Touchstone Friday
...chips, soup, banks & the "deficit of life"
by Jeff Fischer (JeffF@fool.com)


ALEXANDRIA, VA (Sept. 11, 1998) --A strong Friday sent the Drip Port higher as its main holding was the focus of Wall Street. Intel (Nasdaq: INTC) reported that its third quarter revenue will be 8 to 10% above the $5.9 billion achieved in the second quarter. The upside surprise is due to higher domestic and European demand offsetting weakness in Asia. Analysts are raising earnings estimates, but more important than an increase of a few cents per share is that the trend continues, obviously, so that it can add several extra cents in earnings to end the year.

That Intel can grow sales even while half the world's economies are reeling and chip prices are declining (though they might have stabilized by now, as we covered in the past, and as the projected 2 point increase in gross margin hints) of course bodes well for the years ahead when world economies could be prosperous again and when Intel will sell more high-margin chips (due in 1999 and 2000) to further boost revenue and profits.

Trading at $71 to begin 1998, Intel's stock is handily outperforming the market (up 19.7%) during what is commonly perceived as the "worst" year in several for its business. The stock's performance certainly surprises some investors, as might the actual stock market's performance over the past week and month.

Stocks were so volatile this week that I lost track of which way was up, where we began the week, where we ended, and which way we were going at any time. (Not that I pay close attention anyway.) Up down, down up. If I had to guess which direction the market finally went this week and month, I would definitely say DOWN. No doubt about it, especially for the month -- down!

However, this week the Nasdaq actually gained 4.8% and the S&P 500 added 3.6%. And, for the month so far, the Nasdaq has gained 9.5% and the S&P has added 5.3% -- while the Drip Port has added 10.6%. The tone on Wall Street has been so bearish, I assumed that September was ugly so far. Not true.

Touchstone Friday. The initial thing that my first college philosophy teacher taught his auditorium full of students was the idea of the "deficit of life." All of us are living slightly behind schedule -- doing slightly less than we wish to.

Most people consistently have lists of tasks or ambitions they want to tend to. But these fall by the wayside for months or even years while we first tend to the daily deficit that we face when we wake each morning (shower, dress, eat, go to work... work... go home, change clothes, eat). There's always something else to do at each moment -- and most of these moments are far from sailing around the world, rock climbing in Arizona, having a family, or writing a book.

In fact, I just created a slight deficit in your life with that longer than necessary explanation. The point I am getting to is that again this week we began with more ambition than proved realistic.

We began on Tuesday by discussing the record bounce that the stock market experienced that day, and then linking to The Washington Post's series of articles on the Asian crisis. (Great series.) The column stated that later this week, along with looking at our two final bank contestants, we'd discuss how the Drip Port is investing and how its beliefs play out even in down markets, or highly volatile markets. Well, we didn't get to that yet, but we did have two productive days.

On Wednesday, Dale began his final comparison between our two banking finalists, providing comprehensive thoughts as he wraps up a conclusion early next week. On Thursday, Dale focused on Norwest (NYSE: NOB) and Wells Fargo (NYSE: WFC), the combination of which represent Finalist Number One for the Drip Port.

We should almost certainly have our Foolish buy announcement regarding the financial services industry next week. Almost certainly. As long as we can keep that "deficit" of living at bay. Plus, we're still waiting for DRP info from Norwest.

To close, on Friday Campbell Soup (NYSE: CPB) announced that its board agreed to the use of forward stock purchase agreements in order to hedge against share-price changes related to the company's stock-option programs. The company could buy up to 15 million shares over the next three years from institutions under the program. Not a business-changing big deal.

We bought 3.902 shares of CPB at $51.25 on September 2, as shown on our transaction page. This was our last investment in the company's free DRP. Now the Campbell DRP, beginning next week, has fees. This fee issue is another thing that we will address further. For now, we're addressing it by not investing in it.

Campbell's recent conference call summary is available from the Fool. The $50 stock trades at 23 times the current fiscal year (1999) earnings estimate, and 19.7 times fiscal 2000's estimate.

Have a very Foolish weekend! If you have any questions, comments, or general Foolishness to share, we'll see you on the Drip message boards linked in the top right of this page.

Fool on,
Jeff

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


9/10 Close

Stock Close Change CPB $50 7/16 +1 11/16 INTC $84 15/16 +5 7/8 JNJ $76 3/8 + 3/4
Day Month Year History Drip 4.15% 10.65% 10.98% (5.49%) S&P 500 2.94% 5.38% 3.98% 6.07% Nasdaq 3.54% 9.50% 4.54% 3.00% Last Rec'd Total # Security In At Current 09/02/98 8.027 CPB $52.867 $50.438 07/01/98 9.724 INTC $80.239 $84.938 08/07/98 6.543 JNJ $70.138 $76.688 Last Rec'd Total # Security In At Value Change 09/02/98 8.027 CPB $424.36 $404.86 ($19.50) 07/01/98 9.724 INTC $780.21 $825.89 $45.68 08/07/98 6.543 JNJ $458.92 $501.77 $42.85 Base: $1900.00 Cash: $186.05** Total: $1918.57

The Drip Portfolio has been divided into 81.201 shares with an average purchase price of $23.399 per share.

The portfolio began with $500 on July 28, 1997, adds $100 on the 1st of every month, and the goal is to have $150,000 in stock by August of the year 2017.

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