Fool Portfolio Report
Friday, December 1, 1995

If it was Foolish, it probably dropped a point or more Friday, as our portfolio suffered one of its poorer days of 1995. The Fool Port opened up the month of December with a stirring 2.10% decline, versus relatively flat performances from its fellow index competitors.

For the week, we still gained 2.05%, vs. weekly gains of 1.17% and 2.44% for the S&P 500 and NASDAQ, respectively.

For the month of November, the Fool Portfolio took the blue ribbon, up 6.80%, vs. gains of 4.10% and 2.24% for the S&P 500 and NASDAQ. That was the third straight month in which the FOOL outperformed BOTH of its index archrivals.

The week was notable for several reasons, including our achieving in excess of a 90% historic return for the first time, a 2-for-1 America Online split, and a Thursday trade, in which we cut loose our third biggest historic winner, Ride Incorporated. Late Thursday afternoon, we said goodbye to RIDE at $21 1/8 for a six-month gain of 113%. Today, RIDE closed at $22 1/8, a point above that level, showing us once again what geniuses we are.

Then again, we don't really pay much near-term attention to our sells. We don't get hung up when our latest discard jumps a point the next day, and neither do we celebrate ourselves when something that we've sent off to pasture drops a point. In fact, most investors pay way too much attention to the near-term moves of stocks they sell, and NOT ENOUGH attention to the stocks a few months after they've sold. This is human nature. . . we all tend to concern ourselves with the here and now, and don't have the patience and discipline to go back months later and look at the situation with a more educated eye in a more meaningful context.

In fact, this gives us a good opportunity to mention that in our January book coming out from Simon & Schuster, "The Motley Fool Investment Guide," we write a whole chapter on selling strategies. The book introduces our new game, "Don't Look NOW," which helps investors to analyze their stock sales well after they've made them. As the book is just a month away from debuting, I won't steal its fire yet, but suffice to say that we've come up with a Foolish new technique for tracking one's cashouts that we think you'll find terribly helpful for judging your own decision-making.

OK, with one stock up Friday and seven stocks down, it will strike the reader as no surprise that we dropped 2%. Two of our worst moves came once again from our two worst stocks, KLA Instruments and Applied Materials, off $2 1/4 and $1 1/2, respectively. These investments remain good lessons to us all. The lessons are obvious, but bear repeating: in the short term, the stocks of even the best companies can suffer significant declines in the face of a bad market. Now, the market may not appear to be that bad, as the Dow Jones average hits new highs every day. BUT, for semiconductor companies it has indeed been a bad market since September, and many of these stocks (like our unfortunate AMAT and KLAC) are off some 30%.

But we're holding stock in companies that will continue to succeed wildly over the next few years, so you won't find a drop of sweat on our high (and receding) Foolish brows.

Another dog at the track today was the morose Gap Inc., which continued its descent into darkness with another multi-point drop, this time down $2 1/4 to bid $42 3/4. The Gap had closed at a new high $50 3/4 Tuesday. But then came a lower-than-expected same-store sales announcement and a flurry of brokerage downgrades at the end of the week, sinking it 15%. More of the same today, as Montgomery Securities dropped the stock from Buy to Hold. Ah, but at the end of the day, Goldman Sachs stepped in and UPgraded the stock from Hold to Outperform, inducing what we expect will be an improvement in GPS value next week. Stay tuned.

Final doggy moves came from America Online, Iomega, and Sears, ALL off a point or more.

Blech. But hey, it's the weekend. And speaking of the weekend, I wanted to close by mentioning a new addition from one of our forums. If you enjoy movies, you should check out our Movies area on Fridays, keyword FOLLYWOOD. Before you go out to the movies this weekend or any weekend, you can find our updated and revised Insta-Polls, displaying full Fool audience ratings on ALL movies that are currently out. For example, you may be interested to know that the single best-rated flick in FOLLYWOOD is currently "Toy Story" (whose computer-animation production company, Pixar, came public this week). But I always check our Insta-Poll before going to any flick; with limited time to see movies these days, I make sure I go to the best ones. And best of all, our Fool audience does a much better job identifying the best flicks than the often-erratic critics!

Fool on.

---David Gardner, December 1, 1995

Today's Moves

AMAT -1 1/2
CHV - 1/8
GE +1 1/4
GPS -2 1/4
IOMG -1 3/8
KLAC -2 1/4
S -1 1/8

Today's Numbers

Day Month Year History FOOL -2.10% -2.10% 68.63% 87.23% S&P 500 +0.27% 0.27% 32.16% 32.41% NASDAQ -0.37% -0.37% 40.34% 46.53% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 39.88 448.27% 5/17/95 335 Iomega Corp 15.11 41.13 172.10% 8/5/94 165 Sears 28.93 38.25 32.24% 4/20/95 155 The Gap 32.55 42.75 31.34% 8/11/95 95 GenElec 57.91 68.38 18.06% 8/11/95 110 Chevron 49.00 49.25 0.51% 8/24/95 100 AppldMatl 57.52 47.00 -18.30% 8/24/95 130 KLA Instrm 44.71 32.25 -27.87% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 27115.00 $22169.44 5/17/95 335 Iomega Corp 5063.13 13776.88 $8713.75 4/20/95 155 The Gap 5045.25 6626.25 $1581.00 8/11/95 95 GenElec 5501.87 6495.63 $993.76 8/11/95 110 Chevron 5389.99 5417.50 $27.51 8/24/95 100 AppldMatl 5752.49 4700.00 -$1052.49 8/24/95130 KLA Instrm 5812.49 4192.50 -$1619.99 8/5/94 165 Sears 4772.65 6311.25 $1538.60 CASH $18981.46 TOTAL $93616.46