Fool Portfolio Report
Monday, October 30, 1995

EDITORIAL DISCLAIMER: As the Fool Portfolio had not hit an all-time high in more than a month, readers may find mostly self-congratulatory drivel in copious amounts below. This writeup is not for the faint of ego. You have been warned.

The latest round of market trading was very good to the UnWise, as the day before Halloween proved particularly UNscary. For the second trading session in a row, the Fool Portfolio rose greater than two percentage points. Today was even better than Friday in fact, as Foolishness appreciated 2.81%, compared to gains of 1.38% and 0.61% for the NASDAQ and S&P 500, respectively.

Keep in mind, if you go to business school today---graduate or undergraduate---you're more than likely to be taught that the markets are EFFICIENT and that BY DEFINITION, no one can beat the market consistently over time. . . or that if this happens, it's luck. (That this concept is mainly taught by old men who met with little success over the course of their investing lifetimes may be purely coincidental.) Anyway, the academic theory runs that information about stocks is "perfectly distributed," and that stock prices therefore reflect all known information---both current and future---for any public company. From this statement it is concluded that individual investors cannot beat the market consistently or meaningfully, because they cannot gain any "advantage" because of the efficient information. That the ability to PROCESS and THINK ABOUT all this perfectly distributed information may itself NOT have been equally well distributed does not seem to have occurred to the Efficient Markets theorists. But there it is.

Anyway, for the first time, our overall return is now in excess of 50 percentage points better than the S&P 500. Yes, that's right ladies, gents, and Fools, in its brief history the Motley Fool Portfolio is now up 77.60% vs. 27.24% for the S&P 500. Hey, just luck, maybe.

There is something revolutionary afoot, here. It's very simple. The arrangement is unprecedented: we publicly post our stock picks ahead of our own trades, teach people exactly why we buy and sell and how we invest, and take pains to make sure that anyone can duplicate our moves. All this, for nothing more than the price of connect fees on America Online. Compare this to any existing financial advice for individual investors---both in terms of what YOU pay and what WE would make---and you can see something happening online that has never happened before anywhere. That's because this medium has made wonderful new things possible, and we plan to continue to exploit them. Your job is just to laugh along, to learn, and to profit.

Despite ongoing problems with its message boards (and ours were a mess for much of today), America Online was up $5 1/4 to an all-time high bid of $79 1/2. (Does that sound like a broken record? GOOD!) The stock in one day more than blew out its previous all-time high of $74 1/2, and in fact topped $80 in the late afternoon. Most of America Online's move today may have been based in the launch of its new GNN service. Announcing his first full "Internet-only solution," Steve Case revealed the new pricing scheme today at the Internet World convention in Boston. It includes a free full month to start with, and then a $14.95 monthly rate for 20 hours, paying $2 an hour after that. (Sure, sure, AOL will tell you $1.95 an hour, but I'm sick of this $99.99 junk. Give me real prices. It's two bucks.)

I wrote that AMER's move today MAY be based on the GNN launch because it may well not have. That's because many of the other Internet stocks also made extremely robust advances, without launching their own GNNs. Among others, Netscape zoomed up $7 to $88 1/2, and UUNet Technologies matured $4 1/2 to $52. So it was a great day for the online medium, home to some of the great investments of 1995 (and, we expect, beyond). Sweet vindication for those of us who've bought and believed in the face of so many negative Wall Street Journal articles (except for Mossberg's Personal Technology column, which is the only piece of Dow Jones commentary that in any way prepared readers for what would wind up a five-bagger).

On any day that features a gain of greater than 1% in the NASDAQ, you can figure we had another winner or two. Applied Materials jumped $2 and KLA Instruments slithered forward another $1. Both moves represent the new strength of the semiconductor stocks, as they bounce back from getting hammered a few weeks ago. (Geez, if KLAC jumps another $2 tomorrow, we'll actually be showing a profit on that crippled filly.)

Like our portfolio and our top stock, our second best stock also hit a new high. RIDE accumulated another $5/8 gain, closing solidly at $24. The company announced a renewed distribution agreement with its Japanese partner Far East Trading Ltd., for another three years. The new exclusive agreement calls for "substantially increased minimum purchase commitments over the three-year term."

GE and Sears also gained $3/4 and $1/2 together, helping out the Fool.

It was pretty much the sort of day where you dwell on your winners. Please forgive, dear reader.

David Gardner, October 30, 1995

Today's Moves

AMER +5 1/4 AMAT +2 CHV + 1/8 GE + 3/4 GPS + 1/2 IOMG - 1/2 KLAC +1 RIDE + 5/8 S + 1/2 SNIC - 1/4

Today's Numbers

Day Month Year History FOOL +2.81% 5.13% 59.96% 77.60% S&P 500 +0.61% -0.20% 27.00% 27.24% NASDAQ +1.38% -0.37% 38.26% 44.37% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 79.50 446.55% 5/23/95 510 Ride Inc. 9.91 24.00 142.26% 5/17/95 335 Iomega Corp 15.11 22.75 50.52% 8/5/94 165 Sears 28.93 34.50 19.27% 4/20/95 155 The Gap 32.55 37.75 15.98% 8/11/95 95 GenElec 57.91 63.00 8.78% 8/24/95 130 KLA Instrm 44.71 42.75 -4.39% 8/11/95 110 Chevron 49.00 46.38 -5.36% 8/24/95 100 AppldMatl 57.52 50.75 -11.78% 12/23/94 340 SonicSol 14.48 7.88 -45.63% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 27030.00 $22084.44 5/23/95 510 Ride Inc. 5052.44 12240.00 $7187.56 5/17/95 335 Iomega Corp 5063.13 7621.25 $2558.12 8/5/94 165 Sears 4772.65 5692.50 $919.85 4/20/95 155 The Gap 5045.25 5851.25 $806.00 8/11/95 95 GenElec 5501.87 5985.00 $483.13 8/24/95130 KLA Instrm 5812.49 5557.50 -$254.99 8/11/95 110 Chevron 5389.99 5101.25 -$288.74 8/24/95 100 AppldMatl 5752.49 5075.00 -$677.49 12/23/94 340 SonicSol 4924.18 2677.50 -$2246.68 CASH $5969.86 TOTAL $88801.11