Fool Portfolio Report
Wednesday, December 6, 1995
We were hoping for 100% by the end of this month, but with one big move today from a single one of our stocks, Foolishness made history.
Iomega, which yesterday became our second three-bagger, today rose another $5 5/8 on NO NEWS to crash through its all-time high, closing at a bid of $53 3/8.
This move, on a day that otherwise featured little action, was enough to shoot the Fool Portfolio to an historic close of 102.89%.
And on the day you might expect us to brag more than ever before, we ain't gonna. Because, the fact is we've been lucky.
That's right. In any year in which you've outperformed the S&P 500 by 47 percentage points---which is what we've done in calendar 1995---you've been the partial beneficiary of chance. We could invest another 50 years and not equal again what we've done this year. We've had three stocks in the past year more than double, two of them more than tripling. If we had bought another stock instead of Iomega, or held onto Boston Technology a month longer, or held a couple of shorts through the summer, you can be sure we wouldn't be up this much.
(Obviously, if we hadn't bought our semiconductor stocks, never shorted Paychex, or dumped Sonic back in June, we'd be up even more, but that's not the main point, tonight.)
In his book "One Up On Wall Street," Peter Lynch urges readers not to take praise OR blame for the short-term movements of their stocks. Why? Because it's simply out of our control. Just because your Internet stock ran up to a triple, or your casino stock got sliced in half, doesn't mean you should take full responsibility for either move. (Heck, the overall market may be more responsible for your individual stock's move than the company itself!) Over a short-term period, NONE of us can consistently know where anything we hold is going. . . let alone our overall portfolio. Would anybody have BELIEVED that Netscape stock, for example, slated to come public at $14 initially, would be over $160 just a few months later with a market capitalization of $6 billion? I don't think so. Just because somebody did have the guts to buy NSCP at $71 on its first day, doesn't mean that person exhibited pure skill. There's a lot of luck in any big stock move, including the timing of one's buy or sell.
So I'm here to tell you tonight that we're kind of like the bloke who bought Netscape at $71. We're now up over 100%, but things could have played out differently. Fortunately, they haven't, and we've gotten great payoffs for a few good decisions. But we're not THIS good, and in fact, NOBODY---not even Warren Buffett---is this good. There will be years where we'll underperform the market, and during those years we'll be saying the same thing we are now. Roughly:
"One year does not an investment career make. Whether we're down or up, don't just look at our last 12 months and judge us for them. Look at the quality of our thinking, the quality of our work, and ask yourself if it's useful to you. But don't look at our batting average in the past few games and use that as a peremptory measure."
That said, this has been one of the great runs of our lives, and at the heart of it all, we're absolutely delighted to have shared it with so many people who have benefited in various ways from our work. If you're one of them, we simply ask you to help others out as we have helped you. And you know, of course, that you have greatly helped us. Our readers were the first ones to turn us on to Iomega, and have provided more and better information for this Fool Portfolio stock than ANYONE can get anywhere on any high-technology stock I know of.
Let's all keep it up in 1996, and continue to reform the financial world. . . continue to carry the Fool banner over any number of battlefields strewn with the wreckage of Wisdom.
---David Gardner, December 6, 1995
AMER + 1/8 AMAT -1 1/4 CHV + 1/8 GE +1 1/4 GPS --- IOMG +5 5/8 KLAC - 1/4 S ---
Day Month Year History FOOL +1.95% 6.08% 82.73% 102.89% S&P 500 +0.41% 2.45% 35.04% 35.29% NASDAQ -0.39% 0.24% 41.19% 47.42% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 44.63 513.58% 5/17/95 335 Iomega Corp 15.11 53.38 253.15% 4/20/95 155 The Gap 32.55 44.00 35.18% 8/5/94 165 Sears 28.93 38.88 34.40% 8/11/95 95 GenElec 57.91 71.25 23.03% 8/11/95 110 Chevron 49.00 50.75 3.57% 8/24/95 100 AppldMatl 57.52 45.25 -21.34% 8/24/95 130 KLA Instrm 44.71 31.75 -28.99% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 30345.00 $25399.44 5/17/95 335 Iomega Corp 5063.13 17880.63 $12817.50 4/20/95 155 The Gap 5045.25 6820.00 $1774.75 8/5/94 165 Sears 4772.65 6414.38 $1641.73 8/11/95 95 GenElec 5501.87 6768.75 $1266.88 8/11/95 110 Chevron 5389.99 5582.50 $192.51 8/24/95 100 AppldMatl 5752.49 4525.00 -$1227.49 8/24/95130 KLA Instrm 5812.49 4127.50 -$1684.99 CASH $18981.46 TOTAL $101445.21