rash here. I'm not all that comfortable with the art of pontification to begin with. However, I've had my suspicions for quite some time but kept these accusations private because I didn't want to shatter the fragile world of what some still perceive to be wholesome family entertainment. Bah! Sadly I was trying to live in denial, kidding myself into believing that the cute, roly poly Po was just like one of us.

You know, I thought he was generally bullish. A believer in the stock market in good times and bad. Tinky Winky, Laa Laa, and Dipsy seem to have no problem with equities. But, as a parent capable of shedding capitalist tears, the time has come to out Po as a market bear.

Say it ain't so, Po! Say it ain't so. Unfortunately it is so. It's so obvious actually, but let me get into today's market action before I dig into the dark underbelly of the Teletubbies' world. I owe you that much before I break your heart.

After a long weekend the market got going again, and much to Po's chagrin, it had an upward bias early on. But by the end of the day we closed with the all too familiar "mixed" market. The blue chip S&P 500 Index closed 0.95% higher. The tech-intensive Nasdaq Composite gave back 0.35%. With Amazon.com (Nasdaq: AMZN) and @Home (Nasdaq: ATHM) giving back some gains in the process our Rule Breaker collection shed 1.54%, barely holding on to positive returns year-to-date. That's this year, to date. It's still just shy of a triple if we dig up the 1998-to-date billing.

Our top holding, America Online (NYSE: AOL) grew another baby step closer to replacing the smeared-ink media today. Coupon king Catalina Marketing (NYSE: POS) announced that it would set up shop allowing AOL subscribers to print out weekly manufacturer coupons. With tomorrow's newspaper already a day outdated, couponing was one of the few remaining reasons to pony up for at least the Sunday edition.

Now, log on to AOL, type in your zip code, and presto, "You've Got Coupons!"

So, what's left? I already get my sport scores and stock quotes long before I go to bed at night. Local weather and now even local news is just a click away. I imagine the only reason I haven't canceled my newspaper subscription altogether is because I use that morning thud of the paper hitting pavement as a wake-up call.

The world is changing, and you don't have to wait until tomorrow to find out by how many strides.

Today, the news. Tomorrow?

Ker-plunk!

Ahhh, morning.

Okay, so why Po? Well, if you line them up it's easy to find the market bear Po -- he's the short one. That's right, the short one. His color is a blood on the streets tinge of red that seems to spell revelry at the next fiscal downturn. His antenna is topped by a zero. Who else but someone who despises the wealth this great bull market has created would use a nil sign as a receptor? That's right, Po knows.

Our bear is also sluggishly slow, and unlike his magic-bag-toting buddy Tinky Winky, Po has no pocketbook to speak of. It's easy to go through life without any need to store possessions when you're short. When you've got a doughnut on your head. When you're, well, Po. For the sake of your financial well-being, just say No to Po!

- Rick Aristotle Munarriz (tmfedible@aol.com)

What's happening with Harry? Click here to find out.

02/16/99 Close
Stock  Change    Bid 
 ---------------- 
AMZN  -5 7/8   98.63
AMGN  +2      122.25
AOL   +2 1/8  160.13
T     -1 5/16  84.50
ATHM  -5 7/16  95.75
DJT   -  1/4    4.31
DD    -1 3/16  52.81
XON   -  7/8   68.56
IP    -  3/4   41.94
IOM   -  1/8    6.38
LU    +1 7/8   98.25
SBUX  -  1/32  48.00
TDFX    ---    11.38

 
                   Day   Month    Year  History  Annualized 
      R-BREAKER  -1.54% -10.58%   0.31%  906.77%   66.42%
        S&P:     +0.95%  -2.95%   1.35%  184.47%   25.93%
        NASDAQ:  -0.35%  -7.66%   5.53%  221.29%   29.36%
 Note:  Yearly, historical and annualized returns for the 
S&P include dividends

    Rec'd    #  Security     In At       Now      Change
   8/5/94  1100 AmOnline       1.82    160.13    8709.21%
   9/9/97  1320 Amazon.com     6.58     98.63    1399.03%
  5/17/95  1960 Iomega Cor     1.28      6.38     397.89%
  10/1/96    84 LucentTech    23.81     98.25     312.67%
  8/12/96   130 AT&T          39.58     84.50     113.50%
  12/4/98   450 @Home Corp    56.08     95.75      70.74%
  4/30/97 -1170*Trump*         8.47      4.31      49.08%
 12/16/98   290 Amgen         85.75    122.25      42.57%
  2/20/98   200 Exxon         64.09     68.56       6.98%
  2/20/98   215 DuPont        59.83     52.81     -11.73%
  2/20/98   270 Int'l Pape    47.69     41.94     -12.07%
   7/2/98   235 Starbucks     55.91     48.00     -14.15%
   1/8/98   425 3Dfx          25.67     11.38     -55.68%

    Rec'd    #  Security     In At     Value      Change
   8/5/94  1100 AmOnline    1999.47 176137.50  $174138.03
   9/9/97  1320 Amazon.com  8684.60 130185.00  $121500.40
  12/4/98   450 @Home Corp 25236.13  43087.50   $17851.37
 12/16/98   290 Amgen      24867.50  35452.50   $10585.00
  5/17/95  1960 Iomega Cor  2509.60  12495.00    $9985.40
  10/1/96    84 LucentTech  1999.88   8253.00    $6253.12
  8/12/96   130 AT&T        5145.11  10985.00    $5839.89
  4/30/97 -1170*Trump*     -9908.50  -5045.63    $4862.88
  2/20/98   200 Exxon      12818.00  13712.50     $894.50
  2/20/98   215 DuPont     12864.25  11354.69   -$1509.56
  2/20/98   270 Int'l Pape 12876.75  11323.13   -$1553.63
   7/2/98   235 Starbucks  13138.63  11280.00   -$1858.63
   1/8/98   425 3Dfx       10908.63   4834.38   -$6074.25

                              CASH  $39332.55
                             TOTAL $503387.11

Note: The Rule Breaker Portfolio was launched on August 5, 1994, with $50,000. Additional cash is never added, all transactions are shared and explained publicly before being made, and returns are compared daily to the S&P 500 (including dividends). For a history of all transactions, please click here.

</THE RULE BREAKER PORTFOLIO>

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