Rule Breaker Portfolio

Rule Breaker Portfolio
Your Favorite Rule Breakers, Part 2
Plus, a couple o' thoughts

By Jeff Fischer (TMF Jeff)


JUPITER, FL (Nov. 8, 1999) -- In much of the country this week, you can look at the early evening sky and see the Mir space station limping through space. If you have a powerful enough telescope, today you may have been able to see the Rule Breaker itself rocket upward in the sky. Soon, during the volatility that we usually experience, you'll probably catch a glimpse of the Rule Breaker Port burning off cash as it reenters the atmosphere.

Monday was nothing but sky, though -- sky overhead and sky all around -- as the portfolio took to the air like a hawk on a strong wind and soared beyond the reach of any hunter. The portfolio gained 7.12% while the Nasdaq market continued its record-breaking ascent.

Your Favorite Rule Breakers
Last week, I asked you to share your favorite potential Rule Breaker companies and explain your reasoning. Dozens of Fools participated and I gathered all of their posts here. Below, most company names are linked to the original post from the Fool proffering the company, thereby providing company information from the Fool who wrote about it. The Fools posting sometimes ran their suggested companies through the complete Rule Breaker criteria for us, too.

There are many interesting names here for you to research if you desire. Simply progress click-by-click through the list below to see what each company is about. A great second step is to continue reading and asking questions on the Rule Breaker Companies board.

From last week's survey, many Fools are especially interested in Metricom (Nasdaq: MCOM) and Qualcomm (Nasdaq: QCOM). Not surprisingly, many of the proposed Rule Breakers below deal in broadband, wireless, and Internet-related businesses. Listed with each company is the moniker of the Fool who made the post, and that Fool's favorite vacation spot, if provided.

Possible future Rule Breakers:

If you wish to discuss any of these companies or anything about Rule Breaking investing, please, continue to make this experience interactive. That is the best part. I visit the Rule Breaker boards every day of the week to see what I can answer and add to. The boards are linked at the end of this column.

Howard Invests Foolishly
For the first time in the History of the Planet, Starbucks (Nasdaq: SBUX) CEO Howard Schultz bought shares of his company on the open market. When? Recently, when the stock traded around $20 per share. Running like a strong fish on the end of a tight line, Howard has a Foolish market-beater on his hands. In just a few weeks, his investment has gained over 40%. Therefore, any concern that you had for Howard's financial well-being should be assuaged.

In mid-October, Mr. Schultz shared that he expects Starbucks to have over 20,000 retail locations worldwide, double the previous goal of 10,000. The company currently operates over 2,500 locations, so, yes, it has some room to grow. Last week our Moby Dick-inspired company announced a four-week sales gain for October of 34% over last year, and a hefty 8% same-store sales increase, continuing a strong streak. On November 18, quarterly results are announced at Starbucks. At $29, the stock is treading water at 42 times year 2000 EPS estimates.

Microsoft: The Truth will Out?
Seven days after being added to the Dow Jones Industrial Average, Microsoft (Nasdaq: MSFT) suffered one of its largest intra-day declines of the past few years -- only to bounce back and close down fractionally.

Are you amused? Does Microsoft amuse you? It amuses me. With a recent valuation of $500 billion, though, I'm not sure where the boys and girls at Dow Jones expect Microsoft's stock to go. I wouldn't be surprised if many of the stocks dropped from the Dow outperformed Microsoft in at least the intermediate term. From a $500 billion valuation, it is not easy to keep doubling in size.

As for the claims against the company, The Motley Fool has always believed that the "truth will always out," or emerge, regarding all topics and issues. (Tobacco serves as a good example of this belief in action.) If certain truths need to emerge regarding Microsoft, they will. Is the company unfair? Does Microsoft use its position to unfairly bully partners and potential competitors? The truth will out.

Whatever the outcome in court, in an online world bent on sharing, Microsoft's "closed" stance on several issues is not winning it any friends. Red Hat (Nasdaq: RHAT), a Rule Breaking company that we often discuss on the Rule Breaker message boards, continues to improve its market position thanks to investors who are increasing the value (read: operating leverage) of its stock. Here's to the future, one where many operating systems are available, from AOL, to Red Hat, to maybe a Yahoo!-based system.

Dumbest Ad Slogan Running
"Dodge: Do not follow. Do not conform. Be different."

