Boring Portfolio

Boring Portfolio Report
Thursday, September 11, 1997
by Mark Weaver (MWEAV)

ANN ARBOR, Mich. (Sept. 11, 1997) -- The stock market had another wild ride today with the Dow Jones Industrial Average down as much as 139 points before closing off 58 points. The Borefolio was down 0.96% which was good only for third place behind the S&P 500 index which was down 0.70% and the Naz, up 0.04%. Look for another rocky day tomorrow as, after the close, MOTOROLA (NYSE: MOT) announced that earnings would fall short of expectations. Motorola's stock is off 11% in after hours trading. Tomorrow may be interesting...

As for the Borefolio on this day, two stocks were up while seven fell. Once again there was a paucity of news. CISCO SYSTEMS (Nasdaq: CSCO) was down $3/8. Networking stocks were down across the board on news of a Saloman Bros. downgrade and a Goldman Sachs cut in earnings estimates of ASCEND COMMUNICATIONS (Nasdaq: ASND). In reviewing the reasons for the downgrades I found little that impacts Cisco. There were concerns about Ascend price cuts coming out of its "Max Value" program and also concerns about customer satisfaction in its remote access business. As far as I know, Cisco customers remain quite satisfied.

GREEN TREE FINANCIAL (NYSE: GNT) fell $1 1/2 presumably on interest rate worries. Many financial issues were similarly afflicted. The bond market was antsy ahead of Friday morning's reports on August retail sales and producer prices.

BORDERS GROUP (NYSE: BGP) was down $9/16 on no news. Fool Portfolio holding AMAZON.COM (Nasdaq: AMZN) was down $1 3/4 and competitor BARNES & NOBLE (NYSE: BKS) was up $1 7/16. I detect no trend among booksellers, just market winds blowing to and fro.

Winners for the Borefolio included OXFORD HEALTH PLANS (Nasdaq: OXHP) and ORACLE SYSTEMS (Nasdaq: ORCL). Oracle was named by consulting firm The Gartner Group as a "leading vendor" in their Enterprise Application Development Tool Market Update. No surprise there.

As for Oxford, there was no news except that generated by my computer this morning when, in this month's screen for undervalued growth stocks, Oxford came out in the top 25 such stocks. The recent weakness in price has made the stock more compelling. Maybe some other investors began to notice as well.

Before I go I'd like to consider the question "What makes a person rich?"

When I was young I used to think it would be in the neighborhood of $1 million. Now I know better. While we can argue about the amount of money it takes to make for a comfortable retirement I would like to submit that the answer to the question of "richness" lies not in the number of dollars in a person's possession.

A person is rich when he or she does not have to work. That is the ultimate in rich: work as an optional activity. No matter how much money you have, if you have to go to work to pay your bills, you aren't rich. You aren't rich if you have a 7000 square foot house if it takes current income to fund the expense. ou aren't rich if you have to work to make car payments. You aren't rich if you have to work. Rather you are a slave to your possessions.

About a month ago Tom Gardner put forth the notion that the pre-payment of debt was a good idea in his August 14th Fool Portfolio recap on finances. He was roundly criticized and offered a retraction: Fool Portfolio, 08/15/97: Gardner as Swaggart.

Frankly, I think that he was right the first time, but for the wrong reasons. The prepayment of debt doesn't make pure economic sense, but it can hasten the process of becoming rich. With housing expenses out of the way you are a lot closer to making work an optional exercise. It also takes a smaller nest egg to survive in a debt free lifestyle. This is a question of peace of mind rather than economics.

Not every decision we make about money has to be measured in terms of internal rate of return. If pre-payment of mortgage debt is a bad idea why don't we all take out home equity loans and buy stocks? We don't because it leaves us with an uncomfortable sense of indebtedness. As an another example, philanthropy pays dividends in a non-economic sense and by giving money away it is possible to become very rich in a non-material way.

Something to think about on an otherwise dreary investment day.

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Stock  Change    Bid
ATLS  -  7/16  26.63
BGP   - 11/16  25.75
CSL   -  9/16  42.88
CSCO  -  3/8   72.13
GNT   -1 1/2   44.63
ORCL  + 15/16  38.88
OXHP  +1 1/2   77.63
PMSI  -  3/8   14.25
TDW   -  7/16  55.69
                   Day   Month    Year  History
        BORING   -0.96%   2.56%  24.72%  43.52%
        S&P:     -0.70%   1.46%  23.20%  46.81%
        NASDAQ:  +0.04%   3.31%  27.02%  57.53%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     25.75   128.76%
  8/13/96  200 Carlisle C    26.32     42.88    62.87%
  5/24/96  100 Oxford Hea    48.02     77.63    61.63%
   2/2/96  200 Green Tree    30.39     44.63    46.85%
   3/8/96  400 Prime Medi    10.07     14.25    41.53%
  6/26/96  100 Cisco Syst    53.90     72.13    33.81%
 11/21/96  150 Oracle Cor    32.43     38.88    19.86%
 12/23/96  100 Tidewater     46.52     55.69    19.69%
   3/5/97  150 Atlas Air     23.06     26.63    15.47%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10300.00  $5797.51
  8/13/96  200 Carlisle C  5264.99   8575.00  $3310.01
  5/24/96  100 Oxford Hea  4802.49   7762.50  $2960.01
   2/2/96  200 Green Tree  6077.49   8925.00  $2847.51
  6/26/96  100 Cisco Syst  5389.99   7212.50  $1822.51
   3/8/96  400 Prime Medi  4027.49   5700.00  $1672.51
 11/21/96  150 Oracle Cor  4864.99   5831.25   $966.26
 12/23/96  100 Tidewater   4652.49   5568.75   $916.26
   3/5/97  150 Atlas Air   3458.74   3993.75   $535.01

                             CASH   $7890.00
                            TOTAL  $71758.75