Boring Portfolio Report
Tuesday, September 30, 1997
by Mark Weaver, MD (MWEAV)
St. Louis, MO (Sept. 30, 1997) - The third quarter went out with a wimper today. The Nasdaq index dropped 0.55%, the S&P dropped 0.64% and the Borefolio took third prize falling 1.26%. It wasn't a glowing end to the quarter.
Like a broken record, there was more bad news from ASCEND COMMUNICATIONS (Nasdaq: ASND) in the form of an earnings warning and a downgrade from DLJ. This may have weighed on CISCO SYSTEMS (Nasdaq: CSCO) which was off $15/16. I was happy to note that in the Dow Jones News story related to the Ascend announcement some of Ascend's problems were linked to Cisco's intrusion in the area of high end products for telephone carrier customers. It was reported that Cisco's market share in that product category has risen from virtually zero to 14% while Ascend's market share has remained flat at 37%. (Insert music from Jaws.)
In other Cisco news, the company announced an alliance with QWEST (Nasdaq: QWST) to build broadband multimedia services. The partnership will build the "most advanced broadband native Internet Protocol network capable of delivering telephony, fax, videoconferencing, whiteboarding, multicasting and other multimedia applications."
Cisco also announced a 50% price cut on its Catalyst 1900/2820 high-performance ethernet switches. This price cut is targeted to help small and medium sized businesses move to intelligent switch technology. In the meantime Cisco announced a new, more expensive, line of ethernet switches. These newer switches are priced 33% above the switches which were put "on sale" today. All of this has the sound of year-end model clearance to me. That said, prior price cuts in ethernet LAN switches have resulted in a big boom in demand. A surge in sales volume can make this price cut profitable.
BORDERS GROUP (NYSE: BGP) announced an agreement with NPR to set up kiosks within Border's stores which will feature books and CDs which have been featured on NPR. This arrangement will allow customers the opportunity to easily locate these often obscure (from personal experience) items and will give local NPR affiliates an opportunity to meet their "Public". Sounds like a good deal all around. Borders was down $3/4 today.
OXFORD HEALTH PLANS (Nasdaq: OXHP) was mentioned in a front page article in the New York Times today. This article dealt with the growing role of nurses in primary care. Oxford has been a pioneer in the development of programs to utilize nurses for primary care. You can check the whole article out at KEYWORD: Times. Oxford's stock continued to drop in the wake of the AETNA (NYSE: AET) earnings pre-announcement yesterday.
A few weeks ago I wrote a column about what being rich represents to me. I received a lot of mail about that column, it seemed to have touched a nerve. One of the correspondents brought a very interesting book to my attention; "The Millionaire Next Door" by Stanley and Danko. The book is a study of American millionaires with a focus on the habits that are common among millionaires. It makes for very Boring reading.
The section on the investing habits of millionaires had some particularly Boring points. First of all, over 95% of millionaires own stocks and most have 20% or more of their net worth in the stock market. The stock market remains one of the most travelled roads to personal wealth.
The trading habits of millionaires are also remarkable. Fewer than 1% are daytraders, 1% trade on a weekly basis, 7% on a monthly basis and only 9% have holding periods less than 1 year. Fully 32% of all millionaires hold stocks for over 6 years!! At the time of the authors' latest survey 42% of the millionaires had made no trades whatsoever in the prior year.
The authors also found that millionaires spend more time with their investing than people who make similar amounts of money but have accumulated no wealth. In fact, millionaires spend on average 3 times the amount of time studying and planning future investments than do non-millionaire high income generators.
When you wonder why it is taking the Borefolio team so long to come up with a buy, just figure we are trying to make decisions the way a millionaire would!
I'm looking out my window at another glorious fall day and thinking what a lucky Fool I am. Is there anything more pleasant than autumn?
Drip Portfolio --
Health Care companies.
The Fool Portfolio -- Fool Port getting closer.
Fool Message Boards -- Speak your mind!
Evening News -- All the news, early.
Daily Double -- Doubled. Why? Learn.
Daily Trouble -- Slammed. A value?
Fool Four -- 23% annualized historically
Stock Change Bid ATLS + 1/16 28.00 BGP - 3/4 27.50 CSL - 11/16 44.44 CSCO - 15/16 73.06 GNT --- 47.00 ORCL - 7/8 36.44 OXHP - 15/16 74.88 PMSI - 1/2 13.88 TDW + 1/8 59.25
Day Month Year History BORING -1.26% 4.49% 27.07% 46.22% S&P: -0.64% 5.32% 27.88% 52.39% NASDAQ: -0.55% 6.20% 30.57% 61.93% Rec'd # Security In At Now Change 2/28/96 400 Borders Gr 11.26 27.50 144.31% 8/13/96 200 Carlisle C 26.32 44.44 68.80% 5/24/96 100 Oxford Hea 48.02 74.88 55.91% 2/2/96 200 Green Tree 30.39 47.00 54.67% 3/8/96 400 Prime Medi 10.07 13.88 37.80% 6/26/96 100 Cisco Syst 53.90 73.06 35.55% 12/23/96 100 Tidewater 46.52 59.25 27.35% 3/5/97 150 Atlas Air 23.06 28.00 21.43% 11/21/96 150 Oracle Cor 32.43 36.44 12.35% Rec'd # Security In At Value Change 2/28/96 400 Borders Gr 4502.49 11000.00 $6497.51 8/13/96 200 Carlisle C 5264.99 8887.50 $3622.51 2/2/96 200 Green Tree 6077.49 9400.00 $3322.51 5/24/96 100 Oxford Hea 4802.49 7487.50 $2685.01 6/26/96 100 Cisco Syst 5389.99 7306.25 $1916.26 3/8/96 400 Prime Medi 4027.49 5550.00 $1522.51 12/23/96 100 Tidewater 4652.49 5925.00 $1272.51 3/5/97 150 Atlas Air 3458.74 4200.00 $741.26 11/21/96 150 Oracle Cor 4864.99 5465.63 $600.64 CASH $7890.00 TOTAL $73111.88