ALEXANDRIA, VA (Sept. 8, 1999) -- You have probably noticed the new presentation of the daily numbers below this portfolio report. Those are the result of several months of hard work by David Gardner.
No, not that David Gardner. A different David Gardner. The Fool's high-tech guru and programmer who is named David Gardner. We might have called him David Gardner The Second when he began working at the Fool this year, but instead we decided to call him Dagwood Gardner following a company-wide contest to name David a new name, much to his parent's chagrin, I'm sure. (It was necessary to avoid confusion!) "Dagwood" was the name that won the contest. Now Dagwood Gardner, formerly known as David Gardner, also goes by the name of TMF Dagger, while the David Gardner who co-founded Motley Fool is still named David Gardner.
Whew. OK. Breathe freely.
Dagwood was the key Fool in developing the new numbers format that you see below. Dagwood worked with others, of course, and I apologize for not knowing precisely who they all were. (The company is nearing 200 employees and I've worked away from the office often this year, making me even more of a "new face" than many new employees.) With Dagwood's improved numbers format comes many advantages.
First, these numbers essentially update automatically, which helps Mona Sharma (TMF Movie) quite a lot. Mona has been crunching all of the Fool's portfolio numbers at the close of every market day for about two years. She has even skipped vacation to do so (which is well-meaning but not Foolish!). Dagwood's software project for the numbers was named "Mona's Little Helper," which paid homage to Santa's Little Helper on The Simpsons. A more accurate name, however, may have been "Mona's Large Helper."
Aside from clearer presentation and automatic updating, a key difference regarding the new numbers is that we now have more benchmarks against which to measure ourselves. Rather than just the S&P 500 and the Nasdaq, there is also the S&P 500 (DA), which stands for dividend adjusted. This return assumes that all dividends paid by the S&P 500 are reinvested in stock. It is appropriate for us to measure against this number rather than the plain S&P 500, because we reinvest our dividends, after all, and we don't want an unfair advantage against the index.
It is equally appropriate (or even more so) for us to measure against the S&P 500 (DCA), which stands for dollar cost averaged. This return assumes that a person dollar cost averaged into the S&P 500, just as we dollar cost average into our investments. The numbers show our portfolio up about 37%, which tops the apples-to-apples comparison that has the S&P 500 (DCA) up just 24% over the same period. Despite our starting expenses and slow beginning (starting from nothing just two years ago), we're above our annualized goal of about 15.5% (annualized returns are another new addition to the numbers).
Our return is largely due to Intel (Nasdaq: INTC), which has doubled from our cost basis; but we take this early success without excuses. (Even though we know it may not last!) Much of a person's investment success is usually derived from just one or two holdings that eventually dominate a portfolio. That's fine and Foolish with us if it proves to be the case here, too. As long as the company or two dominating our portfolio is not seriously injured, we will never cut it back. That would be like trying to slow down the fastest horse when racing 'round the track, just to keep the pack even.
Returning to the numbers: The daily numbers now show when we first took a position in a stock rather than the latest purchase date. I like the new format because I believe it provides a better indication of our long-term commitment to our companies, and this will become more true as years advance. We have owned Intel and Johnson & Johnson (NYSE: JNJ) since 1997. When 2000, 2001, and so forth roll in, 1997 is going to sound like a long time ago. (Imagine 2017!) Meanwhile, for our most recent buys and a list of all our transactions, you can visit our transactions page.
Alongside questions about the new numbers presentation, there are other questions that we often receive regarding "behind the scenes" Drip Port issues. The answers to the questions most often asked follow.
First, the money in this portfolio is real (it's mine), and the monthly DRP statements arrive at my home address. Our DRP accounts are no different from any other individual's account. I send a simple bank check each month, as announced. Aside from the four stocks held in this portfolio, I also DRP invest with Pfizer (NYSE: PFE) and Coca-Cola (NYSE: KO), though not every month.
This portfolio is largely how I would invest my money anyway, although the limit of $100 per month has caused some small sacrifice. Many months over the past two years, I would have liked to buy more Johnson & Johnson than we were buying. We were limited by our $100 limit, and to keep our DRP statement 100% accurate with our numbers online, I didn't want to buy more J&J for myself. Keeping that situation from happening with Intel is my two Intel DRP accounts, one personal account and the Drip Port account (sorry Intel!). I could do the same with J&J, but I decided that the existing Pfizer account would serve as a substitute (and would cut back on paperwork).
We decide our monthly investments with very little thought. For the most part, we have invested in our smallest positions to make the amount that we invest in each position close to equal. We don't mind if the current valuations of our holdings become uneven -- that is bound to happen and is even welcome. However, we are trying to invest a fairly even amount of money into each stock. With our three active positions close to even as of this summer, we have since been investing partially where we see fit, and mainly just logically.
Intel in the $50s during the doldrums of summer seemed a smart place to buy it again, finally, after months of buying J&J and Mellon Bank (NYSE: MEL) instead. (When Intel was bought, it was in the low $60s again.) We have been buying Mellon consistently because it is at decent prices (we believe) and it offers our highest yield, plus it is still a slightly smaller investment than our other positions. Our other investment this summer, J&J, seemed a logical choice after the stock tumbled from $103 to the high $80s with the summer sell-off. Plus, our cost basis in the position was smaller than that of Intel.
So, we're generally free-spirited in how we invest each month because we believe in all of our active holdings, but we do use loose logic in most choices. If we were investing more than $100 every month, we would add the same amount to each stock every month. That is true dollar cost averaging and that is how we imagine many of you are investing. Often, this works out best. If you spend hours on investing every week, perhaps you can do slightly better by putting more thought in your purchases. I made a point to avoid Coca-Cola above the $60s for several reasons. That decision has turned out well so far. But is that just luck? At least partially, yes.
Drip Port is Foolish because we realize that no one can time the market or individual stocks consistently, so we don't sweat our regular investments once we've found companies we love. We simply invest regularly.
We hope that this answers some of your questions regarding the money and our positions. We also hope you enjoy the new numbers format. If you have any questions, please post them on the Drip Basics message board linked at the top right of this page.
We'll wrap up our fist look at Wrigley (NYSE: WWY) by the end of this week.
(By the way, if you're wondering specifically where Dagwood's name came from, it came roundabout from a column in this very portfolio. The day that the Fool held the contest to rename the then David Gardner, Brian Graney made reference to a Dagwood sandwich in this column, which I had read. So, Dagwood was on my mind when I entered the name into the contest. When "Dagwood" won, I was awarded a stuffed monkey for suggesting it. The stuffed monkey -- doll, I should clarify -- sits on the desk next to Spanky the Wonder Pooch, which is indeed a real existing animal named and brought in by Brian. So, I received a stuffed monkey and David was dubbed Dagwood. Who was luckier?!)
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