Boring Portfolio

Boring Portfolio Report
Wednesday, August 6, 1997
by Mark Weaver (MWEAV)

ST. LOUIS, Mo. (Aug 6, 1997) - The markets continued their upward march on Wednesday but the Boring portfolio chose to take a breather, down 1.05%. Weakness in OXFORD HEALTH PLANS (Nasdaq: OXHP) and CISCO SYSTEMS (Nasdaq: CSCO) weighed heavily on the portfolio. In addition BORDERS GROUP (NYSE: BGP) dropped $1 7/16 on no news. Borders remains the best performing stock in the portfolio.

As for Oxford, the Wall Street Journal emphasized the change of leadership in its reporting today. Between the anxiety the leadership change provoked and the very shaky earnings report of AETNA (NYSE: AET), Oxford was down $2 7/8 today. Full coverage of the Oxford conference call is up and ready for reading. I didn't see a thing in that report that gave me pause.

Cisco, on the other hand, appeared to be the victim of failing to beat the so-called "whisper numbers." This has become an all too typical scenario for the technology leaders. On the heels of that earnings report comes an increase in earnings estimates for 1998 from Salomon Brothers. Their new estimate of $2.67 is in the middle of the range but higher than the consensus number.

The Motley Fool coverage of the Cisco conference call is now available. It was penned by Greg Markus and comes to us from Hawaii where Greg continues his peregrination. It makes pretty good reading and is highly recommended. If there were negatives there, I didn't see them.

In other Borefolio news CARLISLE (NYSE: CSL) announced a 14% increase in their dividend which now stands at $0.14 per share. More change for the Boring coffers. You have to love that.

ATLAS AIR (Nasdaq: ATLS) was the recipient of a B-bond rating and a "rating outlook positive" designation from Standard and Poors. Atlas rose $1/4.

ORACLE CORP. (Nasdaq: ORCL) participated indirectly in the "man bites dog" story of the day as APPLE (Nasdaq: APPL) announced a cross-licensing technology alliance with... of all companies, Microsoft. Steve Jobs made this announcement at a MacWorld convention and was roundly booed. The Apple board has added a few members as well, including our man Larry Ellison. Oracle rose $1 3/16.

TIDEWATER (NYSE: TDW) rose $2 3/16 today . On CNN's "Money Line" yesterday the oil drilling industry was favorably profiled. A glance at my Investor's Business Daily shows that the oil services sector has moved back into the top spot for relative strength. This sector was #1 in 1996 as well. Tidewater continues to trade near it's highs and sports a relative strength of 99. A strong stock in a strong industry... Boring!

To wrap things up today I want to confess to being more than a bit confused on the 'flation picture. Bonds yields are up this week because of renewed "inflation fears" due to the strong employment report released last week. Inflation equals rising interest rates. That's bad for bonds and ultimately is bad for stocks, as higher bond yields create competition for stocks, and because business has to pay more for the money it takes to fund expansion and whatnot. In this weekend's St. Louis Post-Dispatch there was an article on the threat of inflation, particularly in the service sector. It was enough to make me consider the inflation threat a reality.

Imagine my confusion then when I read a very persuasive argument for deflation in last week's Barron's and also in a series of articles, including one today, in Investor's Business Daily. In a deflationary environment prices actually decline. The results of deflation for investors are even more extreme than with inflation. Bond yields will fall in an effort to stimulate economic growth making it a good scenario for bond investors. Stock prices will tend to fall as profits become hard to come by. The value of hard assets falls for a lack of buyers. In a deflationary environment one dollar today is worth less than a dollar tomorrow so that people tend to hoard their cash. Deflation is not a good thing.

Far be it from me to sort all of this out. One thing is for certain, there is very little pricing pressure for goods in this economy. The only inflation risk is in the services sector and even that seems tame. At the present time all of the economic stars are in line and the economy is chugging along at an optimum pace. Don't worry, be happy. The voices of doom and gloom are quieted.

Count this contrarian a bit wary.

I wouldn't be so ridiculous as to say "SELL STOCKS NOW" but, as a good Boring investor, I would say that this isn't a time to "pay up" for stocks. There are always good stocks to own and good stocks to buy. The broker who calls and says "buy now before it gets away" is a carnival barker. Patience is an investing virtue. If there ever was a time to be patient, it is now.

Let's be careful out there!

Drip Portfolio-- Buy Coca-Cola now? Part Two.
Fool Message Boards -- What are Fools saying?
Evening News -- Big movers, up and down.
Daily Double
-- How can you find the next double?
Daily Trouble -- Value in this beaten down stock?
The Fool Portfolio -- The Comeback Kid.
Fool Four -- 23% annual historic returns.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

Stock  Change    Bid
ATLS  +  1/4   26.88
BGP   -1 7/16  23.19
CSL   -  1/16  42.25
CSCO  -1       80.94
GNT   +  1/4   47.00
ORCL  +1 3/16  57.94
OXHP  -2 7/8   79.13
PMSI  -  1/2   11.00
TDW   +2 3/16  52.88
                   Day   Month    Year  History
        BORING   -1.05%  -0.73%  22.59%  41.07%
        S&P:     +0.83%   0.63%  29.64%  54.49%
        NASDAQ:  +0.55%   2.30%  26.29%  56.63%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     23.19   106.00%
  5/24/96  100 Oxford Hea    48.02     79.13    64.76%
  8/13/96  200 Carlisle C    26.32     42.25    60.49%
   2/2/96  200 Green Tree    30.39     47.00    54.67%
  6/26/96  100 Cisco Syst    53.90     80.94    50.16%
 11/21/96  100 Oracle Cor    48.65     57.94    19.09%
   3/5/97  150 Atlas Air     23.06     26.88    16.55%
 12/23/96  100 Tidewater     46.52     52.88    13.65%
   3/8/96  400 Prime Medi    10.07     11.00     9.25%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   9275.00  $4772.51
   2/2/96  200 Green Tree  6077.49   9400.00  $3322.51
  8/13/96  200 Carlisle C  5264.99   8450.00  $3185.01
  5/24/96  100 Oxford Hea  4802.49   7912.50  $3110.01
  6/26/96  100 Cisco Syst  5389.99   8093.75  $2703.76
 11/21/96  100 Oracle Cor  4864.99   5793.75   $928.76
 12/23/96  100 Tidewater   4652.49   5287.50   $635.01
   3/5/97  150 Atlas Air   3458.74   4031.25   $572.51
   3/8/96  400 Prime Medi  4027.49   4400.00   $372.51

                             CASH   $7890.00
                            TOTAL  $70533.75