Fool Portfolio Report
Wednesday, February 21, 1996
(FOOL GLOBAL WIRE)
By Keith Pelczarski (MF Czar)
ALEXANDRIA, Va., Feb. 21 -- Amid all the ruckus in the media today about three-way Republican rows and the Greenspan interpretation contest (which may become an Olympic event this year in Atlanta), a tiny, but very bright beacon appeared to steer Fools clear of the rocky shoals of madness. It wasn't Iomega's new Ditto commercial, and it certainly wasn't The Center for Science in the Public Interest's latest assault on fat.
Jeanne Calment, reported to be the oldest woman in the world, turned 121 today -- one hundred and twenty-one. She recently recorded a CD entitled "Mistress of Time," which is probably a lot more informative than OJ's new video.
Even without listening to Jeanne's CD, we can learn some lessons about long-term perspective. She is, after all, older than the Statue of Liberty, and hasn't even taken on a green tint (more green-ish). What would you do if you lived more than a century, other than stand around on Ellis Island?
Seriously, though, what would you do financially if you lived a century or more? The miracles of modern medicine are making that sort of lifespan in reach for more and more people, so you'd better give it some thought.
Many retirees and soon-to-be retirees are scared of the stock market, because they believe there's too much risk. To me, there's nothing more tragic than a 55-year old person who has all their retirement money in bonds (except maybe a 55-year old who's short AMER).
You see, if you're 55, you could still live another 55 years and you would still have 11 years to go before you reached where Jeanne is today. Do you think retirement savings will grow fast enough to keep pace with taxes, inflation, and your spending if you're fully invested in fixed income? If you do, you either have a lot saved for retirement, or you're very deluded.
I don't know what Jeanne has for savings. She doesn't necessarily need much -- France's socialist structure probably takes care of her pretty well, and even if they didn't, the folks at the Guinness Book would probably put her up for a while. You, on the other hand, can't count on the government or the world record mavens to keep you in Geritol and bingo cards. You have to take care of yourself.
As mentioned in the very first issue of Ye Olde Printed Foole, "The least-mentioned, biggest risk of all is not taking enough risk." This refrain was also heard recently in "The Motley Fool Investment Guide" (remember, only 39 shopping days left until April Fool's Day).
Blatant plugs aside, the possibility does exist that you could outlive your money if you don't keep money in equities. That's not to say that granny should dump all her muni bonds and go long IOMG, just that with so many gigantic, well-managed companies out there to invest in, why limit yourself to guaranteed mediocre returns?
Sure, retirees should keep some money in bonds or treasuries tucked away in case of a market collapse. It could happen.
However, if you keep your money entirely in fixed income vehicles, you're not just running the risk of getting pitiful returns on your money. It will happen.
So, my Foolish friends, remember that security is as dangerous as greed. Buy solid companies, with bright futures, using money you can afford to keep in the market for five years. Five years may seem like a long time to you, but it's nothing compared to one hundred and twenty-one.
With all that talk of long term perspective, the thought of a recap of one day's worth of activity seems rather insipid. But rather than disappoint you faithful readers, I'll give you today's rundown, as tepid as the performance was.
On a strong day for the market, which saw the four major U.S. indices up over one percent on the day, the Fool Portfolio posted a mere 0.30% gain. The mood here at Fool HQ is more somber with today's gain (which underperformed the market) than it was with yesterday's loss (which outperformed the market). When our malaise gets to be too much, though, we just remind ourselves that we're Fools, and one day does not an historical return make.
Our individual issues were fairly quiet today, with only KLAC and S posting any items of serious note. KLAC released news yesterday of a new integrated system, which combines three steps in the chip fabrication process: inspection, defect classification, and defect data analysis. The best part about this system is that it can provide information regarding the nature and causes of defects -- thus the moniker, "Intelligent Line Monitor System." This is a "smart" move for KLAC, and today their stock responded by gaining $1 1/4 on the bid side, to close at $29 1/4.
Speaking of smart moves, Sears turned a rumored smart move into an official one today, announcing that they are seeking a buyer for their share of the beleaguered Prodigy online service. This announcement is hot on the heels of H&R Block's (NYSE: HRB) proclamation that they are spinning off Compuserve (assuming that the IRS doesn't put the kibosh on its tax free status). Sears was up $1 1/4 to $43 1/4.
GE was up $7/8 today to $77 3/4. Thanks, Jack (we hope you live to be 121).
MDRX slid again today, without any news on the wire that this Fool could see. MDRX was down $3/4 to $27 3/4.
There wasn't much to note about the other Fool Port stocks, so rather than beat a dead horse (which we assure the APSCA we have never actually done), I'll let you go read the special collection on Novell, including reports from MF Templar, MF Networx, and MF Bogey.
AMER - 1/2 AMAT + 3/4 CHV + 5/8 GE + 7/8 GPS - 7/8 IOMG + 3/8 KLAC +1 1/4 MDRX - 3/4 S +1 1/4
Day Month Year History FOOL +0.30% 5.98% 12.38% 109.84% S&P 500 +1.17% 1.90% 5.22% 41.38% NASDAQ +1.26% 3.50% 4.25% 52.31% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 51.25 604.67% 5/17/95 1005 Iomega Cor 5.04 14.88 195.26% 8/5/94 165 Sears 28.93 43.25 49.52% 4/20/95 155 The Gap 32.55 48.38 48.62% 8/11/95 95 GenElec 57.91 77.75 34.25% 8/11/95 110 Chevron 49.00 56.25 14.80% 1/29/96 250 Medicis Ph 27.86 27.75 -0.39% 8/24/95 100 AppldMatl 57.52 40.25 -30.03% 8/24/95 130 KLA Instrm 44.71 29.25 -34.58% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 34850.00 $29904.44 8/24/95 100 AppldMatl 5752.49 4025.00 -$1727.49 5/17/95 1005 Iomega Cor 5063.13 14949.38 $9886.25 4/20/95 155 The Gap 5045.25 7498.13 $2452.88 8/5/94 165 Sears 4772.65 7136.25 $2363.60 8/11/95 95 GenElec 5501.87 7386.25 $1884.38 8/11/95 110 Chevron 5389.99 6187.50 $797.51 1/29/96 250 Medicis Ph 6964.99 6937.50 -$27.49 8/24/95 130 KLA Instrm 5812.49 3802.50 -$2009.99 CASH $12147.13 TOTAL $104919.63