Rule Breaker Portfolio

<THE RULE BREAKER PORTFOLIO>

The Poetry of Investing

by Selena Maranjian (TMFSelena@aol.com)

ALEXANDRIA, VA (March 30, 1999) --

"For I have known them all already, known them all --
Have known the evenings, mornings, afternoons,
I have measured out my life with coffee spoons."
     -- T.S. Eliot

Do you ever feel this discouraged? Looking back at your life, do you sometimes see just an endless series of... cups of coffee? Piles of laundry? Traffic jams? Small talk? Subpoenas from special prosecutors?

The poet Theodore Roethke also saw himself measuring time, but with those of the opposite sex. In "I Knew a Woman," he writes:

"But who would count eternity in days?
These old bones live to learn her wanton ways.
(I measure time by how a body sways.)"

How do you measure your life? The answer to this question can be revealing. If you measure it in minute-by-minute upticks and downticks in the stocks you (briefly) own, then friend, you've got a Wisdom problem. That's not Foolish at all. It might seem, from looking at The Motley Fool's website, that we're all about stocks and investing and nothing more, but that's not the case. We do want to help people take control of their own financial future and learn to invest. But we also think that investing should be only a single (albeit fun and rewarding) part of a good life.

A life well lived is a diverse one, perhaps full of eccentric family members (like Uncle Hubert, who always packs a big jar of pickles when traveling), great books that you couldn't put down, movies that made you gasp or sigh, letters that you've read and reread, tomatoes that you've grown, a portfolio of stocks that you're proud of having picked, and bowling trophies that adorn your mantle. Oh yes -- and maybe some poetry, too.

I'll admit that I haven't read much poetry since my college days. But when I recently revisited some of my favorite poems, I found them even more meaningful than before. And familiar, like old friends. Take T.S. Eliot's "The Love Song of J. Alfred Prufrock," excerpted at the top of this report. It's a painful account of an anxious man's thoughts and worries. "Shall I part my hair behind? Do I dare to eat a peach?" He doesn't think much of himself at all, it seems:

"...I have seen the moment of my greatness flicker, and I have seen the eternal Footman hold my coat and snicker, and in short, I was afraid."

This is probably how many of us think about ourselves when it comes to investing. We're afraid. Afraid someone will snicker if we ask what we think is a silly question. (In Fooldom, it's only silly to not ask your questions. We've got an extensive "Info / Help" area waiting for you.)

Interestingly, Prufrock later notes that, "No! I am not Prince Hamlet, nor was meant to be; Am an attendant lord, one that will do... At times, indeed, almost ridiculous -- Almost, at times, the Fool." (So there's hope for him, after all. Phew!)

There's hope for the Rule Breaker Port, too. At least some of the Wise thought so today. PaineWebber analyst Jim Preissler upped his 12-month target price for America Online (NYSE: AOL) from $125 per share to $215. (Almost seems like it's just a typo correction, doesn't it?) This makes me wonder, though. According to this news, Mr. Preissler deemed AOL rather overvalued yesterday and very undervalued today. He must have had quite an epiphany overnight. Another big overnight development occurred at Amazon.com (Nasdaq: AMZN). Yesterday, Amazon's website featured four tabs up top: Books, Music, Video, Gifts. This morning, a fifth was already there: Auctions. Investors cheered this development, sending the stock up 10%.

(By the way, if you think some friends might be interested in learning about Rule Breakers, head over to our new "Yo!" service and you can select some info to be sent to them for free. You can choose material on Rule Breakers, buying a car, 401(k)s, portfolio tracking, stock ideas, and much more.)

The performance of our beloved Rule Breaker Portfolio in the last few years has been... well, kind of ridiculous. Deliciously ridiculous, that is, like some lines from the very funny poem "Marriage" by Gregory Corso (even if you're not a poetry fan, give this one a read -- it's very funny):

"How nice it'd be to come home to her
and sit by the fireplace and she in the kitchen
aproned young and lovely wanting my baby
and so happy about me she burns the roast beef
and comes crying to me and I get up from my big papa chair
saying Christmas teeth! Radiant brains! Apple deaf!
God what a husband I'd make! Yes, I should get married!"

What is it that makes a good poem work? Perhaps we should think of it as a distilled novel, or an autobiography that has been left on the stove bubbling, until there's a small, concentrated amount left. (Removed, of course, before it burns and sticks to the pan. Such might be the makings of bad poetry.)

Consider Richard Wilbur's "Transit." I used to read it almost every day when I commuted to and from work in Manhattan. Posted in city buses, it was part of a great reduce-the-despair-of-bus-riders initiative, called "Poetry in Motion." I used to marvel at how the poem had a rhythm of its own, like the bus that would lurch to and fro. It crystallizes a single moment in time, beginning with:

"A woman I have never seen before
Steps from the darkness of her town-house door
At just that crux of time when she is made
So beautiful that she or time must fade."

(Balance sheets crystallize a single moment in time, too. And some of them can make a savvy investor weep.)

