Fool Portfolio Report
Tuesday, January 2, 1996
It's great to be a stock-market investor, ain't it? While many people are telling us 1996 will bomb, and others think equity investing is only for two-bit gamblers and "professionals," we all together have the pleasure of taking in another great day on the market. It was, unofficially, the second best day ever for the Fool Portfolio, up a stellar 4.16%.
What a way to kick off the New Year!
Six of our eight stocks rose a point or more, including four which rose at least two points, while the general market indices also did well, posting roughly a three-quarter of a percent gain. We're now off to the races in another new year, as the Fool Portfolio begins its third year on AOL (second full year overall). Let's see where we are, now:
S&P 500: 0.19%
S&P 500: 34.37%
S&P 500: 0.78%
Our stated goal, to outperform the S&P 500 by 10 percentage points or more, is off to a fine start in 1996.
So what were the reasons behind the move? Well, for one thing it was "Beating the Dow Day." What happens the first trading day of every year is that a whole mess of mutual funds---using the Dow Dividend Approach (which they charge their poor investors MANAGEMENT FEES to execute)---buy the highest yielding Dow stocks, sending them up for inevitably solid gains. In our case, GE rose $1 5/8 to a new high of $73 3/8, Sears jumped $1 3/8 to $40 3/8 ($3/8 short of its new high), and Chevron (the PPP, officially) gained $5/8 to $52 3/4. That's inside a point of its 52-week high. We thank the funds and unit investment trusts for very mechanically pumping up the values of our blue-chip heavyweights. We're glad we made our switch at the end of the summer.
But the Dow stocks alone cannot propel this portfolio. We remain, as we will always remain, aggressive growth investors looking mainly to small stocks for our biggest gains. As all our regular readers know, this entails taking on above-average risk for above-average reward; we wouldn't have it any other way, because you don't get something for nothing in investing, or in Life.
And so the twin gains of $2 3/4 in our two best stocks, America Online and Iomega, really brought home the bacon this rainy day in Virginia. AMER was helped by a nice plug in Barron's over the weekend from fund manager Michael DiCarlo. Iomega was just, well, Iomega.
Tuesday featured a few nice bits of other news about the Fool Port stocks. Applied Materials, ahead $2 to a bid of $41 1/4, was on the "Single Best Investment Idea" list from Needham & Co. (Don't ask us why there would actually be ELEVEN best ideas on that list, but there were. Needham's phone number, for any interested in tracking down and reporting upon this bizarre anomaly, is 617-457-0900.) No other details were forthcoming, but bad ol' Applied Materials was up there with other companies like Genzyme, Synopsys, and Sunglass Hut.
Then there was a Merrill Lynch upgrade of Sears from ABOVE AVERAGE to BUY, citing strong holiday sales. And in fact Dow Jones was prompted to do a story about retail stocks in general, speculating that 1996 might actually be a good bounceback year for this beleaguered sector, following some expected consolidation in store numbers. That is, companies like the Gap (up $2 5/8 to $44 3/8) might close down their unprofitable stores and therefore boost profits. Anyone think this trend might continue as electronic shopping makes further and further inroads, eating into on-site shopping?
Blah, blah, blah. . . we'll see. One thing you can be sure of: we'll be hear to bring it to you. We look forward to our best year ever in 1996. . . Fooldom is gonna be a blast.
Let me close by noting that this simply isn't the sort of report I like writing. All this up, up, up stuff sometimes reads like rah-rah-rah to me. But we couldn't manage to get any of our stocks to go down today, so I don't have the pleasure of dwelling on our inadequacies. I'm confident that tomorrow we will have some drops to make jokes about, but suffice to say that until then, we'll all have to put up with having just made money.
---David Gardner (happy to be back home), January 2, 199SIX!
AMER +2 3/4 AMAT +2 CHV + 5/8 GE +1 5/8 GPS +2 5/8 IOMG +2 3/4 KLAC + 1/4 S +1 3/8
Day Month Year History FOOL +4.16% 4.16% 4.16% 94.49% S&P 500 +0.78% 0.78% 0.78% 35.41% NASDAQ +0.62% 0.62% 0.62% 47.00% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 40.00 449.99% 5/17/95 335 Iomega Corp 15.11 51.38 239.92% 8/5/94 165 Sears 28.93 40.38 39.58% 4/20/95 155 The Gap 32.55 44.38 36.33% 8/11/95 95 GenElec 57.91 73.38 26.70% 8/11/95 110 Chevron 49.00 52.75 7.65% 8/24/95 100 AppldMatl 57.52 41.25 -28.29% 8/24/95 130 KLA Instrm 44.71 26.25 -41.29% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 27200.00 $22254.44 5/17/95 335 Iomega Corp 5063.13 17210.63 $12147.50 8/5/94 165 Sears 4772.65 6661.88 $1889.23 4/20/95 155 The Gap 5045.25 6878.13 $1832.88 8/11/95 95 GenElec 5501.87 6970.63 $1468.76 8/11/95 110 Chevron 5389.99 5802.50 $412.51 8/24/95 100 AppldMatl 5752.49 4125.00 -$1627.49 8/24/95130 KLA Instrm 5812.49 3412.50 -$2399.99 CASH $18981.96 TOTAL $97243.21