Rule Breaker Portfolio

<THE RULE BREAKER PORTFOLIO>

The Psychic Fool Network
and Iomega at PC Expo

By Barbara Eisner Bayer (TMF Venus)

WOODSTOCK, NY (June 24, 1999) � Fools worldwide, grab your significant others, children and pets, and get ready for an earth-shattering announcement. By virtue of several centuries of past lifetimes, I hereby anoint myself the psychic doyenne of Woodstock, land of an unusually high percentage of freelance psychics, new age gurus and Y2K doomsayers, to channel this message from the universe: Interest rates will rise.

I don't know when, and I don't know by how much, but as sure as I know that one day in the future they will fall, they will most certainly rise. While my stunning prediction may put much of the entire prognosticating financial print and electronic media out of work, it also serves to give Fools the opportunity to do what Fools do best -- spend time finding Rule Breaking companies in which to invest their hard-earned money for a lifetime of prosperity.

Sometimes it gets so tiresome watching analysts predicting the turbulence of the future. These Nostradamus wannabes panic investors into creating the exact situations they foresee. Sure, sometimes these smooth sayers are actually soothsayers (who can forget the ides of March?); but most of the time, they bombard us with useless predictions, like a possible rise in interest rates, that any person knows is necessary in order to keep the world economy rockin' and a-rollin'.

The Rule Breaker portfolio was down 3.49% today, in line with the general market; but since focusing on negativity leads you nowhere worth going, it's worthy to breaststroke through the darkness and find all the positive things that are happening. Foolish vision focuses on that glass of golden water that's half full.

Internet search engines were revving in today's Foolish track. America Online's (NYSE: AOL) Netscape introduced its own search engine based on technology from the uncannily effective Google, which was necessitated when its former search engine, Excite, eloped with competitor and Rule Breaker @Home Corp. (Nasdaq: ATHM). We Fools are now in the position of always rooting for the home team, a luxury of capitalism where it is conceivable there will be only winners.

While it's true that many original search engines are now effectively placing themselves as Internet portals (see today's Lunchtime News), there is a real need for search engines that work effectively and help users isolate specific queries. As the Internet becomes an indispensable tool for research for all, no one wants to wade through 23,400 matches for a simple search, unless his name is Sisyphus. And the company which can deliver a user-friendly service will definitely have an edge as the browser wars continually heat up.

Do effective search engines really make that much of a difference? Suppose an old, rickety boyfriend of mine wondered whatever became of me? Did the heartbreak turn me into a bag lady destined to roam the streets of New York for eternity? Or did I actually make something of myself, realizing that he was a jerk all along? He goes to a search engine and plugs in "Barbara Eisner Bayer." Could he actually find me?

Considering I've been published on the Internet for the past four years, this would seem like a no-brainer. In search of my inner Sam Spade, I laced up my gumshoes and headed to the 'Net. My first stop was to newsworthy MatchSite.com, which today entered into a contract with Rule Breaker eBay, Inc. (Nasdaq: EBAY), as eBay continues its effort to increase traffic to its site. At Matchsite, there were 40 matches to my name, and although none of the top 3 had anything to do with me, my work did appear in 16 of the top 40 -- a good 40%. (Note to old boyfriends: the site entitled "Barbara Eisner's Gallery" is NOT mine. You'd sooner see me living in a box on 9th Avenue, than hear me say, "I baked this yummy marble birthday cake." Note to readers: To this my husband will unhappily attest.)

Next stop was Netscape's old friend Excite, where I showed up nowhere in the top 100 matches to my name. This did not excite me. Good thing for AOL we got rid of 'em; but where does that leave @Home?

The runner up was Lycos, where I was represented in all of the top 40 matches. But the hands down winner was none other than Netscape/Google, which had 135 matches, the first 82 of which included representations of all my work over the past 3-4 years. But forget match #78 � while I wish I owned Nethercastle in Holland, it's disappointingly not mine.

Just because Excite/@Home lost this round of the browser war, we can celebrate its service as being "one of the leading Internet Service Providers (ISP) in PC Magazine's annual survey of user satisfaction," outpacing AOL, GTE, Mindspring, and Compuserve in overall satisfaction. It was also rated number one for ISP connection speeds, connection reliability, and overall connections during the day. (Is this starting to sound like a car commercial?)

