Fool Portfolio Report
Tuesday, January 9, 1996

The Motley Fool Portfolio suffered a significant setback Tuesday, following more technology bashing. The NASDAQ loss of 3.25%, the worst since a bad day last August, was probably most directly attributable to the comments of Soundview Financial analyst Rick Whittington, who downgraded a bunch of semiconductor companies even further to SELL. One of them was our own Applied Materials, which lost $3 5/8 to $33 1/2. KLA Instruments had an even worse day, one day after I opined that it might have bottomed, right here in this hallowed report. KLAC lost $3 1/2 to $22. And most anything having to do with technology got nailed.

My review of the matter reveals that we've now watched Mr. Whittington change his mind from Strong Buy to Buy to Hold to Sell in the matter of a few months. No word yet on whether or not he has devised a rating lower than SELL, but our crack research staff has been doing some investigation into the matter, and has come up with some potential new ratings. The list includes: "MORIBUND," "CONSTANT SELL," "NEVER BUY IT AGAIN," and "OK, SHORT THE THING." Were Whittington to use any of these new ratings to downgrade semiconductor stocks further, Fool Headquarters would expect a similar, additional 20% decline in shares of Applied Materials, KLA Instruments, and a host of other non-Fool holdings.

OK, it's not like much else did anything right either. Oh, we did have one stock that caught an updraft. Sears, good ol' Sears, up $3/4 to $42 1/8. Other than that, though, a glance to the right tells a tale of woe.

The traditional "January effect" hasn't been happening thus far. You may know of it. Small stocks have traditionally outperformed big stocks in January, making January the best performing month for the stock market, historically. What we've seen instead is a decline of more than 5% in five and a half trading days. The Fool Portfolio has managed to outperform the NASDAQ so far in 1996, but underperform the general market. Let's take a look at our portfolio's allocation:

50% in NASDAQ technology

30% in NYSE heavyweights

20% in cash

Given this, our performance is pretty much what you'd expect. We have 50% of our bucks out of technology stocks, which explains why we've bested the NASDAQ. But, we do have 50% of our money IN technology stocks, which pretty well explains why we're losing to the S&P 500. Our Dow stocks have been extremely resilient, even on a day today in which the Dow dropped almost 70 points.

It's too early at this point to figure out what the tone and "themes" will be for 1996's stock markets. More Internet? Is biotechnology going to rule the roost? Or are dull stocks like Sears going to be where your money is best invested?

The Fool Portfolio never worries about guessing which. The point of investing Foolishly is to keep your money spread around into a bunch of good investing situations in DIVERSE industries. That way, when semiconductor stocks all get crushed 10%-20% in one day, even though you owned a few you didn't feel it too badly.

With Motorola reporting bad earnings after market close today, it'll be interesting to see what happens to the NASDAQ tomorrow. As always, your Fools will be there reporting on it all.

---David Gardner, January 9, 1996

Today's Moves

AMER -2 1/4
AMAT -3 5/8
CHV - 1/2
GE -1 1/4
GPS - 1/2
IOMG -3 3/8
KLAC -3 1/2
S + 3/4

Today's Numbers

Day Month Year History FOOL +0.10% 1.18% 1.18% 88.93% S&P 500 +0.28% 0.41% 0.41% 34.92% NASDAQ -0.11% -1.88% -1.88% 43.35% 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 48.13 218.42% 8/5/94 165 Sears 28.93 41.38 43.04% 4/20/95 155 The Gap 32.55 45.88 40.94% 8/11/95 95 GenElec 57.91 73.25 26.48% 8/11/95 110 Chevron 49.00 55.50 13.27% 8/24/95 100 AppldMatl 57.52 37.13 -35.46% 8/24/95 130 KLA Instrm 44.71 25.50 -42.97% 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 16121.88 $11058.75 4/20/95 155 The Gap 5045.25 7110.63 $2065.38 8/5/94 165 Sears 4772.65 6826.88 $2054.23 8/11/95 95 GenElec 5501.87 6958.75 $1456.88 8/11/95 110 Chevron 5389.99 6105.00 $715.01 8/24/95 100 AppldMatl 5752.49 3712.50 -$2039.99 8/24/95130 KLA Instrm 5812.49 3315.00 -$2497.49 CASH $18981.96 TOTAL $94462.59