Oh, OK. Thank you for telling me what to do!

Newest Ad Slogans Running
"Fool.com: Financial advice that you can actually understand."
"Pets.com, because pets can't drive."
"Microsoft, because you have no choice."
Finally, Amazon's slogan could be: "Amazon.com: We're not sure who we are either."

Amazon Crests the Unexpected
Again Amazon (Nasdaq: AMZN) made waves and the stock jumped 20% in its wake. The company announced that tomorrow it will unveil a new product line or... something. Something that will, according to Amazon, forever change the competitive landscape of e-commerce. So, whatever it is, it will be... something. And we'll know by tomorrow evening what that is.

It could be a proprietary new way to search for products. That is my guess. The addition of another product line would not revolutionize the e-commerce world as is tacitly being promised. Others are guessing that Amazon will add software and tools to its product line. I'm sure the company will -- if not tomorrow, soon. But there has to be something else, too, to make this announcement "revolutionary." We'll see tomorrow.

Will Whatever Isn't Artificial Please Raise Its Hand?
From airbrushed magazine covers so artificial they make people look creepy, to "escape villas" in the wild that provide the "real experience" of surviving on your own, complete with air conditioning, cook, maid, and fluffy beds, what isn't in some way pampered or melded into an artificial state these days? Not much! Today, it only got worse, as commercialism employing artificial means made another leap: Celine Dion performed a virtual duet with Frank Sinatra. Celine's so-called "duet" is offered on AOL only -- thank goodness.

Frank, we are sorry.

Be Foolish!

RB Related Links:






Rule Breaker Portfolio

11/8/99 Closing Numbers
Ticker Company Dly Pr Chg Price
AMGNAMGEN INC5/16$85.44
AMZNAMAZON.COM13 1/16$78.00
AOLAMERICA ONLINE1/2$150.00
ATHMAT HOME CORP CL A3/4$44.94
CATCATERPILLAR INC-11/16$54.06
CHVCHEVRON CORP7/8$89.38
DDDU PONT (EI) DE NEMOURS-2 1/16$60.56
EBAYEBAY INC3/4$137.00
GTGOODYEAR TIRE & RUBBER CO11/16$37.38
IOMIOMEGA CORPUnch.$3.13
SBUXSTARBUCKS CORP3/16$28.94
TDFX3DFX INTERACTIVE-9/16$9.13

  Day Week Month Year
To Date
Since
8/5/94
Annualized
Rule Breaker 7.22% 7.22% 10.77% 50.39% 1,412.32% 67.56%
S&P 500 .49% .49% 1.03% 12.02% 200.39% 23.25%
S&P 500(DA) .49% .49% 1.03% 12.60% 214.65% 24.34%
NASDAQ 1.34% 1.34% 5.98% 43.38% 336.55% 32.32%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
8/5/942200AOL0.917$150.0016,255.90%
9/9/972640AMZN3.188$78.002,347.05%
5/17/951960IOM1.280$3.13144.06%
12/16/98580AMGN42.889$85.4499.21%
12/4/98900ATHM28.040$44.9460.26%
2/26/99300EBAY100.527$137.0036.28%
2/23/99300CAT46.964$54.0615.11%
2/23/99180CHV79.169$89.3812.89%
7/2/98470SBUX27.955$28.943.52%
2/20/98260DD58.844$60.562.92%
2/23/99290GT48.715$37.38-23.28%
1/8/98425TDFX25.667$9.13-64.45%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
8/5/942200AOL$2,017.62$330,000.00$327,982.40
9/9/972640AMZN$8,415.03$205,920.00$197,505.00
12/16/98580AMGN$24,875.50$49,553.75$24,678.25
12/4/98900ATHM$25,236.13$40,443.75$15,207.63
2/26/99300EBAY$30,158.00$41,100.00$10,942.00
5/17/951960IOM$2,509.63$6,125.00$3,615.37
2/23/99300CAT$14,089.25$16,218.75$2,129.50
2/23/99180CHV$14,250.50$16,087.50$1,837.00
7/2/98470SBUX$13,138.63$13,600.63$462.00
2/20/98260DD$15,299.44$15,746.25$446.81
2/23/99290GT$14,127.38$10,838.75($3,288.63)
1/8/98425TDFX$10,908.63$3,878.13($7,030.50)
  Cash: $6,381.51  
  Total: $755,894.00  



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.