Fool Portfolio Report
Monday, January 15, 1996
Jan. 15- (FOOL GLOBAL WIRE) by David Gardner
(For immediate release)
Alexandria VA---For those in the greater New York area, Tom Gardner will appear on radio station WEBD 1050-AM tomorrow night at 6:45 PM ET. The subject? The Dow Dividend Approach. Catch Tom's Foolish schmooze with radio fame tomorrow night, and come back to the forum and flame him!
For those who've asked about our "Motley Fool Investment Guide" book tour, you can now get full information about it via a new listbox entry created JUST for that purpose on our mainscreen. Check it out!
Well, ho hum, another January day and another bashing of technology issues. Just to give you some sense of perspective, take a great company like Micron Technology and look what's happened. I actually purchased this stock in my own portfolio at $58 in August. One month later, genius that I am, I watched it go to $94, up a cool 60% in 30 days. Today, the stock dropped another couple points to $30 7/8. . . THIRTY AND SEVEN-EIGHTHS! OK, OK, it was probably a bit overvalued at $94. . . no doubt about it. But here it's just been the most actively traded stock on the NYSE again today, and it's less than one-third what it was three months ago.
You know what? I'm holding this one for now (this is NOT a plug---just part of my Investing for Growth portfolio). And I feel comfortable holding it. I'm not ADDING to it, mind you, despite my faith in the company and its stock price being 46% lower than my buy-in price. That's because our regular readers will know well by now that Fools don't add to their losers. No, I lead off today's Fool Recap with this example because it shows the wild whims that Wall Street will follow. $58 one month, $94 the next, $30 a quarter later. Have Micron's SALES moved that exaggeratedly over the same period? No, they've risen. Are their prospects for future success less than one third of what they were just three months ago? I don't think so.
But the stock price is off 67%, and that's why buy-and-hold investors will always win. Wait. . . what?! Er. . . "win"? Why? Because very few people could have predicted the short-term move to $94 OR the short-term drop to $30. And very few people will accurately predict where this stock will be in another quarter. And of those few who DO predict one of these situations correctly, chances are very good that they will NOT call the other two situations correctly.
In other words, my own travels of this wide world have yet to turn up ANYONE who can call short-term market movements. Those who "trade" with the idea they can do this will therefore ALWAYS lose to those who just buy and hold. Because regardless of where technology stocks closed today, or next week , or next quarter, I can say with virtual surety that they're headed up, and up, and more up over the long term. To borrow a line from our "Motley Fool Investment Guide" (it's now out!): "If the S&P 500 isn't up at least 10% compounded annually from today's perch, take the Fools by the arm 40 years from now on Spacestation "Harold" and demand from us a free Tang spritzer."
OK, so it's time to lament what happened today. What happened today is that our portfolio had its second worst day ever. The Fool Portfolio dropped 5.39% in value, narrowly beating its 5.55% drop on December 18th. . . less than a month ago. "Geez!" you're thinking. "Two one-day drops of more than 5 percentage points within a month of each other? That's volatile!" You betcha. We would of course prefer volatile moves upwards, of which we've had many over the past 18 months, but with volatility to the upside comes some volatility to the downside. Today was an obvious lesson.
As you'll read in our Evening News (accessible by our mainscreen listbox entry entitled "The Motley Fool Index"), you'll see that technology stocks headed down sharply again today, following a wave of more analyst downgrades of technology issues. Semiconductor stocks like Micron got chopped, and the NASDAQ followed, itself down a not inconsiderable 2%+. Our Fool technology losses were strong and across the boards: America Online down $3 7/8, Applied Materials down $3 7/8, Iomega off $4 3/8, and KLA Instruments dropping $2 1/2. And we read in a wire story that Chris Callies, technical analyst at Brown Brothers Harriman, says there's still too much "complacency" about tech stocks. "Short sellers had to keep covering on the way up and now people are trying to pick the bottom and every time they try they get hurt,'' Callies said. That may be.
But as we close our report tonight, we will simply note that we ain't investing for today, or tomorrow, or next week. We're looking past well past 2000 with the Fool Portfolio, and we look to buy and hold. We're not scared of high volatility, either, since in the long run it plays to all of our Foolish benefit. Let the Wise and their minions be terrified of short-term market moves; they'll always tend to sell out near the bottom, and then be out of the market when it recovers. (The "crash" of '87 is one recent eloquent reminder.) Foolish investing is not for the faint-hearted, not for those who are investing in small-cap growth stocks, and we certainly never counsel that anyone invest in anything they don't understand and aren't comfortable with. But for those who are, whom we think of as Fools, the rewards will be there at the end of the rainbow. Fool on!
- David Gardner, January 15, 1996
AMER -3 7/8 AMAT -3 7/8 CHV --- GE - 1/8 GPS -1 IOMG -4 3/8 KLAC -2 1/2 S ---
Today's Numbers
Day Month Year History FOOL -5.39% -6.47% -6.47% 74.64% S&P 500 -0.33% -2.62% -2.62% 30.85% NASDAQ -1.95% -6.04% -6.04% 37.27% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 32.88 352.02% 5/17/95 335 Iomega Corp 15.11 39.38 160.52% 8/5/94 165 Sears 28.93 43.00 48.66% 4/20/95 155 The Gap 32.55 45.38 39.40% 8/11/95 95 GenElec 57.91 70.00 20.87% 8/11/95 110 Chevron 49.00 52.63 7.41% 8/24/95 100 AppldMatl 57.52 31.38 -45.46% 8/24/95 130 KLA Instrm 44.71 23.75 -46.88% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 22355.00 $17409.44 5/17/95 335 Iomega Corp 5063.13 13190.63 $8127.50 8/5/94 165 Sears 4772.65 7095.00 $2322.35 4/20/95 155 The Gap 5045.25 7033.13 $1987.88 8/11/95 95 GenElec 5501.87 6650.00 $1148.13 8/11/95 110 Chevron 5389.99 5789.30 $399.31 8/24/95 100 AppldMatl 5752.49 3137.50 -$2614.99 8/24/95130 KLA Instrm 5812.49 3087.50 -$2724.99 CASH $18981.96 TOTAL $87320.01
