Fool Portfolio Report
Tuesday, March 26, 1996
(FOOL GLOBAL WIRE)
by Selena Maranjian (MF Selena)
RIVER VALE, NJ, Mar. 26 -- Greetings, Fellow Fools! As I write this, our fearless leaders, the brothers Gardner, are hurtling through the sky, thousands of feet above the ground, strapped to chairs, feasting on an ounce of honey-roasted peanuts and a tiny plastic dish of chipped beef. They are rocketing toward Denver to sign books (7:30 to 9:00 p.m. at The Tattered Cover tomorrow!), and they asked me, a new Fool, to write tonight's report.
My first reaction, of course, was, "Am I worthy?" But then I realized that of course I am. Any Fool could write a portfolio report. But do I know enough to write the report? Well, actually, a Fool doesn't really need to know too much about investing. In fact, a Fool can probably drop out of school in the second grade and still end up beating over three-quarters of mutual fund managers at their own game. How, you ask? Through the Dow Dividend Approach to investing, also known as Beating the Dow. (For a lot more on this approach, check out MF DowMan's Dow Dividend Approach area here in Fooldom! You can find it from the main Fool screen by clicking on the "Investing Foolishly" button.)
The Fool not only recommends that you keep up to 50% of your money in Beating the Dow (100%, if you don't have the time for or interest in other options), but it puts its money where its mouth is. The Fool Portfolio holds three Beating the Dow stocks, chosen with no regard to their business. That's right -- if the formula ended up pointing to FungusWorld Mushroom Emporium (NASDAQ: MUSH), Intra-Rhode Island Airlines (NYSE: RIA), Morse Code Telecommunications (NYSE: TAP), Gnats-4-U (NASDAQ: GNAT), and General Elbow (NASDAQ: GELB), those would be the ones we would choose from and invest in -- no questions asked!
But the fact is, the portfolio ended up with Chevron (NYSE: CHV), General Electric (NYSE: GE), and Sears (NYSE: S). We might note that Chevron was up $1 1/4 to $57 1/8 today, that GE was unchanged at $79, and that Sears rose $5/8 to $50 3/8. But then again, we might not even bother to find out. It doesn't matter -- we don't have to think about them for a whole year. We don't have to follow them, study them, or try to understand and evaluate any press releases.
For example, Chevron announced today that it might have found a very sizable new oil field in Colombia. Rumors are starting to fly that the company might have already struck oil there. Others warn us that drilling for oil can be a very unpredictable enterprise, and that there are few facts available yet. But do we really care? Nah. In the words of the immortal Alfred E. Newman, "What, Me Worry?"
GE reported that one of its subsidiaries, GE Power Systems, along with Mitsui & Co., received an $85 million contract to supply "two steam turbine-island equipment packages including 340-megawatt steam turbines, fourboiler feedpump steam turbines, and other equipment". Now, should I be concerned that I have no idea what that last sentence really means? Hardly. As a long-term Foolish investor using the Dow Dividend Approach, I need only pay attention once a year. Not bad!
So, now that we get the idea, we don't have to move on to Sears' news, right? Good -- since there doesn't seem to be any.
While ignorance might be bliss for the Foolish Dow Dividend investor, Fools who want to earn substantially more than 20% a year have to take on more responsibility and do a little more homework. (But the beauty of Fooldom is that one never has to undertake this alone or without guidance.)
It is recommended that you evaluate your non-Dow Dividend Approach holdings at least quarterly, examining whether they still hold the same promise you saw in them when you bought them, and whether they are still more attractive than your next best idea. And, of course, you should pay attention to news released about these holdings.
Iomega's newly-released Jaz drive was reviewed in PC Magazine, with author Alfred Poor using such words as "innovative", "worth the wait", "simple", "quick and easy", "almost as fast as a hard disk yet priced competitively", and "designed for the long haul." But wait -- there's more! The drives have rugged specifications and should survive a drop from the head of a small child -- well, a three-foot-tall child, to be more precise. And they're designed to work at altitudes up to 10,000 feet, meaning that you can backup newsletters and massive spreadsheets two-thirds of the way up the Matterhorn. What does this mean for this Foolish holder of Iomega, which was up $1/2 to $23 1/4? Methinks I'll hang on to the stock!
While CompuServe, in a rush to catch up, has finally announced "WOW", its major campaign to lure non-engineer customers, America Online, already king of consumer online services, is positioning itself to attract business users. Today it announced a significant expansion of its international ANSnet network, which is the core of its growing corporate Intranet service. What does this really mean, besides the fact that the news nudged share prices up $1/8 to $53 7/8? Merely that America Online, not content with exponential growth among the consumer base, is rapidly unfolding a strategy to tap the business market. And the America Online investor's response? Bully for them! And bully for me!
Lest Foolish investors' heads swell too swiftly, though, let's look at the Fool Portfolio's performance for the day. Down 0.17%. That's the bad news. The worse news is that the S&P 500 was actually up 0.45% today, and the NASDAQ up 0.11%. So we lost out for the day.
But no matter! We're long-term investors here, and we'll just have to settle for a 23.22% return so far this year, compared to 6.01% for the S&P 500 and 3.44% for the NASDAQ.
If that's the best we can do, so be it. Fool on!
TODAY'S OTHER FOOLISH THING: The Evening News is now offering a free two-week e-mail subscription to all Fools and potential Fools. The free period starts on April 1st, and is a great way for you to introduce your co-workers, friends, relatives, and disgruntled postal workers to Fooldom. Anyone with e-mail, whether on AOL or not, can take advantage of this. To sign up yourself or others, send a message to MFSelena@aol.com.
AMER - 1/4 ...AMAT + 1/4 ...CHV +1 3/8 ...GE ---...GPS -1 1/2 ...IOMG + 1/2 ...KLAC -1 1/2 ...MDRX -1 1/2 ...S + 5/8 ... Day Month Year History FOOL -0.17% 7.67% 23.22% 130.09% S&P 500 +0.45% 1.96% 6.01% 42.45% NASDAQ +0.11% -1.07% 3.44% 51.12% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 53.50 635.61% 5/17/95 1005 Iomega Cor 5.04 23.13 359.02% 8/5/94 165 Sears 28.93 50.38 74.16% 4/20/95 155 The Gap 32.55 56.63 73.96% 8/11/95 95 GenElec 57.91 79.00 36.41% 8/11/95 110 Chevron 49.00 57.25 16.84% 1/29/96 250 Medicis Ph 27.86 24.00 -13.85% 8/24/95 100 AppldMatl 57.52 35.25 -38.72% 8/24/95 130 KLA Instrm 44.71 22.00 -50.80% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 36380.00 $31434.44 8/24/95 100 AppldMatl 5752.49 3525.00 -$2227.49 5/17/95 1005 Iomega Cor 5063.13 23240.63 $18177.50 4/20/95 155 The Gap 5045.25 8776.88 $3731.63 8/5/94 165 Sears 4772.65 8311.88 $3539.23 8/11/95 95 GenElec 5501.87 7505.00 $2003.13 8/11/95 110 Chevron 5389.99 6297.50 $907.51 1/29/96 250 Medicis Ph 6964.99 6000.00 -$964.99 8/24/95 130 KLA Instrm 5812.49 2860.00 -$2952.49 CASH $12147.13 TOTAL $115044.01