Drip Portfolio Report
Friday, December 19, 1997
by Jeff Fischer (TMFJeff@aol.com)

ALEXANDRIA, VA (Dec. 19, 1997) -- With the holiday around the corner, it still isn't too late to give stock as a gift. Even better is the gift of beginning a DRIP account for someone else. If you're interested in doing so, The Moneypaper was offering a holiday special for gift givers that we mentioned before but that has since ended, but you can always give stock as a gift anytime if you're a Moneypaper subscriber. (No, Moneypaper didn't put me up to this; no check under the table; you simply can't get more Foolish than to give stock to someone, so I wanted to pass along the idea again.)

If you're strapped for time, just tell your gift recipients (in a moving, emotional letter, perhaps) what you've ordered on their behalf, and explain that they should have a stock DRIP account opened for them early in the New Year. You can also do this through a discount broker, of course, if you have an account -- though you then have to set up the DRIP account yourself.

As for the Drip Portfolio, we had a busy week that culminated in the mailing of another check to buy $100 worth of Intel (Nasdaq: INTC) on the first trading day of January. That check was mailed on Friday afternoon, following our $100 addition to the port on the 15th. We're changing our policy going forward, though.

To date, we've been adding $100 to the portfolio on the 15th of each month, but then along comes Johnson & Johnson (NYSE: JNJ) with an investment date on the 10th of every month. So, we're going to add $100 to the portfolio on the First of each month from now on, beginning in January (just a few weeks away). We're also going to announce our monthly investments much earlier, as some readers have requested -- especially readers overseas. It seems appropriate to reiterate now that we're not magicians, and though we try to use logic in our monthly investments, there is no reason to follow us. Some people want to, though. In that regard, things are going to be much easier to follow now. Why?

Beginning in January -- and until we add another stock to the portfolio -- we're going to send $50 to Johnson & Johnson and $50 to Intel every month, regularly, unless something really rocks our boat to make us send more money to one company. Again, why?

Well, for one, we like both companies and we can live with the valuations that both are trading at. Also, we've only had one place to send money all these months: Intel -- and so we've become much more weighted in that stock. We want to keep buying Intel, but we also want to start building a position in Johnson & Johnson. At the same time, we're not eager to load up on Johnson & Johnson over the next four months merely in order to make that holding equal with Intel. We have twenty years to make our investment allocations equal, as we might wish. For now, we like the base that we've built with Intel and we're eager to start building one with Johnson & Johnson, while continuing to invest in Intel, too.

Once we have a full portfolio we may simply invest money each month in each company, or alternate as need be. This is a work in progress, and as long as everyone is aware of the changes as they come, we should all be quite fine, Foolishly.

So, beginning in January, it's 50/50 between the Computer Chip King and the Healthcare King, except when we see reason to deviate, in which case we'll share our thoughts with you in advance. And beginning in January, we add $100 on the first day of each month rather than the 15th. For those of you at home simply doing the monthly investments through automatic checking account deductions: aren't you glad that you're not us? Ha! But we're here every day, following our investments, and we do enjoy having input in our monthly investment decisions when need be.

For the week, Randy covered Nabisco Holdings and concluded that we'll pass on the stock for further evaluation unless it becomes inexpensively valued. I reviewed Quaker Oats and decided that we'd keep an eye on it. I want the Snapple mistake to clear and to see operating margins in the future. For now, they're too low for us. I also shared thoughts on Intel's quick descent. (Today it rose and closed at $70, actually ending down only $1/2 for the week.) Meanwhile, Johnson & Johnson went the other direction, scoring a new high this week.

Next week is a holiday week. If you're following along with the lovable Drip Port, be sure to send your check to Harris Trust and Savings Bank to buy more Intel, using the grey envelope that they provide. Send them a little holiday greeting on the check, then kick back, and enjoy the holidays yourself. We'll be here each day next week except for Christmas, of course, though we'll likely have abbreviated columns on a few days -- columns that, in part, will share what we want to do early next year in this column.

Enjoy, and Fool on!


Do your Foolish gift shopping now, in time for the Holidays. And consider the Fool's Industry Focus '98 book -- to learn not only about industry-leading stocks, but about the industries in which they operate as a whole -- and see which one company in each industry that our news and analysis team favors most.

Have You Given? The Fool Charity Fund


Stock   Close    Change
INTC  $69  1/8   - 3/8
JNJ   $66 13/16  + 7/16 
            Day        Month      Year      History
Drip         0.55%    (4.81%)   (14.94%)    (14.94%)
S&P 500     (0.89%)   (0.90%)    27.82%      (0.48%)
Nasdaq       0.10%    (4.74%)    18.10%      (4.33%)

Last Rec'd  Total #  Security   In At     Current
12/01/97      6.082    INTC     $81.346   $70.000
11/14/97      1.000    JNJ      $62.125   $66.313

Last Rec'd  Total #  Security  In At    Value   Change
12/01/97    6.082      INTC   $494.72  $425.72  ($69.00)
11/14/97    1.000      JNJ     $62.13   $66.31    $4.19   

Base:   $900.00
Cash:   $389.75**
Total:  $885.66

The Drip Portfolio has been divided into 41.647 shares
with an average purchase price of $24.105 per share. GOAL: The portfolio began with $500 on July 28, 1997, adds $100 on the 15th of every month, and the goal is to grow the port to $150,000 by August of the year 2017.