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Rule Breaker Portfolio

Rule Breaker Portfolio
Rip Fool Winkle
....and the Fool Charity Drive

By Barbara Eisner Bayer (TMF Venus)

WOODSTOCK, NY (Oct. 21, 1999) � The market ululated the IBM (Nasdaq: IBM) blues today, as it collapsed under the anticipatory fear of the Y2K monster. While just yesterday investors were euphoric over Microsoft's (Nasdaq: MSFT) bullish earnings report, today stocks were being sold off as if they were a Braves/Mets Game 7 ticket.

If only I were the Foolish Rip Van Winkle, peacefully snoozing for 20 years, blissfully immune to comments like CNBC's "Disaster Out of IBM" or Mario Gabelli's "Even a blind pig will find an acorn every now and then." (The latter statement is irrelevant, but I couldn't resist sharing it.)

For two decades my Rule-Breaking investments would continue to beat the market while affording me more and more prosperity. I'd be unable to pull the "sell" trigger when a circling, but short-term panic, caused me to lose momentary confidence in my decisions.

While we Fools are most definitely committed to the long-term, we wouldn't be human if we didn't have occasional doubts. During turbulent sessions, we view the temptation to bail out as a challenge and summon the inner strength and confidence to buckle our seatbelts and hold, hold, hold. We know our decisions are made based on solid research and we accept that from time to time there'll be short-term negative momentum, temporarily causing our stocks to slide and our cheeks to pale.

Earlier this week, we received a most unusual suggestion from one of our readers: "I propose a My Portfolio lockout feature. I love to visit your website, but I simply can't resist peaking at my portfolio. As is often said, a watched portfolio never grows. A neat feature would be to be able to lockout this view for a selected period of time (one month, three months, six months, on year). This would prevent those of us with little willpower from "taking a look-see" that will ultimately ruin our day. After the chosen period of time locked out, the view would reappear and either upset us or make us very happy."

We won't be making that feature available. If you need a lockout, I recommend finding it at your fingertips. Or joining the NBA. Anyone unable to resist the temptation of frequently checking his or her portfolio is missing the whole point of Foolishness. If you find yourself in that category, try the Joe DiMaggio technique of going 56 consecutive days without clicking onto your port. You might not break a record of relevance, but you'll have the satisfaction of having faith in your decision-making abilities.

Our very own Rule Breaker portfolio held up pretty nicely in today's mini mania. And why not? There has only been wonderful news on our holdings.

In yesterday's column, Jeff enumerated America Online's (NYSE: AOL) various commerce and ad clients. Today we can add Stamps.com ($56 million) to that very impressive list. Now AOL subscribers will be free to spend even more time online, since they no longer need to scurry to their local post offices and wait in lengthy queues.

In addition, AOL members can now download an Internet Answering Machine, which will alleviate the need of having more than one phone line for Internet access. They'll be able to hear who's calling them without having to sign off. According to David Hofstatter, President of CallWAVE.COM, "If every AOL user were to adopt this free solution, millions of busy calls would be eliminated each day, and AOL users as a whole could avoid over 5 billion dollars in second phone line charges each year!" That's 5 billion dollars freed up to be spent on Fool holdings Amazon.com (Nasdaq: AMZN) (+1/4) and ebay (Nasdaq: EBAY) (+2-5/8)!

But today's big AOL news is the agreement with Gateway (NYSE: GTW) to market and distribute each other's products. It's a win-win, lovey-dovey relationship that makes investors scream, YES! It didn't hurt the stock either, as AOL soared (+4-1/4), bucking the market's downward trend. For one-of-a-kind Foolish grass-roots analysis, read our Fool Plate Special and then head on over to our AOL folder for further discussion.

Lastly, many of us have already profited from our Foolish investments in the stock market. In the Fool's relentless effort to search for better solutions, we present to you our third annual Charity Drive which, in keeping with the Fool spirit of cooperation, will be interactive. We're asking you to nominate worthy charities. And once we reduce the list to a manageable few, we'll let you decide how to allocate your charity dollars. What could be more Foolish than that?

