Fool Portfolio Report
Tuesday, November 7, 1995

You know, JUST when you think your semiconductor stocks will return to profitability and never look back, both Applied Materials and KLA Instruments crashed and died, Tuesday.

It wasn't as if you weren't warned. In my augustly Foolish words yesterday, you may recall the following pronouncement: "MAKE MONEY NOW! SHORT THE ENTIRE FOOL PORTFOLIO!!!" Had you done so, you would've made 2.45% for your one-day return. I've already received a few e-mails from readers thanking me so much for my prediction, which they credit for having doused their own portfolios on this rainy Tuesday (in the Nation's Capital, anyway).

It's not every day you're going to find someone THAT good at calling the market. Heck, I think it behooves me to trot out the Compounding Clown at this point, and annualize that figure. If my brilliant short-term predictions continue to return 2.45% a day, I'll manage to rack up---very simply---an annual return of 42,461%. You heard it here first! You wanna get rich? Tune in every single night right here for my Daytrading Hotline Pick of the Day. That's right, ladies, gents, and Fools, for just $4.95 for your first minute, and another (what the heck) 7 bucks every minute thereafter, you can probably enjoy comparable returns. Turn a single dollar bill into over $42,000! Where else, but Fooldom?

Returning to earth, it was indeed a bummer of a trading session. An analyst from Soundview Financial downgraded the entire semiconductor sector, on his belief that the chip supply is up and demand is down. (The old, old story.) This threw our two semi stocks for a 7-yard loss, putting us fairly deep into our own territory, looking at third down and long. But as usual, we have no intention of punting.

Interestingly, of all the chip stocks that this chap downgraded, the only long-term buy rating he kept was for Applied Materials. We feel the same way, of course, even if we are down 15% in two months.

America Online got pasted $3 3/4 today, but the real story came after the bell, when AMER announced its earnings. THIS JUST IN! Sales for the first quarter for fiscal 1996 (a 6/96 fiscal year, as you'll remember) were quite awesome, coming in at $197.9 million, vs. $56.9 million for the like quarter the year before. . . a gain of 248%. Operating earnings were 16 cents per share, vs. 8 cents per share in operating earnings for September of last year. (We're ignoring some more extraordinary charges, as once again merger-related expenses played havoc with standard accounting.) Analysts had called for earnings of 15 cents per share, so the company beat estimates.

Further, America Online announced it had hit the 4 million subscriber mark, meaning that in the past year alone, AMER has grown from 1 million to 4 million subscribers. Quite amazing!

Anyway, my take on all this remains the same as I reported last week. Essentially, the company has done exactly what the market expected, which usually means it'll drop a few points over the next couple of days. It is, as I've written before, a case of "buy on the rumor, sell on the news." AMER last week ran up more than $12, responding to a few exciting announcements and expectations for estimate-beating earnings. Voila! Once the numbers finally show, they often cause a selloff.

Now, I put NO stock (pun intended) in my or anyone else's short-term opinions, so please don't confuse this mere OPINION with FACT. Who knows what it'll do? But ever since I proved I could put up 42,000% annual returns, I'm a new man. The stock goes down tomorrow.

As usual, for the latest in information and opinion about AMER, head right on over to our America Online stock folder in our Stock Boards. It's one of my personal favorites, and it will be a-buzzin' tonight with investor reaction. For those newcomers who don't know how to get there, just click the Message Boards button on our main screen, then click the Stock Boards button, then click List Categories and choose the Am-Ao option. ALSO, to download and review the company's financial statements, just type keyword PRESS.

Finally, I'd be remiss if I didn't mention that we had one good stock today. General Electric rose $3/4 . There, I haven't been remiss.

See you at our RIDE auditorium event!

David Gardner, November 7, 1995

Today's Moves

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

Today's Numbers

Day Month Year History FOOL -2.54% 2.45% 65.24% 83.47% S&P 500 -0.36% 0.83% 27.66% 27.91% NASDAQ -1.72% 0.75% 38.82% 44.95% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 82.00 463.74% 5/23/95 510 Ride Inc. 9.91 24.38 146.04% 5/17/95 335 Iomega Corp 15.11 25.50 68.72% 4/20/95 155 The Gap 32.55 42.88 31.72% 8/5/94 165 Sears 28.93 36.75 27.05% 8/11/95 95 GenElec 57.91 63.50 9.64% 8/11/95 110 Chevron 49.00 48.00 -2.04% 8/24/95 130 KLA Instrm 44.71 40.50 -9.42% 8/24/95 100 AppldMatl 57.52 48.63 -15.47% 12/23/94 340 SonicSol 14.48 8.13 -43.90% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 27880.00 $22934.44 5/23/95 510 Ride Inc. 5052.44 12431.25 $7378.81 5/17/95 335 Iomega Corp 5063.13 8542.50 $3479.37 4/20/95 155 The Gap 5045.25 6645.63 $1600.38 8/5/94 165 Sears 4772.65 6063.75 $1291.10 8/11/95 95 GenElec 5501.87 6032.50 $530.63 8/11/95 110 Chevron 5389.99 5280.00 -$109.99 8/24/95130 KLA Instrm 5812.49 5265.00 -$547.49 8/24/95 100 AppldMatl 5752.49 4862.50 -$889.99 12/23/94 340 SonicSol 4924.18 2762.50 -$2161.68 CASH $5969.86 TOTAL $91735.49