Fool Portfolio Report
Friday, December 29, 1995
Today, we tried to get as much back from recent losses as we possibly could. The Fool ran ahead 0.77%, on up-moves by our two largest holdings, and from strong Dow-stock support. The NASDAQ rose 0.95%, and the S&P 500 was up 0.29%.
America Online closed today at $37 1/4; Fools note that the stock has essentially been flat since the middle of August. The Company recently announced the arrival of its 4.5 millionth subscriber. First, compare these total subcriber numbers to those of any print publication---daily, weekly, or monthly. Then compare AMER's growth rates against those of any other media organization.
The numbers tell a story, explaining why we think the Internet is going to provide America Online with more of an opportunity than a threat. Not that there won't be competition. But would you rather be making the move from print to Web or from online service to Web? We continue to price this stock above $50 a share around the time they announce their six millionth subscriber---projected date: May 16th at 2:39:12 PM.
Iomega rose $1/2 today, and there's much talk about new deals to be signed with Kinko's and Dell Computers. Rather than getting caught up in the rumors game, how about just musing Foolishly over just how appropriate these deals would be?
Compaq assembles a competing drive: unbranded, and untested. You be their competitor: Do you spend much time looking elsewhere or do you go to the company that has manufactured and marketed the most popular disk and drive on da planet? And Kinko's. . . that's such a natural fit, we'll leave all excellent explanation of 't to the graphics gurus in the IOMG folder.
Beating the Dow. It's the foundation of Folly.
If you come into this forum, abhor all the chatter, think thousands of individual investors are being led to their slaugher, and generally hate the idea of investing Foolishly, at least think on the high-yield approach to beating the market. Today, we gladly chalked up gains of $5/8 in General Electric and $3/8 in Sears---stocks we don't have to think about for full years at a time. Sears is up over 70% in 1995 and General Electric is up over 42%. . . and up 24% for Fools who bought in last August.
If you leave this forum with nothing else, take home the idea that high-yield investing based on the Dow Industrials may well be a great way to top the market over long periods of time. With 80% of all mutual funds underperforming the market. . . oh, it hurts a Fool's brainpan to know that still a great *minority* of individual investors know that the ten highest-yielding Dow stocks have trounced the market by more than 25% per year over the last three decades.
All that with no research, no phone calls, no one else "building your financial future"---broadly diversified in high-commissions vehicles. Only simplicity, superior returns, and clownish smiles all around. And just imagine what happens when you DO start researching, aiming to beat the Dow group. . . !
YEAR-END REVIEW, PART IV
Today ought be no different than any other day. Again, well over a thousand investing notes published in the forum. Information pitched from edge of America to the next, across oceans (to Korea in the Iomega folder, for example), and occasionally no further than from one end of an office to the other. All in the name of self-sufficiency, education, amusement and profit.
But let's not shout SELF-RELIANCE too loudly going into this New Year's Eve, with bottles of champagne and perrier held high, bells jangling---if you're Foolish enough to dress the part, giant disco balls falling, Dick Clark looking a full year younger, and with thoughts of so many spectacular things to look forward to in 1996: Like a giant Fool gathering in Roy, Utah in April (David and I will be in attendance, organization is going on now).
In these leisurely moments, let's not yell out "SELF-RELIANCE!" too loudly. [Though it's a fine aim.]
Why? Well if you're like me, you've drawn off considerable expertise all year long from an outstanding group of MFs in Fooldom. Staff members dart to the latest question, spill out their expertise, write clearly, and patiently work through some straightforward and some not-so-clean financial problems with thousands of you each month. This is not entire self-sufficiency, then.
Now we don't want to go overboard; we well know who the paying customers are here; and we're well aware that many of the greatest contributions to the forum come from readers. Still, I think we ought to take a moment to step back from the Quotes & Portoflio screen, from the stock folders, from the School discussions, from the new Industry Research area, and, at some point this weekend, jot out a brief note of thanks to any Fools that have assisted in any way in 1996.
