Rule Breaker Portfolio

<THE RULE BREAKER PORTFOLIO>

What, Me Worry?
The Mirth of Venus

by Barbara Eisner Bayer (TMFVenus@aol.com)

HILLSBORO BEACH, FL (March 4, 1999) -- In the beautiful sun-drenched mornings here in Florida, I often turn on the financial news, only to hear the worry blues. This morning, the Hang Seng was down because investors worried about the government's plans; the President of Fidelity was asked if he worried about competition from index funds; the guest analyst was asked whether he worried about the market atmosphere. (They should have asked his mother if she worried about his worries about the market.) I wasn't worried when I woke up, but I sure am now!

Positive news is often followed by, "Yes, but can the company sustain its newfound strength and momentum?" When Fed Chairman Greenspan addresses Congress, mentioning nothing relevant to the market, people worry that his lack of commentary signifies some future negative.

These days there's no end to things we can worry about. Food additives, sun overexposure, African safaris, airplane strikes, airplane crashes, market volatility, interest rates, and most popularly, the Y2K problem. Why, I'm half expecting Rupert Murdoch to launch a 24-hour Worry News Network. "WNN�You give us 22 minutes, we'll sure as heck give you something to worry about."

Earlier this week, I received a phone call from a friend's husband (whom I have never met), panicking about the Y2K situation and asking me, a stranger, if he should sell all his stocks and go into cash. When I asked him the reasons he purchased his stocks in the first place, he confessed they were chosen by a broker/friend who was currently advising him to hold; but since he felt he'd gotten "lucky" in the market, he feared that now might be the time for his luck to end.

I explained that he would be best served by studying the stocks he currently held and seeing which of them might still be primed for future growth. If he understood the business models of these companies, he wouldn't be afraid of the bottom falling out around January 1. Sadly, he claimed he didn't have the time. But he did have enough time to worry. If only he would get Foolish and spend his time learning to invest in a company's fundamentals, these pressures might not be consuming him.

With daily media warnings of Year 2000 gloom and doom, and Nervous Nellies giving seminars teaching how to prepare for catastrophe, it's only natural that people are scared. But don't squander your energy on situations out of your control; be constructive! Hence, Venus' Tips for Handling Market Worry:

(1) If you wake up in the early morn only to discover overseas markets trading down, down, down, don't worry about your portfolio crashing, crashing, crashing; spend time figuring out what time it is in each country you're worried about. This will either put you back to sleep, or so frustrate you (did you account for Daylight Savings?) that you'll forget all about the overseas markets;

(2) If you hear a technical analyst discussing head and shoulders formations, schedule a check-up with your dermatologist. After all, little white speckles on your shoulders are a definite turn-off. Could they affect your portfolio? Only a worrier knows for sure.

(3) If you're compelled to turn on CNBC during the day, spend time casting "Squawk Box: The Movie." Without a doubt, Calista Flockhart of "Ally McBeal" fame is a shoe-in for Maria Bartiromo. And how about Joe Kernan being portrayed by Jeff Bridges, David Faber by Gary Sinise, and Mark Haines by Tom Bosley.

(4) If you're worried the market is going to fall and can't get up, spend time researching your companies to discover WHY they have risen dramatically. Is it hype, or is price movement being driven by increased earnings, revenues, and visionary tactics by management?

(5) If you fear the Y2K problem, go ahead and buy several gallons of water and dried and canned foods. They're always good to have around, anyway. Those of us who have lived in rural environments and experienced 48 hours of power outages always have these rations on hand. And take heart, because after the first 24 hours, it feels like you're merely re-enacting a history lesson of life from an earlier time.

We Fools don't spend our time worrying; it's not a constructive pastime. If your investing plan is causing your hair to prematurely gray, your face to wrinkle, or your stomach to have a voice of its own, it just ain't worth it. Just ask Harry Jones, whose portfolio doesn't cause him a wink of lost sleep.

