Boring Portfolio

Boring Retrospective
...and the latest on Sparta Brush

by Greg Markus
(TMF Boring)

ANN ARBOR, Mich. (Aug. 24, 1998) -- Stocks closed mixed in light trading Monday, with the S&P 500 rising 0.64% but the Nasdaq easing 0.38%.

There's been little in the way of mixed signals emanating from the Russell 2000 index of smaller-capitalization stocks, however. That index slid 0.49% Monday to close at 393.7. With that loss, the Russell 2000 has fallen fully 20% from the high it established back in April, putting small caps officially in a bear market, according to the traditional definition of that term. Even more dramatically, the Russell 2000 has fallen 15% in just the past five weeks. Ouch!

The Boring Portfolio managed to buck the small-cap trend Monday, rising 0.27%. Winning and losing issues split four-four, with the upside led by a $1 11/16 gain in shares of Carlisle Companies (NYSE: CSL).

Speaking of Carlisle, a regular contributor to the Boring Stocks area on the AOL side of Fooldom, who goes by the online handle of Edelster, wrote last week that he had just returned from the International Association of Milk, Food and Environmental Sanitarians (IAMFES) trade show. While there, he had checked out the booth for Sparta Brush, a Carlisle subsidiary.

Edelster informed us that Sparta "had a large booth showcasing their color-coded brush system to prevent cross-contamination between different parts of a food plant. They said they are experiencing strong demand from the dairy industry."

"Sparta offers potential customers the opportunity to sit down with an engineer to work out the ideal bristle color, length, stiffness, density and chemical resistance, the overall shape and handle shape and flexibility for any application," Edelster wrote. "They will put a prototype in your hands in under six weeks -- two weeks if it's a minor modification of a stock item."

I don't know about you, but I just love to learn stuff like that about companies -- and especially about companies I'm part-owner of. The most obvious reward of investing in stocks is the opportunity for long-term accumulation of wealth, which may one day be put to good use by you and your family. In the meantime, though, I've discovered that the process of investing has its own rewards, one of which is the knowledge you acquire about how businesses operate, what kind of products and services they provide, their business philosophies and practices, and so forth.

Acquiring such information -- and sharing it with others -- is enjoyable in its own right. It can also have direct application in running one's own business and in related pursuits. So, yes, wealth may be the long-term objective. But getting there can be half the fun -- or maybe even more.

That's just one of the things I've learned through my participation in The Motley Fool these past five years. And if you're so inclined, I'd like to share with you tonight and over the next couple of nights a few more thoughts along those lines.

A Boring Retrospective, Part I

It finally hit me in the fall of 1992: if I was going to finance my daughter's college education after she graduated from high school with the Class of 2001, and if I was going to accumulate enough of a nest-egg to permit me one day to cut back on my professoring to pursue more of my other passions (endurance sports, tropical beaches, endurance sports on tropical beaches), then I'd better start investing above and beyond what I had been doing more or less by default since 1975 through my university-sponsored retirement plan.

Partly because I'm self-reliant by nature and partly because I actually enjoy doing research and learning new things, I decided that I'd try my hand at picking my own stocks and managing my own investments -- learning as I earned, and earning as I learned.

After sitting in on a couple of financial workshops and doing some homework on my own, I headed over to the local office of a large national discount brokerage, opened an account, and bought my first three stocks. They were small stakes in Medstat, a locally based medical information firm that was growing by leaps and bounds, Snapple, a "New-Age" beverage start-up that my wife and I had discovered on a trip to California, and Apple Computer (Nasdaq: AAPL), a company whose products had in a few short years become as essential as food to my daily life.

"Buy stuff you know," I thought to myself as I made my selections. "Focus on growth stocks. Diversify. And don't pay too much!"

A regular Peter Lynch.

As fate would have it, Medstat got acquired not long thereafter, eventually becoming a cog in the huge, Toronto-based information machine known as Thomson Corp. Snapple also got snapped up, in a ludicrously overpriced deal with Quaker Oats (NYSE: OAT). I sold my stakes in both and invested the proceeds in a then-relatively unknown company based near Stanford University that made devices to link far-flung computer systems together to form a handy new thing called the Internet. (The Internet was a subject of much discussion here in Ann Arbor, because the University of Michigan was one of the early participants in the project.) Thus began my continuing love-affair with Cisco Systems (Nasdaq: CSCO).

As for my investment in Apple, that soon soured as the company embarked on a series of strategic blunders that have since become MBA case studies in how to seize the opportunity of a lifetime ... and run it straight into the ground. I sold my AAPL, learning as I did that individual stocks can go down -- even for a long time, and maybe forever -- as well as go up.

About that time, I stumbled onto an out-of-the-way "folder" (so named because of its on-screen icon) inside America Online (NYSE: AOL). In it, two twenty-something brothers who had recently begun publishing a quirky newsletter called, of all things, "The Motley Fool" were hosting a free-wheeling online discussion about investing. Messages about stocks were intermixed with quotes from Shakespeare, horrible puns, favorite recipes, and whatever else came to mind.

Lo and behold, a rapidly growing number of folks soon discovered along with me that sharing ideas, opinions, and bad jokes in an online community was informative, thought-provoking, and just plain fun. The Motley Fool was off to the races....

[To be continued....]

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

08/24/98 Close

Stock  Change    Bid 
 ANDW  -  1/4   15.44 
 CGO   +  3/16  32.56 
 BGP   -  5/16  24.63 
 CSL   +1 11/16 44.38 
 CSCO  +  1/4   103.00 
 FCH   +  1/16  24.81 
 PNR   -  1/16  37.00 
 TBY   -  3/16  6.81 
                   Day   Month    Year  History 
         BORING   +0.27%  -6.05%  -5.87%  18.44% 
         S&P:     +0.64%  -2.90%  12.13%  75.05% 
         NASDAQ:  -0.32%  -4.36%  14.04%  72.04% 
     Rec'd   #  Security     In At       Now    Change 
   6/26/96  150 Cisco Syst    35.93    103.00   186.64% 
   2/28/96  400 Borders Gr    11.26     24.63   118.77% 
   8/13/96  200 Carlisle C    26.32     44.38    68.57% 
    3/5/97  150 Atlas Air     23.06     32.56    41.22% 
   4/14/98  100 Pentair       43.74     37.00   -15.41% 
   5/20/98  400 TCBY Enter    10.05      6.81   -32.18% 
   11/6/97  200 FelCor Sui    37.59     24.81   -33.99% 
   1/21/98  200 Andrew Cor    26.09     15.44   -40.83% 
     Rec'd   #  Security     In At     Value    Change 
   6/26/96  150 Cisco Syst  5389.99  15450.00 $10060.01 
   2/28/96  400 Borders Gr  4502.49   9850.00  $5347.51 
   8/13/96  200 Carlisle C  5264.99   8875.00  $3610.01 
    3/5/97  150 Atlas Air   3458.74   4884.38  $1425.64 
   4/14/98  100 Pentair     4374.25   3700.00  -$674.25 
   5/20/98  400 TCBY Enter  4018.00   2725.00 -$1293.00 
   1/21/98  200 Andrew Cor  5218.00   3087.50 -$2130.50 
   11/6/97  200 FelCor Sui  7518.00   4962.50 -$2555.50 
                              CASH   $5686.93 
                             TOTAL  $59221.31