I'll just give a few quick recent examples of great staff work:
1. MF Pixy posted a note in the "Fools & Their Money" folder on the Fool's School board today about paying down credit card debts. He rightly points out: "Where else can you get 18% growth on your financial situation without any risk?" Paying down the debts is always the best first step toward consistently market-beating returns.
2. MF Swagman and his crew have completed an entire restructuring of Port Folly---no small task. The game will offer out more prizes, focus on a shorter season, prize great research, and give you the opportunity to PICK YOUR OWN STOCKS. MF Knave and MF Dwight have thrown away recent weekends building the Macro Temple to make this possible. If all things come together as planned, Port Folly will house some great investment ideas and give exposure to some of the best investors in the forum.
3. Why try to locate any single post of his in the last month? MF Taxes has been everywhere in The Fool's School---though primarily in his own Tax Strategies folder---racing about to answer hundreds of individual questions about tax issues heading into the end of the year. Let's not pigeonhole him in taxes, though. . . he's been everywhere.
4. Maybe you've already seen his post and thanked MF Boring for his work in the Applied Materials folder today. What a spectacular piece of work: solid research, written clearly for everyone, and focused on the long-term value of the company. A follow-up to that note read: "Now I see why you're a favorite around The Motley Fool world." MF Boring's auditorium event dedicated to Boring stocks and stocks to hold for a decade will be edited and posted when I get a moment's pause.
5. The MF Sweepers. The stock folders in Fooldom are all alphabetized, opened upon request via the suggestion box, and a band of Fools is committed to following up on questions, providing research, offering up more Foolish ways to value equity, and occasionally---and quite unfortunately---putting out match fires around the forum. Find a few sweepers and pat 'em on the back this weekend.
6. MF Edible has just posted his Eight Edible Stocks for the quarter---eight food and restaurant stocks that he expects will outperform the market in the first quarter of 1996. The list is inspiring and the writeups throughout his Food site in the Industry Research area (keyword: sector) teach more about this group in an entertaining fashion than I think we'd find anywhere else, on- or offline.
There are so many more MF feats to mention tonight, so many convincing reasons for us to stay up past midnight every night again this year. When we get the time, we'll be running a "Best of '95" recap in Fribbledom, with recognition of great MF and reader work in the forum over the past year. It may take awhile to cobble together. . . in the meantime, take a moment out over the next few days and drop an email or post a note thanking one or more of the MFs who have helped you with your investments.
And Sunday night, cause for mirth, is another night to support a notoriously underpaid worker: the taxi driver. We expect you've turned profits enough this year to allow for at least two rides in a yellow, white or red cab. Enjoy the weekend, and let's get ready for the year ahead.
Tom Gardner, December 29, 1995
AMER +1 AMAT -1 CHV --- GE + 5/8 GPS -1 IOMG + 1/2 KLAC --- S + 3/8
Day Month Year History FOOL +0.77% -2.37% 68.17% 86.73% S&P 500 +0.29% 1.74% 34.11% 34.37% NASDAQ +0.95% -0.67% 39.92% 46.09% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 37.25 412.18% 5/17/95 335 Iomega Corp 15.11 48.63 221.73% 8/5/94 165 Sears 28.93 39.00 34.83% 4/20/95 155 The Gap 32.55 41.75 28.26% 8/11/95 95 GenElec 57.91 71.75 23.89% 8/11/95 110 Chevron 49.00 52.13 6.38% 8/24/95 100 AppldMatl 57.52 39.25 -31.77% 8/24/95 130 KLA Instrm 44.71 26.00 -41.85% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 25330.00 $20384.44 5/17/95 335 Iomega Corp 5063.13 16289.38 $11226.25 8/5/94 165 Sears 4772.65 6435.00 $1662.35 4/20/95 155 The Gap 5045.25 6471.25 $1426.00 8/11/95 95 GenElec 5501.87 6816.25 $1314.38 8/11/95 110 Chevron 5389.99 5733.75 $343.76 8/24/95 100 AppldMatl 5752.49 3925.00 -$1827.49 8/24/95130 KLA Instrm 5812.49 3380.00 -$2432.49 CASH $18981.96 TOTAL $93362.59