Rule Breaker Portfolio

<THE RULE BREAKER PORTFOLIO>

Requiem for the Nasdaq?

by Barbara Eisner Bayer (TMFVenus)

WOODSTOCK, NY (April 19, 1999) -- Instead of spending Sunday afternoon pounding tennis balls at sneering opponents, I attended a funeral. (The real thing, not the premature funeral that today's crushing of the Nasdaq might suggest.)

While funerals for the most part conjure up visions of hysterical grievers, they also encompass great positivity, both spoken and sung. Irreplaceable musical gems that homogenize painful feelings into mesmerizing musical montages have been written for funerals (the Verdi, Faure and Mozart Requiems immediately come to mind). Family members previously separated by distance, experience the bittersweet joy of being reunited. Most of all, we say farewell to the deceased, and remember all the contributions s/he's made to society, family, and friends. In the moment of remembrance, it is undeniably compelling to ask yourself, "What if it were me? Would I have accomplished all my dreams? What would my legacy be?"

Through the experience of a funeral, we have the opportunity to reexamine the direction of our lives, to understand where we've come from, where we are now, and where we're going. And on days like today if you're struggling to make sense of the market, you can use the same techniques on your investments.

This is important for Fools, because being in financial control of your life is much more than merely having an IRA, SEP, or 401(k) (although they are certainly necessary). Fools must identify their dreams and then draw the blueprint for their evolution into reality.

How would you like your life to look when you're 80 years old? Close your eyes and see yourself as you'd look then (yes, ladies, wrinkles and all; yes, gentlemen, loss of replacement hair and all.) Where are you? Who's with you? What are you doing? Then take a look at your life now, and see what you need to do to get there. Understanding where you want to go is half the battle; once you know where you're going, learning how to get there isn't as difficult. (For help with the mechanics of manifesting your dreams please visit our "Managing Your Finances" board where you can contribute and support other Fools on their journeys.)

Being a Nasdaq investor these days has often felt like taking a walk through the Valley of Death. Luckily, being Fools, we fear no evil, as we have invested in companies whose futures we believe in, and we know full well that the day-to-day or week-to-week gyrations of the market are part of its life cycle. While we celebrate the market highs because, well, it's fun, we don't take short-term corrections too gravely. Nothing goes straight to the top without a little trouble along the way.

Analysts have been busy ending their love affairs with Internet stocks, as Morgan Stanley's Mary Meeker proclaimed in this week's New Yorker that they might suffer "a big correction." When someone as influential as Ms. Meeker makes such a proclamation of joylessness, momentum investors apparently compete against one another in a dumping frenzy reminiscent of the Boston Tea Party. Voila -- the prediction becomes reality. They apparently didn't read past the headlines, where Ms. Meeker RECOMMENDS shares of companies that have a chance of becoming online "supercompanies" like Rule Breaker holdings America Online (NYSE: AOL) crushed $23 7/8 to $115 7/8/4; Amazon.com (Nasdaq: AMZN) pounded $31 1/16 to $158 15/16; and @Home Corp. (Nasdaq: ATHM) overwhelmed $26 to $118 15/16.

This frenzied momentum caused the market to look topsy-turvy today. Even though analysts predict that Amgen, Inc. (Nasdaq: AMGN) is likely to beat estimates for the first quarter due to strong growth sales for its anemia treatment drug Epogen, the stock reacted anemically, dropping $5 7/8 to $60 15/16. However, though U.S. manufacturing executives said their profits may weaken in coming months as the global economic crisis continues, a fact which would directly affect our Foolish Four holdings, and Dupont (NYSE: DD), up $3/8 to $68 1/8, was downgraded, our Foolish Four stocks danced happily on twinkle-toes. Chevron (NYSE: CHV) blasted up $3 1/16 to $101 15/16 while Goodyear Tire (NYSE: GT) rose $2 to $59 1/4. It's a great feeling to have these DOW stalwarts on an otherwise somber day.

