Fool Portfolio Report
Wednesday, December 20, 1995
Hey, it's not half bad having $19,000 in cash when the market gets banged up in the last hour off budgetary concerns. The Fool Portfolio fell 0.50% versus a nearly full-percentage-point loss in the S&P 500, and a generally flat day for the NAZ.
We got a great letter into the Fool HQ mailbox last night begging us not to try to explain short-term market moves, and today, we get back up on the cantaloupe crate in the center of town and reiterate that Fools don't sit around trying to reason out market-level gains and losses.
Iomega championed Foolish investing today, rising $1 3/8 to $46 1/4 on the great news that they've begun releasing Jaz drives in limited quantities to their *key partners* in the professional audio industry. Guess what? We should be getting some reviews of the product right over in our Iomega folder, from first-round users of the drive.
A brief few words about the activity of late in the Iomega folder. First, rumors come and rumors go. Word was that the Jaz wasn't going to get shipped until April 1st? Uhhh, right. Word at one point was that SyQuest had the superior drive and would turn fuller profits? Uhh, right. Word was that Foolish investors were overrating the growth before both of the last two quarterly reports? Uhh, right. And offering those opinions up certainly was and is fine. . . the problem is with the *second-hand* reporting style---the "my contacts tell me" stuff.
Our recommendation to ourselves is as always just to sit tight, wait on the next two quarters to come rolling in, review the income statement, cash-flow statement, and balance sheet when they do, dig through product reviews and technology-award ceremonies, hammer out valuations based on the facts in front of us, and generate prudent, statistically-based speculations of future growth.
Wow, that's a long recommendation!
But our recommendation to ourselves isn't one that every single investor out there is going to value dearly. That's what makes markets after all. In the face of a handful of brilliant, thoughtful, and prudent investors---the likes of Buffett, Lynch, O'Higgins---all sporting extraordinary returns over the last two decades, all sitting on early retirement money, all championing the most poorly-treated creature on the Street (the retail investor), and all narrowly focused on long-term profitability, historical market returns, fundamental research, low-commission, and low-anxiety investing. . . in the face of even these, we're still greeted with proposals in the traditional media and through into Fooldom that rumor-based, short-term, high-commission, high-anxiety, high-expense trading is IDEAL.
Witness the recent article on Iomega in the San Francisco Chronicle, which launches ever higher the idea that rumor trading, institutional-tip trading, and low-accountability are a necessity in building a model portfolio. Oh well, not everyone ought be Foolish. . . though it is a shame that those who can't afford a computer and modem are stuck with this sort of nonsense.
Just to hold *ourselves* accountable, we promise to keep a close eye on the post-holiday return rates on the Zip drive, over which the San Francisco Chronicle has expressed concern. We're not holding our breath; we're not on the edge of our seats. . . but we do agree that if we're going to propose that an idea is poorly researched and nonsensical, we darn well better report back when things have played out. We will.
Aside comment: Funny how all this non-fundamental gossiping perks up around options expirations, eh?
But all was not right in Fool-land today, even though we did double the market's performance---our eternal aim. We did still show some losses. KLA Instruments and Applied Materials got knocked back again, in the market's continued assault on the semiconductor group. No news on either issue. And good gracious, even our beloved General Electric gave back a full $2, on the news that Sulzer AG is selling its 40% stake in General Electric's Shannon Turbine Technologies. We'll get our European staffers on that pronto!
All in all, an interesting day in an interesting month. All eyes are beginning to look into the Iomega folder, and there's certainly reason to believe that it's one of the handful of most remarkable occurrences in cyberspace over the past 12 months. Great research, great investment lessons, a great company. . . and, as is a necessary annoyance as we move from Wall Street control to Main Street control of investment capital, a sizable enough cloud of nonsense in there as well.
Let everyone keep their heads about them, smile casually at the talk around options time---who said it: "When they let options in, they let gambling in, and when they let gambling in, they let in gibberish."---and let's focus on the companies, the industries, and long-term prospects for growth.
Tom Gardner, December 20, 1995
AMER - 1/8 AMAT -2 1/4 CHV + 3/8 GE -2 GPS -1 IOMG +1 3/8 KLAC -1 3/4 S - 1/2
Day Month Year History FOOL -0.50% -3.62% 66.03% 84.34% S&P 500 -0.98% 0.09% 31.94% 32.19% NASDAQ -0.11% -3.21% 36.35% 42.36% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 36.00 394.99% 5/17/95 335 Iomega Corp 15.11 46.25 206.01% 8/5/94 165 Sears 28.93 39.13 35.26% 4/20/95 155 The Gap 32.55 43.13 32.49% 8/11/95 95 GenElec 57.91 70.00 20.87% 8/11/95 110 Chevron 49.00 51.13 4.34% 8/24/95 100 AppldMatl 57.52 40.63 -29.38% 8/24/95 130 KLA Instrm 44.71 28.75 -35.70% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 24480.00 $19534.44 5/17/95 335 Iomega Corp 5063.13 15493.75 $10430.62 8/5/94 165 Sears 4772.65 6455.63 $1682.98 4/20/95 155 The Gap 5045.25 6684.38 $1639.13 8/11/95 95 GenElec 5501.87 6650.00 $1148.13 8/11/95 110 Chevron 5389.99 5623.75 $233.76 8/24/95 100 AppldMatl 5752.49 4062.50 -$1689.99 8/24/95130 KLA Instrm 5812.49 3737.50 -$2074.99 CASH $18981.96 TOTAL $92169.46