Boring Portfolio

It's a Full Moon better time for frozen yogurt.
by Mark Weaver

SPRINGFIELD, IL (July 9, 1998) -- It was another wild and woolly day on Wall Street as the Internet-related stocks continued to make even day-traders dizzy. A plausible explanation (well, at least as plausible as the reasons for the frenzied moves in share prices) for all of the frenzy in these stocks came to me at midnight last night when I looked up and saw a full moon. With trading ranges of over 10% during the day becoming the routine, the best Internet investment these days might be to corner the market on Rolaids.

The Boring Portfolio spared us the indigestion with only a single stock making a move greater than a point. The portfolio as a whole dropped 0.20%. The S&P 500 backed off 0.67% as large caps gave up some ground. There have been a spate of earnings warnings coming from some high profile big caps, and today it was DuPont (NYSE:DD). The economic woes of Asia and Russia are starting to be felt with regularity. On the other hand, the Nasdaq rose 0.23% as there were key upgrades of PC maker earnings forecasts. The tech heavy index got a boost from moves in semiconductor and computer stocks following the upgrades.

Given earnings expectations for the S&P 500 are less than robust for the second half of this year, continued earnings disappointments out of the large cap sector should give investors pause. Ultimately, earnings are what drive stock prices and earnings growth isn't expected to live up to the lofty earnings multiple that the S&P 500 index enjoys.

Caveat emptor.

As has been the case for most of this week, there was no company specific news to report on the Borefolio holdings today. However, a couple of news items caught my attention.

A couple of days ago Cabletron Systems (NYSE: CS) announced it was cutting prices by 50% on its SmartSwitch Router in an attempt to lure new business. In spite of pretty impressive performance in independent tests, Cabletron has not been able to make much headway against Cisco Systems (Nasdaq: CSCO) in the router business. The price-cutting by Cabletron might put some pressure on margins in this segment of Cisco's business. On the other hand, it might represent a desperation move on the part of Cabletron, a company with revenue growth that has been virtually flat over the past year. Cabletron's stock declined on the news. Cisco was off $1 1/4 today.

Federal Express parent FDX Corp. (NYSE: FDX) was up over 8% today. Why? Well, in a nutshell it was because the news coming out of Asia wasn't as bad as expected. The company's international business returned to profitability and the company told analysts that Asian sales were stable. Borefolio holding Atlas Air (NYSE: CGO) does a lot of air freight business in the Pacific Rim and the FDX announcement could auger well for its upcoming earnings report. Atlas Air declined $1/4 today.

Finally, on a more personal note, I am going to try to enjoy some TCBY (NYSE: TBY) yogurt tonight. That isn't newsworthy, but it is certainly a good way to add enjoyment to a delightful summer evening under the aforementioned full moon. Heck, if everyone did the same it might even boost the stock!

FoolWatch -- It's what's going on at the Fool today.

07/09/98 Close

Stock  Change    Bid 
 ANDW  -  3/16  17.88 
 CGO   -  1/4   37.25 
 BGP   +  13/16 39.44 
 CSL   -  7/16  45.25 
 CSCO  -1 1/4   92.94 
 FCH     ---    32.25 
 PNR   -  7/8   41.63 
 TBY   -  1/16  8.69 
                   Day   Month    Year  History 
         BORING   -0.20%   2.96%   7.36%  35.09% 
         S&P:     -0.67%   2.18%  19.39%  86.38% 
         NASDAQ:  +0.23%   2.38%  23.53%  86.35% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     39.44   250.36% 
   6/26/96  150 Cisco Syst    35.93     92.94   158.64% 
   8/13/96  200 Carlisle C    26.32     45.25    71.89% 
    3/5/97  150 Atlas Air     23.06     37.25    61.55% 
   4/14/98  100 Pentair       43.74     41.63    -4.84% 
   5/20/98  400 TCBY Enter    10.05      8.69   -13.51% 
   11/6/97  200 FelCor Sui    37.59     32.25   -14.21% 
   1/21/98  200 Andrew Cor    26.09     17.88   -31.49% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  15775.00 $11272.51 
   6/26/96  150 Cisco Syst  5389.99  13940.63  $8550.64 
   8/13/96  200 Carlisle C  5264.99   9050.00  $3785.01 
    3/5/97  150 Atlas Air   3458.74   5587.50  $2128.76 
   4/14/98  100 Pentair     4374.25   4162.50  -$211.75 
   5/20/98  400 TCBY Enter  4018.00   3475.00  -$543.00 
   11/6/97  200 FelCor Sui  7518.00   6450.00 -$1068.00 
   1/21/98  200 Andrew Cor  5218.00   3575.00 -$1643.00 
                              CASH   $5528.69 
                             TOTAL  $67544.32