<THE DRIP PORTFOLIO>
Touchstone Thursday
Holiday Spirit saves Kurlak from us

by Jeff Fischer ([email protected])

Paris, France (December 24, 1998) -- Yes, shares of Intel (Nasdaq: INTC) rose yesterday after the long-standing, most prominent bear on the stock, Merrill Lynch analyst Tom Kurlak, raised his rating, earning estimate, and upside potential for the stock. He said that he predicts 20% upside from Wednesday's closing price, which is in dramatic opposition to his previous $60 price target for Intel.

How can such a highly paid, well-regarded professional be so wrong (all year, and before this year, too), and then flat-out simply turn a complete about-face without even an apology?

That's the Wise for you.

With all due respect, what did Mr. Kurlak cost clients who unFoolishly listened to his sage advice? They sold Intel in the $70s and are now being told to buy it back at $120. Brilliant! However, it is the holidays so we're not going to make mince meat of Mr. Kurlak. Instead, we wish him better luck in 1999, and we hope that he can think long-term next year -- at least into the years 2000 and 2001 -- when he's rating giant corporations and their stocks. If he'd been thinking long-term about Intel, he probably wouldn't have so aggressively downgraded the stock on near-term concerns.

Everyone is allowed to make mistakes (we all do), but why you make them goes far to identify the service that you're providing to clients and the public. If you make mistakes because you're only thinking short-term, perhaps you deserve to be criticized. The business world, investing, and life are all best measured on a long-term scale, not short-term. Kurlak's bearish rating on the stock was based primarily on his near-term worries. With those worries gone like a Ghost of Christmas Past, Mr. Kurlak raised his earning estimate much closer to consensus. He now stands at $4.25 per share for 1999, up 18% from his previous estimate. Intel's revenue could top $30 billion next year.

Touchstone Thursday. Nope. We're not going to follow Wednesday's column on downstream oil operations with another one on Christmas Eve! No way. Many of you probably didn't even read Wednesday's column yet (I'm hoping, meaning that you're having a good holiday), so now is the time to catch up.

This week was productive and Foolish (more jokes were written per word than any other week, I believe -- whether they were good jokes or not is your call). On Monday, Brian accomplished something that I thought no Fool could ever do: write about the natural gas industry and make it interesting, educational and funny, too. In a phrase: make natural gas Foolish. He did it! So far, we've focused on oil, but Brian's excellent column is an overview of our other area of study, the gas industry.

On Tuesday, Brian wrote about the recent Johnson & Johnson (NYSE: JNJ) and Amgen (Nasdaq: AMGN) news, addressing precisely why this news probably isn't all that terrible for J&J. (J&J was hoping to at least win some time, perhaps, with this lawsuit.) See Tuesday's detailed column if you're wondering what the heck I'm talking about.

As was just mentioned, on Wednesday we began to explore the downstream side of the oil (and gas) industry. Upstream includes Exploration and Production. Downstream means Refining, Transporting, and Marketing. We've now covered the basics of upstream and, moving to the downstream side, we hit refining already, on Wednesday.

Housekeepin' with the Fool. A reminder that last weekend (Dec. 19th) we sent $100 to buy more Mellon Bank (NYSE: MEL), and on January 1st, we'll again add $100 in savings to the Drip Port. We also still need to update the port for a recent Intel buy (at substantially lower prices) and a Mellon purchase this month (also at lower prices).

Next week we'll review the year that was regarding our stocks, and we'll try to look ahead, too, into 1999 and beyond. Then, finally, Brian will chime in on December 31st to end the whole shebang. Whadda year, eh? Have a great holiday. And please do consider making a contribution to SOS if you'd like to give to those less fortunate. There is always time for that.

Happy Foolidays!

--Jeff Fischer

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

12/23/98 Close

Stock    Close     Change
JNJ     79 3/8      +9/16
INTC       125          0
CPB     56 1/8       -1/4
MEL   67 15/16          0


            Day     Month    Year   History
Drip         0.11%     5.91%     35.18%      15.12% 
S&P 500     (0.18%)    5.38%     26.36%      28.90% 
Nasdaq      (0.44%)   10.95%     37.74%      35.71% 


Last Rec'd    Total #    Security    In At    Current
 11/02/98      8.055       CPB      $52.880   $56.125
 09/01/98      9.727       INTC     $80.238  $125.000
 11/09/98      8.578       JNJ      $74.090   $79.375
 10/07/98      1.000       MEL      $48.560   $67.938


Last Rec'd    Total #    Security    In At     Value    Change
 11/02/98      8.055       CPB      $425.95   $452.09   $26.14 
 09/01/98      9.727       INTC     $780.50  $1215.92  $435.42 
 11/09/98      8.578       JNJ      $635.55   $680.88   $45.33 
 10/07/98      1.000       MEL       $48.56    $67.94   $19.38 


Base:  $2200.00
Cash:   $262.88**
Total: $2679.70

  

The Drip Portfolio has been divided into 93.111 shares with an average purchase price of $23.628 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. 
 

**Transactions in progress:

10/24/98: Sent $40 to buy more INTC.


11/24/98: Sent $100 to buy more MEL.


12/19/98: Sent $100 to buy more MEL.
    

    

      

      
</THE DRIP PORTFOLIO>