What would be the equivalent of the poem itself in the investing world? Perhaps a single portfolio and its transaction history. It would tell some tales of smart moves and regrettable moves. It would impart some insights and make us go "Ahhh..." A portfolio into which was dumped some shares of Microsoft (Nasdaq: MSFT) in 1986 -- and in which these shares still remain -- now that would be a thing of beauty. Especially if next to Microsoft are shares of companies like General Electric (NYSE: GE), Coca-Cola (NYSE: KO), America Online (NYSE: AOL), Intel (Nasdaq: INTC), and Berkshire Hathaway (NYSE: BRK.A/BRK.B).

In the portfolio's archives might be sales of some stocks that crashed and burned and others that were simply sold when holding them no longer made sense. In short, it would be a portfolio that has had a full life, full of mistakes, lessons, and ultimately, triumph. A portfolio that stands ready to pay for the college education of young minds. A portfolio that will pay your way to travel through the beautiful highlands of Kashmir. A portfolio that will give you entry into the nursing home of your choice one day, perhaps one with in-room laptop hook-ups and a pinball lounge.

I think sometimes that we've been too spoiled recently, with so many strong market years in a row. (I know that I've been spoiled, at least.) We need to remember that there will be downturns. And upturns. That like a poem, our investments will amuse, confound, and surprise us, and will teach us a little about ourselves, as well.

So how do we measure our lives? If we're Foolish, it might be by stocks we've held over various decades. Better still, if we're anything like Billy Collins, the poet who wrote "Nostalgia," it might be by dances and fashions and alphabets made of twigs.

I should probably draw my rambling to a close. But I'll leave you, especially newcomers to Fooldom and investing and those who might still be intimidated by the stock market, with these thoughts: You can do it. You can succeed in beating Wall Street at its own game. Just take your time and read up first. Get comfortable with the idea of putting your long-term savings into a vehicle that moves at an average of 11% per year. You can even surpass that 11% handily, with a little more learning. If you're afraid, that's fine. That's understandable. Perhaps ol' Theodore Roethke said it best in "The Waking:"

"This shaking keeps me steady. I should know.
What falls away is always. And is near.
I wake to sleep, and take my waking slow.
I learn by going where I have to go."

Fool on!

If your poetic interest is now piqued, you might check out these sites and books:

What's up with Harry Jones today?

03/30/99 Close
Stock  Change    Bid 
---------------- 
AMZN  +15 1/16 164.69
AMGN  +1 5/16  78.56
AOL   +13 1/16 144.69
ATHM  -6 11/16 153.00
DJT   +  1/16   4.00
CHV   -  15/16 89.00
CAT   -  5/16  46.94
DD    +  3/4   58.00
GT    -1       49.06
IOM   +  3/8    4.88
SBUX  -1 1/8   28.25
TDFX  -  7/16   11.94
EBAY  -10 21/32 137.13

 
                   Day   Month    Year  History  Annualized 
      R-BREAKER  +5.77%  37.51%  56.18% 1467.63%  80.76%
        S&P:     -0.72%   5.04%   6.14%  197.32%   26.41%
        NASDAQ:  -0.50%   8.40%  13.12%  244.40%   30.47%

    Rec'd    #  Security     In At       Now      Change
   8/5/94  2200 AmOnline       0.91    144.69   15819.84%
   9/9/97  1320 Amazon.com     6.58    164.69    2403.14%
  5/17/95  1960 Iomega Cor     1.28      4.88     280.74%
  12/4/98   450 @Home Corp    56.08    153.00     172.82%
 12/16/98   580 Amgen         42.88     78.56      83.24%
  4/30/97 -1170*Trump*         8.47      4.00      52.77%
  2/26/99   300 eBay         100.53    137.13      36.41%
  2/23/99   180 Chevron       79.17     89.00      12.42%
   7/2/98   470 Starbucks     27.95     28.25       1.06%
  2/23/99   290 Goodyear T    48.72     49.06       0.71%
  2/23/99   300 Caterpilla    46.96     46.94      -0.06%
  2/20/98   260 DuPont        58.84     58.00      -1.43%
   1/8/98   425 3Dfx          25.67     11.94     -53.49%

    Rec'd    #  Security     In At     Value      Change
   8/5/94  2200 AmOnline    1999.47 318312.50  $316313.03
   9/9/97  1320 Amazon.com  8684.60 217387.50  $208702.90
  12/4/98   450 @Home Corp 25236.13  68850.00   $43613.87
 12/16/98   580 Amgen      24867.50  45566.25   $20698.75
  2/26/99   300 eBay       30158.00  41137.50   $10979.50
  5/17/95  1960 Iomega Cor  2509.60   9555.00    $7045.40
  4/30/97 -1170*Trump*     -9908.50  -4680.00    $5228.50
  2/23/99   180 Chevron    14250.50  16020.00    $1769.50
   7/2/98   470 Starbucks  13138.63  13277.50     $138.88
  2/23/99   290 Goodyear T 14127.38  14228.13     $100.75
  2/23/99   300 Caterpilla 14089.25  14081.25      -$8.00
  2/20/98   260 DuPont     15299.43  15080.00    -$219.43
   1/8/98   425 3Dfx       10908.63   5073.44   -$5835.19

                              CASH   $9924.87
                             TOTAL $783813.93

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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