If anxiety from today's market has not been reduced thus far, read Warren Gump's Foolish words from today's Lunchtime News. And if that doesn't calm you, maybe some perspective will. Just look at where we were at the beginning of 1999:


STOCK PRICE  12/30/98  CLOSE TODAY
AMGN          $52       $60 15/16
AMZN         $106      $158 15/16
AOL           $80      $115 7/8
ATHM          $74      $118 15/16
EBAY          $79      $154 1/8

Not bad, when you bring in some perspective.

Fools, hang tough through these turbulent market days. Focus on the long-term. Remember to invest in companies you know, whose growth potential you understand, and stay diversified. Look down the road to where you're going, and know that all journeys experience some traffic and road construction.

In closing, I'd like to extend a big thank you to everyone who participated in Saturday's Motley Fool golf shoot-out fund raising event for Fool employee Tim Aycock. The green was sloped for difficult putting, the chip shots were long and challenging, and the driving competition was fierce; but in the end all participating Fools were winners, and all are thanked.

Fool on!

Barbara

What's up with Harry Jones today?

04/19/99 Close
Stock  Change    Bid 
---------------- 
AMGN  -5 7/8     60.94
AMZN  -31 1/16  158.94
AOL   -24 1/4   117.75
ATHM  -25 7/8   119.06
CAT   -1 11/16   62.13
CHV   +3 1/16   101.94
DD    +  1/2     68.13
DJT   +  1/8      4.00
EBAY  -21 7/8   154.13
GT    +2         59.25
IOM   -  1/8      5.00
SBUX  -2 3/8     29.56
TDFX  -  1/4     19.63


                  Day     Month  Year   History   Annualized 
      R-BREAKER -14.08% -10.59%  42.11% 1326.34%  75.95%
        S&P:     -2.24%   0.24%   5.22%  194.86%   25.85%
        NASDAQ:  -5.57%  -4.72%   6.97%  225.70%   28.54%


    Rec'd    #  Security     In At       Now      Change
   8/5/94  2200 AmOnline       0.91    117.75   12855.93%
   9/9/97  1320 Amazon.com     6.58    158.94    2315.74%
  5/17/95  1960 Iomega Cor     1.28      5.00     290.50%
  12/4/98   450 @Home Corp    56.08    119.06     112.31%
  2/26/99   300 eBay         100.53    154.13      53.32%
  4/30/97 -1170*Trump*         8.47      4.00      52.77%
 12/16/98   580 Amgen         42.88     60.94      42.13%
  2/23/99   300 Caterpilla    46.96     62.13      32.28%
  2/23/99   180 Chevron       79.17    101.94      28.76%
  2/23/99   290 Goodyear T    48.72     59.25      21.63%
  2/20/98   260 DuPont        58.84     68.13      15.77%
   7/2/98   470 Starbucks     27.95     29.56       5.75%
   1/8/98   425 3Dfx          25.67     19.63     -23.54%

    Rec'd    #  Security     In At     Value      Change
   8/5/94  2200 AmOnline    1999.47 259050.00  $257050.53
   9/9/97  1320 Amazon.com  8684.60 209797.50  $201112.90
  12/4/98   450 @Home Corp 25236.13  53578.13   $28342.00
  2/26/99   300 eBay       30158.00  46237.50   $16079.50
 12/16/98   580 Amgen      24867.50  35343.75   $10476.25
  5/17/95  1960 Iomega Cor  2509.60   9800.00    $7290.40
  4/30/97 -1170*Trump*     -9908.50  -4680.00    $5228.50
  2/23/99   300 Caterpilla 14089.25  18637.50    $4548.25
  2/23/99   180 Chevron    14250.50  18348.75    $4098.25
  2/23/99   290 Goodyear T 14127.38  17182.50    $3055.13
  2/20/98   260 DuPont     15299.43  17712.50    $2413.07
   7/2/98   470 Starbucks  13138.63  13894.38     $755.75
   1/8/98   425 3Dfx       10908.63   8340.63   -$2568.00

                              CASH   $9924.87
                             TOTAL $713168.00
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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