Boring Portfolio

Boring Portfolio Report
Thursday, January 23, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (Jan. 23) -- Whoosh! Stocks dropped sharply in the last hour of trading Thursday, sending the Dow down 94 points (1.4%) in the busiest session ever for the NYSE. Over 683 million shares were traded. The S&P 500 fell 1.1%, while the Nasdaq lost 0.7% on volume of nearly 800 million shares -- the Naz's third-busiest day on record.

The Dow Jones wire service reports that "traders cited profit-taking" as the cause of the sell-off. Insightful reportage like that undoubtedly helped make Dow Jones, Inc. the financial powerhouse and undisputed authority on markets that it is today.

I have my own theory regarding today's drop. Market gooroo Elaine Garzarelli reportedly just sent out a letter to her subscribers recanting her warning of a pending market meltdown, which she originally issued six months ago -- just about the time that the summer correction ended. Her current view, it has been reported, is that the stock market is on its way to a near-term 10 to 15 percent advance. Perhaps Garzarelli's market letter may be worth the hefty subscription price after all -- as a near-term contrary indicator?

I'm just joshing, Elaine. For what it's worth (which is precious little), I happen to think that Garzarelli tracks a perfectly sensible collection of market and economic indicators for forecasting market changes. Some of her earlier reasoning coincided more or less with why I began getting defensive back in early November -- almost precisely on the day that the market initiated its two-month tear to new high after new high. There's a lesson in there someplace, I think.

In any event, the Boring Portfolio actually managed a 0.15% advance today, with five stocks up, three down, and one -- Green Tree Financial (NYSE: GNT) -- unchanged.

g's Boring recap, I offered my thoughts on President Clinton's proposal to "rescue" Medicare by trimming reimbursements to HMOs that accept Medicare recipients. I advised the nation's leaders that such a move jeopardized recent successes in moving Medicare recipients from fee-for-service health care and into generally lower-cost managed care plans. I also suggested that well-to-do retirees might be asked to contribute more to the costs of their own health care and shift some of the load off younger -- and often poorer -- working folks.

I'm gratified to see that President Clinton and Congress read the Borefolio recap and took it to heart so quickly.

This morning's Wall Street Journal reported that in an interview last night, the President, "evincing a surprising degree of willingness to compromise with Republicans," said "he may support raising Medicare premiums for 'wealthier' senior citizens."

And today, Republican members of the U.S. Senate "expressed concern" over the White House plan to reduce payments to HMOs. According to a news report, "Sen. William Frist (R., Tenn.) said that decision might force HMOs out of the market and in particular out of inner-city and rural areas."

The consensus of reports I've seen from analysts of healthcare stocks is that well-positioned HMOs such as Oxford Health Plans (Nasdaq: OXHP) have little to worry about and that, as the quotations above suggest, the budget battle has a long way to go before anything gets resolved. That said, Oxford lost a quarter-point today.

Oracle Corp. (Nasdaq: ORCL), our other "O" stock, fell $1 3/4 on relatively heavy volume of 9.5 million shares. Possibly, traders were reacting to news (in Investor's Business Daily, for example) that production and sales of Network Computers, or Thin Clients, or Internet Toasters, or whatever you call 'em is behind schedule.

Or possibly not.

On the brighter side (and there was a brighter side), Borders Group (NYSE: BGP) extended its recent winning ways, booking another $1/4 on good volume and tapping its record high at one point during the session. Carlisle Companies (NYSE: CSL) rose fifty cents, Prime Medical Services (Nasdaq: PMSI) gained $3/8, Tidewater (NYSE: TDW) rolled up $3/4, and Solectron (NYSE: SLR) surged $1 1/8, also establishing an intra-day high.

All in all, better than a poke in the eye with a sharp stick.

Today's Numbers

Stock  Change    Bid
BGP   +  1/4   38.50
CSL   +  1/2   30.75
CSCO  -2       71.63
GNT   ---      39.75
ORCL  -1 3/4   40.50
OXHP  -  1/4   52.13
PMSI  +  3/8   11.75
SLR   +1 1/8   60.50
TDW   +  3/4   49.50
                  Day   Month    Year  History
        BORING   +0.15%   4.15%   4.15%  19.85%
        S&P 500  -1.10%   4.97%   4.97%  25.09%
        NASDAQ:  -0.70%   6.76%   6.76%  32.41%

    Rec'd   #  Security     In At       Now    Change

  2/28/96  200 Borders Gr    22.51     38.50    71.02%
  6/26/96  100 Cisco Syst    53.90     71.63    32.89%
   2/2/96  200 Green Tree    30.39     39.75    30.81%
  8/13/96  200 Carlisle C    26.32     30.75    16.81%
   3/8/96  400 Prime Medi    10.07     11.75    16.70%
 10/15/96  100 Solectron     54.52     60.50    10.96%
  5/24/96  100 Oxford Hea    48.02     52.13     8.54%
 12/23/96  100 Tidewater     46.52     49.50     6.39%
 11/21/96  100 Oracle Cor    48.65     40.50   -16.75%

    Rec'd   #  Security     In At     Value    Change

  2/28/96  200 Borders Gr  4502.49   7700.00  $3197.51
   2/2/96  200 Green Tree  6077.49   7950.00  $1872.51
  6/26/96  100 Cisco Syst  5389.99   7162.50  $1772.51
  8/13/96  200 Carlisle C  5264.99   6150.00   $885.01
   3/8/96  400 Prime Medi  4027.49   4700.00   $672.51
 10/15/96  100 Solectron   5452.49   6050.00   $597.51
  5/24/96  100 Oxford Hea  4802.49   5212.50   $410.01
 12/23/96  100 Tidewater   4652.49   4950.00   $297.51
 11/21/96  100 Oracle Cor  4864.99   4050.00  -$814.99

                             CASH   $5999.08
                            TOTAL  $59924.08