Our Foolish Four were exhibiting their dogginess today, as Goodyear Tire & Rubber Co. (NYSE: GT) pre-announced second quarter earnings that will be 50% below Wall Street estimates, and Chevron Corp. (NYSE: CHV) warned that second-quarter profits would suffer from costs relating to job cuts and a refinery fire. They don't call 'em dogs for no reason.

Earlier this week I sharpened my elbows (the better to maneuver through the New York City crowds) and headed to PC Expo to keep an eye on RB holding Iomega Corp. (NYSE: IOM). The little Clik! PC card was adorable and should definitely appeal to consumers. The rep assured me that it was as indestructible as the ZIP, although I stopped short of jumping on it or throwing it in order to see for myself. There doesn't appear to be much to distinguish the Zip/CD from other similar devices other than it's bearing the Iomega brand, which only the consumer will determine if it makes a difference in the market.

My final predictions: The sun will rise, the stars will shine, and we Fools will continue sharing information daily on our message boards creating a paradigm for the individual investor.

Speaking of psychics, have you checked out Harry Jones today? Harry's running his column every Thursday now, alongside some Foolish thoughts on index investing by Jeff Fischer (TMF Jeff). Don't miss it.

Fool on!

06/24/99 Close
Stock  Change    Bid 
------------------ 
AMGN  +2 7/16    55.69
AMZN  -4 1/8    113.63
AOL   -5 11/16  106.56
ATHM  -3 7/16    53.00
CAT   -  5/8     59.00
CHV   -1         91.63
DD    -  11/16   66.13
DJT   -  1/16     4.38
EBAY  -4 5/16   142.13
GT      ---      56.63
IOM   -  1/16     4.81
SBUX  -1 1/16    36.75
TDFX  -  3/8     15.88


             Day     Month  Year   History   Annualized 
      R-BREAKER  -3.49%  -8.71%  22.17% 1126.25%   67.06%
        S&P:     -1.30%   1.07%   7.62%  201.29%   25.33%
        NASDAQ:  -1.70%   3.38%  16.48%  254.63%   29.59%


    Rec'd    #  Security     In At       Now      Change
   8/5/94  2200 AmOnline       0.91    106.56   11624.98%
   9/9/97  1320 Amazon.com     6.58    113.63    1627.02%
  5/17/95  1960 Iomega Cor     1.28      4.81     275.86%
  12/4/98   900 Excite@Hom    28.04     53.00      89.01%
  4/30/97 -1170*Trump*         8.47      4.38      48.34%
  2/26/99   300 eBay         100.53    142.13      41.38%
   7/2/98   470 Starbucks     27.95     36.75      31.46%
 12/16/98   580 Amgen         42.88     55.69      29.88%
  2/23/99   300 Caterpilla    46.96     59.00      25.63%
  2/23/99   290 Goodyear T    48.72     56.63      16.24%
  2/23/99   180 Chevron       79.17     91.63      15.73%
  2/20/98   260 DuPont        58.84     66.13      12.37%
   1/8/98   425 3Dfx          25.67     15.88     -38.15%

    Rec'd    #  Security     In At     Value      Change
   8/5/94  2200 AmOnline    1999.47 234437.50  $232438.03
   9/9/97  1320 Amazon.com  8684.60 149985.00  $141300.40
  12/4/98   900 Excite@Hom 25236.13  47700.00   $22463.87
  2/26/99   300 eBay       30158.00  42637.50   $12479.50
 12/16/98   580 Amgen      24867.50  32298.75    $7431.25
  5/17/95  1960 Iomega Cor  2509.60   9432.50    $6922.90
  4/30/97 -1170*Trump*     -9908.50  -5118.75    $4789.75
   7/2/98   470 Starbucks  13138.63  17272.50    $4133.88
  2/23/99   300 Caterpilla 14089.25  17700.00    $3610.75
  2/23/99   290 Goodyear T 14127.38  16421.25    $2293.88
  2/23/99   180 Chevron    14250.50  16492.50    $2242.00
  2/20/98   260 DuPont     15299.43  17192.50    $1893.07
   1/8/98   425 3Dfx       10908.63   6746.88   -$4161.75

                              CASH   $9924.87
                             TOTAL $613123.00
 
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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