Fool Portfolio Report
Thursday, January 11, 1996

Heck, how many days in a row can you lose big money?

Well, if you're into the penny stock game, or you're a state lottery junkie, or you let debt sit on your credit card, or you live a quarter mile from the dog tracks, eeek, you can lose money hour after hour, day by day.

Seems a bit hard-headed of the wee Fool to make such a claim, eh? Not until you look at the numbers.

I. A recent report in Fooldom asserted that 75% of all stocks under $5 a share eventually go bankrupt.

II. A report in Fooldom in 1995 maintained that, on average, states pay back 44 cents off every one dollar Lotto ticket. Salaries, advertising and, oh, bonuses apparently ain't cheap. Buy the tickets habitually and you commit to long-term losses of 56% on every dollar "invested."

III. Credit-card debt pulls away on average 18% annually. . . meaning that if debt sleeps on your plastic AND you're investing, you'd have to beat the market's average returns over the past sixty years by 80% per year JUST TO BREAK EVEN. Yyyouch.

IV. There has yet to be any data published about dogs, rabbits, tracks, and betting stubs in Fooldom. We'll be looking out for it in the year ahead, though we're not much expecting to hear favorable news about the compounded annual returns of greyhound racing.

Now, there are no guarantees in the stock market, but Fools are of the opinion that if you pick out financially-sturdy companies in booming industries, you probably won't lose big money too many days in a row. In that spirit, five of our eight stocks rebounded by more than $1 today, and The Fool Portfolio closed up 3.03% versus S&P growth of 0.62%.

KLA Instruments showed the greatest resiliency, bouncing back $4 1/2 to $26 1/4---a 20.7% day. Criminy, that matches Beating the Dow average *annual* returns. At that daily-growth rate, our $3,412 in KLAC would launch into over $41 million within two months. Obviously ridiculous. . . even though the old media still runs advertisements that base returns on similar projection methodology---"projection methodology" that sounds official. . . coin it!

Then again showing numbers like that seems only slightly less ridiculous than the SoundView Financial downgrade of KLA Instruments yesterday from "Buy" to "Short-Term Hold." Uhhh, short-term hold. . . what exactly does that mean to the linguists among us? Apparently, Wall Street defined "short-term" there in hours, as it rode KLAC up 20% a day later.

America Online raced forward into market close, finishing the day up $1 3/4 at $35 1/8. Applied Materials also cruised up $1 3/4. And Iomega closed out our technology parade, up $1 3/8 to $43. We're hungry for AMAT to get a few more quarters of earnings under their belt. . . it's no fun watching our investment lose us $2,152 without much news---beyond Street downgrades and, uhh, sideway-grades (short-term hold?). But ever looking at the growth in our overall savings, in our entire portfolio, Fools note that America Online and Iomega have turned us over $28,000 in profit. We're waiting on AMAT to join that group.

As the money flowed back into technology today it did not, thankfully, pour away from our retailing positions. The Gap (NYSE:GPS) edged up $1 1/4 to $46 1/2 and Sears grew another half-point to $42 1/2. We're not talking about Chevron and General Electric, today. We only like to talk about da winnahs.

And so we close out another day of long-term, capital-growth, business-management investing---an approach that prizes research over speculation, objectivity over mania, activity over reactivity, self-reliance over outsourcing, and continual improvement over continual complaint. No, we can't control everything that gets posted in da forum; no, we can't speak for the Wise.

But do, just for fun, keep an eye open as you click through our message folders, and pick out the notes that appear to prize over all else: Speculation, mania, reaction, dependence and complaint. If Wisdom in investment there ever were, it were these.

Thankfully, they're not much in evidence among thousands of Fools.

Editor's note: He/She who offers up to our Talk with the Editors folder the best translation of what a "SHORT-TERM HOLD" recommendation recommends, to that Fool goes two free hours. The Talk Editors board can be found behind our Message Board button on our mainscreen.

We'll be making the judgement call in-house! "Best" is defined as educational, entertaining and potentially profitable.

Tom Gardner, January 11, 1996

Today's Moves

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

Today's Numbers

NOTE: Due to inclement weather, this area is current through 01/10/1996 Day Month Year History FOOL +3.03% -2.57% -2.57% 81.93% S&P 500 +0.62% -2.23% -2.23% 31.37% NASDAQ +2.07% -3.94% -3.94% 40.33% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 35.13 382.96% 5/17/95 335 Iomega Corp 15.11 43.00 184.51% 8/5/94 165 Sears 28.93 42.50 46.93% 4/20/95 155 The Gap 32.55 46.50 42.86% 8/11/95 95 GenElec 57.91 70.25 21.30% 8/11/95 110 Chevron 49.00 52.63 7.40% 8/24/95 100 AppldMatl 57.52 36.00 -37.42% 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 23885.00 $18939.44 5/17/95 335 Iomega Corp 5063.13 14405.00 $9341.87 8/5/94 165 Sears 4772.65 7012.50 $2239.85 4/20/95 155 The Gap 5045.25 7207.50 $2162.25 8/11/95 95 GenElec 5501.87 6673.75 $1171.88 8/11/95 110 Chevron 5389.99 5788.75 $398.76 8/24/95 100 AppldMatl 5752.49 3600.00 -$2152.49 8/24/95130 KLA Instrm 5812.49 3412.50 -$2399.99 CASH $18981.96 TOTAL $90966.96