The Rule Breaker lost to the general markets today rising a paltry .004% compared to +1.54% for the S&P and +1.22% for the NASDAQ on very little news. Amazon.com (Nasdaq: AMZN) slumped $3 3/8 to $120 1/8 when it went fishing for estranged customers by e-mailing them $5 discounts in order to lure them back. While the market perceived this as a negative, it is just part of their long-term plan to aggressively spend money now in order to make money later.

And AT&T (NYSE: T) Chief C. Michael Armstrong made investors pout by revealing that his company had no interest in acquiring America Online (NYSE: AOL). And who said AOL wanted to unite with AT&T anyway?

Fool Short Shorts: Excellent features at the Fool include a debate about overseas investing with Dueling Fools TMF Edible and TMF Selena; elsewhere TMF Puck interviews the co-CEOs of the Globe.com.

On a final note, this month marks the 75th birthday of the mutual fund. Happy Birthday, old friend; perhaps it's time to retire. Don't worry -- we individual investors can carry investing into the future.

Foolishly,
Barbara

What's up with Harry Jones today?

03/04/99 Close
Stock  Change    Bid 
 ---------------- 
AMZN  -3 3/8  120.13
AMGN  +2 1/8   64.69
AOL   -  3/4   86.25
ATHM  +2 1/8  115.25
DJT     ---     4.25
CHV   +1 5/16  79.31
CAT   +  11/16 47.94
DD    +1 9/16  51.88
GT    +1 7/8   49.13
IOM   -  3/8    5.56
SBUX  +1 15/16 56.56
TDFX  +1 1/2    13.75
EBAY  +7 5/16 130.81

 
                   Day   Month    Year  History  Annualized 
      R-BREAKER  +0.004% -0.29%  13.25% 1036.64%  70.06%
        S&P:     +1.54%   0.67%   1.74%  185.51%   25.76%
        NASDAQ:  +1.22%   0.21%   4.57%  218.38%   28.79%


    Rec'd    #  Security     In At       Now      Change
   8/5/94  2200 AmOnline       0.91     86.25    9390.01%
   9/9/97  1320 Amazon.com     6.58    120.13    1725.82%
  5/17/95  1960 Iomega Cor     1.28      5.56     334.43%
  12/4/98   450 @Home Corp    56.08    115.25     105.51%
 12/16/98   580 Amgen         42.88     64.69      50.87%
  4/30/97 -1170*Trump*         8.47      4.25      49.82%
  2/26/99   300 eBay         100.53    130.81      30.13%
  2/23/99   300 Caterpilla    46.96     47.94       2.07%
   7/2/98   235 Starbucks     55.91     56.56       1.17%
  2/23/99   290 Goodyear T    48.72     49.13       0.84%
  2/23/99   180 Chevron       79.17     79.31       0.18%
  2/20/98   260 DuPont        58.84     51.88     -11.84%
   1/8/98   425 3Dfx          25.67     13.75     -46.43%

    Rec'd    #  Security     In At     Value      Change
   8/5/94  2200 AmOnline    1999.47 189750.00  $187750.53
   9/9/97  1320 Amazon.com  8684.60 158565.00  $149880.40
  12/4/98   450 @Home Corp 25236.13  51862.50   $26626.37
 12/16/98   580 Amgen      24867.50  37518.75   $12651.25
  2/26/99   300 eBay       30158.00  39243.75    $9085.75
  5/17/95  1960 Iomega Cor  2509.60  10902.50    $8392.90
  4/30/97 -1170*Trump*     -9908.50  -4972.50    $4936.00
  2/23/99   300 Caterpilla 14089.25  14381.25     $292.00
   7/2/98   235 Starbucks  13138.63  13292.19     $153.56
  2/23/99   290 Goodyear T 14127.38  14246.25     $118.88
  2/23/99   180 Chevron    14250.50  14276.25      $25.75
  2/20/98   260 DuPont     15299.43  13487.50   -$1811.93
   1/8/98   425 3Dfx       10908.63   5843.75   -$5064.88

                              CASH   $9924.87
                             TOTAL $568322.06

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 in the yearly, historic and annualized returns). For a history of all transactions, please click here.

</THE RULE BREAKER PORTFOLIO>

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