Fool Portfolio Report
Wednesday, October 4, 1995
The Fool Portfolio was crushed even worse Wednesday than it had been Monday or Tuesday, which is saying a lot. This single day drop of 3.92% ranks as one of our very worst days ever. . . if not the worst. (We'll have to send our hundred-man research staff back over the records to find out. They're out eating a light supper at the moment.)
No matter where you look among our technology stocks you see bloodletting. America Online was munched, off $4 1/4. Applied Materials, now off almost 20% since our purchase, was castigated, off $4 7/8. Iomega didn't look much better, taking a $1 3/8 shot to the face, breaking what was left of its nose. Amazingly, this stock (nearly a double for us several weeks ago), is now only up 22% overall. Meanwhile, Ride Inc. lost its double again today, off $1 1/8. (Blood even on the slopes. What an unpleasant thought.) KLA Instruments played the same sort of game, off $1 to $37 1/4.
There wasn't really any news on any of these. It was just a huge profit-taking session. I call it "profit-taking" because all of the stocks mentioned above have been big winners in 1995 and we expect that some people want to lock in short-term profits. We ourselves don't think about investing that way; we're not constantly looking for exit points out of our outstanding companies. Each of the situations above remains a tremendous growth opportunity going forward, one whose full rewards we aim to reap.
Will we ever reap any rewards of Sonic Solutions? Maybe not. Sonic was also bludgeoned on Wonderless Wednesday, off $7/8 to close below $10 for the first time in weeks (bidding $9 1/2). Sonic remains our worst Fool investment.
But heck, even GOOD Fool investments---good QUIET Fool investments---investments like 165 shares of Sears, were chopped up today. Sears closed at $35 1/4, down $7/8. Gap dropped $3/8 too. We do feel very confident in both our heavyweight retailers, however. Analysts from Bear Stearns and Gruntal were both bullish on this Christmas retail season, due to expected strong comparisons versus last Christmas's extremely light retail sales. That said, Gruntal analyst Susan Silverstein said she thought Gap's September would come in 2%-5% below last year's. Ah, but look at expected September comparisons for Limited, Ann Taylor, and Charming Shoppes (off an expected 20%)! They're all worse, making us like Gap even more right now. In fact, GPS has shown a tendency to RISE on supposedly bad news in the past couple of months. That's probably because the market got too pessimistic on these shares. We're sitting on a 9% return right now, and we're looking for more.
Chevron ran up a full $1 3/8 Wednesday. Its USA unit announced a shutdown of its 295,000-barrel-a-day refinery at Pascagoula, Mississippi, due to Hurricane Opal. You think that's BAD news? Wrong-o! When the supply of oil is threatened, oil prices may rise. . . and that of course adds value to any oil company's entire supply. All major oil stocks enjoyed similar gains today, even though oil prices actually haven't moved all that much yet. In fact, they remain extremely low, as gasoline futures traded on the New York Mercantile Exchange (NYMEX) are at nine-month lows of under 51 cents a gallon. This is quite obviously part of the reason that Chevron and its mates are among the market's dullest performers in 1995.
Will the market continue its freefall? You tell me. Hey, will America Online continue to shed more than 4 points a day? If it does, the stock will reach $0 in two weeks. The odds of this happening would appear to be somewhat remote. That's why you see the Fools digging in and raising their pikes in the face of onrushing bears.
---David Gardner, October 4, 1995
AMER -4 1/4 AMAT -4 7/8 CHV +1 3/8 GE + 3/8 GPS - 3/8 IOMG -1 3/8 KLAC -1 RIDE -1 1/8 S - 7/8 SNIC - 7/8
Today's Numbers
Day Month Year History FOOL -3.92% -8.10% 39.83% 55.25% S&P 500 -0.15% -0.50% 26.61% 26.85% NASDAQ -1.78% -3.96% 33.29% 39.17% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 60.00 312.49% 5/23/95 510 Ride Inc. 9.91 18.75 89.26% 8/5/94 165 Sears 28.93 35.25 21.87% 5/17/95 335 Iomega Corp 15.11 18.38 21.58% 8/11/95 95 GenElec 57.91 63.50 9.64% 4/20/95 155 The Gap 32.55 35.50 9.06% 8/11/95 110 Chevron 49.00 50.13 2.30% 8/24/95 130 KLA Instrm 44.71 37.25 -16.69% 8/24/95 50 AppldMatl 115.05 92.88 -19.27% 12/23/94 340 SonicSol 14.48 9.50 -34.41% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 20400.00 $15454.44 5/23/95 510 Ride Inc. 5052.44 9562.50 $4510.06 5/17/95 335 Iomega Corp 5063.13 6155.63 $1092.50 8/5/94 165 Sears 4772.65 5816.25 $1043.60 8/11/95 95 GenElec 5501.87 6032.50 $530.63 4/20/95 155 The Gap 5045.25 5502.50 $457.25 8/11/95 110 Chevron 5389.99 5513.75 $123.76 8/24/95130 KLA Instrm 5812.49 4842.50 -$969.99 8/24/95 50 AppldMatl 5752.49 4643.75 -$1108.74 12/23/94 340 SonicSol 4924.18 3230.00 -$1694.18 CASH $5927.47 TOTAL $77626.85 Transmitted: 95-10-04