When it comes to incessantly checking your portfolio, it's okay to be a Rip Fool Winkle and doze for 20 years; but when it comes to giving charity back to your community, we need you now.

As always, share any thoughts about tonight's recap in our Rule Breaker Strategies board. And if you are looking into, or for, any new Rule Breaker prospects, the conversation always continues on our Rule Breaker Companies message board.






Rule Breaker Portfolio

10/21/99 Closing Numbers
Ticker Company Dly Pr Chg Price
AMGNAMGEN INC-6$80.13
AMZNAMAZON.COM1/4$80.75
AOLAMERICA ONLINE1/4$122.25
ATHMAT HOME CORP CL A-2 11/16$40.13
CATCATERPILLAR INC-1 1/2$52.13
CHVCHEVRON CORP11/16$92.69
DDDU PONT (EI) DE NEMOURS2$63.88
EBAYEBAY INC5/8$148.50
GTGOODYEAR TIRE & RUBBER CO-1/2$44.31
IOMIOMEGA CORP-1/16$3.13
SBUXSTARBUCKS CORP15/16$23.50
TDFX3DFX INTERACTIVE1/8$8.31

  Day Week Month Year
To Date
Since
8/5/94
Annualized
Rule Breaker .75% 7.26% 6.27% 38.81% 1,295.90% 65.81%
S&P 500 -.45% 2.90% .07% 4.42% 180.02% 21.84%
S&P 500(DA) -.45% 2.90% .07% 5.00% 194.28% 23.01%
NASDAQ .50% 2.57% 2.03% 27.79% 289.06% 29.77%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
8/5/942200AOL0.917$122.2513,230.06%
9/9/972640AMZN3.188$80.752,433.32%
5/17/951960IOM1.280$3.13144.06%
12/16/98580AMGN42.889$80.1386.82%
2/26/99300EBAY100.527$148.5047.72%
12/4/98900ATHM28.040$40.1343.10%
2/23/99180CHV79.169$92.6917.07%
2/23/99300CAT46.964$52.1310.99%
2/20/98260DD58.844$63.888.55%
2/23/99290GT48.715$44.31-9.04%
7/2/98470SBUX27.955$23.50-15.93%
1/8/98425TDFX25.667$8.31-67.61%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
8/5/942200AOL$2,017.62$268,950.00$266,932.40
9/9/972640AMZN$8,415.03$213,180.00$204,765.00
12/16/98580AMGN$24,875.50$46,472.50$21,597.00
2/26/99300EBAY$30,158.00$44,550.00$14,392.00
12/4/98900ATHM$25,236.13$36,112.50$10,876.38
5/17/951960IOM$2,509.63$6,125.00$3,615.37
2/23/99180CHV$14,250.50$16,683.75$2,433.25
2/23/99300CAT$14,089.25$15,637.50$1,548.25
2/20/98260DD$15,299.44$16,607.50$1,308.06
2/23/99290GT$14,127.38$12,850.63($1,276.75)
7/2/98470SBUX$13,138.63$11,045.00($2,093.63)
1/8/98425TDFX$10,908.63$3,532.81($7,375.81)
  Cash: $5,954.23  
  Total: $697,701.40  



Note
The Fool Portfolio was launched on August 5, 1994, with $50,000. It was renamed the Rule Breaker Portfolio in October 1998. The investing strategy began with the first investments of the Fool Port and has evolved with time and experience. In July 2001, the portfolio began adding $12,500 each quarter (We missed Jan. 2002, so we added $25,000 in April 2002). We skip a quarter if we have enough uninvested cash or cash available in stocks we would prefer to sell to make new investments. All transactions are shared and explained publicly before being made, and returns are compared in each week's column to the S&P 500 (including dividends where noted) and the Nasdaq composite. For a history of all transactions, please click here.





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