Fool Portfolio Report
Monday, April 8, 1996

by David Gardner

ALEXANDRIA, VA, April 8, 1996 -- Spring has sprung, they tell me, although we're about to get 4 inches of snow in Alexandria tonight. So that while April showers traditionally lead to May flowers, April snow would have to lead to what? Ummm. . . May woe? Well, that's exactly what you might expect, if you were an inexperienced investor who'd just received what I received in the mail today.


Anybody else get this thing?

Now, I get junk mail pushing new investment "products" from time to time. . . yeah, I'm on the lists too. Only problem is, the people sending it to me don't realize that I'm going to put their stuff up on our national online service. (Giggle.)

"Announcing a breakthrough for individual investors..." it begins. "THE GARZARELLI EDGE." It's a 20-page full-color pamphlet promoting, among other things, Ms. Garzarelli's "proven, scientific system that has produced average yearly gains of 20.2% since 1982!" (Hope for her benefit her readers never find out about the Dow Dividend approach or Investing for Growth!) What the missive actually does, of course, is send a finely honed gibberish of mixed signals designed to hook the inexperienced investor to follow religiously the pronouncement of another one of them market-timin' gooroos!

Long-time readers will bring to tonight's report two key bits of information. The first is that we Fools don't think ANYONE can consistently accurately call the movements of the stock market, that it's a complete waste of time driven on by the financial media (most of whom don't actually know much about the stock market or invest in it). And second, our regular reader will also know that we consider the job of market-timin' gooroo to be among the best and most coveted in our fair American fields.

That's right. . . an enviable position. Where else can you get paid for giving advice that no one will ever hold you accountable for? Surgeons can't do it, my dear Fools. Neither can tax accountants, clergy, or parents. But if you're a market-timin' gooroo, you can call the market perfectly AT EVERY TURN. . . or at least claim to in your marketing literature. ("Over the last 14 years THE GARZARELLI EDGE has correctly forecast every major turn in the U.S. stock market. EVERY SINGLE ONE, BAR NONE!") (Editor's note: It wouldn't do, of course, ever to admit you were ever once wrong just a tiny bit about anything.)

Anyway, the real secret to success as a market-timin' gooroo is just to speak constantly about the market, constantly prognosticate about its direction, and (most important of all) to be constantly doing so out both sides of your mouth.

"... I've always said that the stock market is very, very unsafe, unless you work very, very hard to take the risk out. . . That's why the stock market can be the fastest way to lose money this side of Las Vegas." (Good line. Market's just like Vegas. That plays in Peoria.) "I know dozens of private investors who have lost thousands upon thousands of dollars by trusting ill-conceived advice about 'sure things' in a so-called bull market. Today, the danger is extreme."

Interesting. OK, let's flip a page or two in:

"RIGHT NOW ALL MY INDICATORS POINT TO HUGE PROFITS AHEAD (yet sadly, most investors will miss out). I say this unequivocally..."

That's good. "Unequivocally," eh? Given the "extreme danger" we just read about, this is priceless.

"... and I back it up with 14 years of unmatched market calls---you should be invested 100% right now!"

Given the juxtaposition of the first statement ("extreme danger") with the second ("HUGE profits ahead. . . you should be invested 100% right now!"), we see that Ms. Garzarelli and her copywriters have reached true virtuoso status in the high circles of market-timin' gooroos. Have to have both sides of the hedge well trimmed as usual. . . this is outstanding timing work.

"Now don't get me wrong," Elaine hedges on. (Wait, oh wait, I bet the sales pitch is coming!) "There are still ways to make a great deal of money in 1996---but YOU MUST FIRST TAKE THE RISK OUT!" (The mantra repeated again. Sounds so easy, by now.) I know, I know, this gets wearisome. I'll stop. In fact, the following line was my last. "And to do that, you must be able to separate fact from sales pitch."

That's exactly what I did when I then dispatched this "sales pitch" to the friendly confines of my wastebasket.

But I can't quite let it go there. Those guys over in market research seem to have located the sound byte that the masses will react strongest to: "TAKE THE RISK OUT!" That's a great one. As self-admitted Fools, one of OUR sound bites is, "The greatest, least-mentioned risk of all is not taking enough risk." Our problem is that we weren't relying on market research with that line, but instead our own hearts. So I guess we're screwing up with that one.

No surprise, perhaps, that the whole Garzarelli offer is offered as a "no-risk" trial subscription.

Without irony intended (I don't think), my pamphlet ends by letting me know the so-called "BEST VALUE" option ($269 for GARZARELLI for two years). . . which is, of course, the BEST VALUE for the publisher (Phillips Publishing in Potomac, MD), not you the potential reader.

OK, this sort of drivel does play really well. . . for a while. . . to a society whose investment know-how has been dumbed down by (1) poor financial media, (2) a Wall Street formerly able to "corral" most of the good info in its own 40-story Manhattan fortresses, and (3) the massive educational void created largely by items (1) and (2). But the factors once at play in the wide world that made stuff like "THE GARZARELLI EDGE" possible are now quickly diminishing and disappearing. Intelligent investors are learning to ignore the increasingly strident screams of the fading old media ("But Barron's panned Iomega a couple months ago!" I can hear the astonished Barron's subscriber saying as, feeling betrayed, he sees the stock up another $2 7/8 today, up about three times since Abelson's forgotten---Abelson HOPES---column).

And Wall Street is finding it can't "hide" the info anymore. Where all companies used to just include only Wall Street analysts on their conference calls, most of the ones that matter are now getting reported on and summarized right here in The Motley Fool. . . and then our readers go on to discuss and debate the company in our message boards, the most intelligent public exchange of info I've found anywhere. Equal info, fairly distributed. . . we're not talking about a Yahoo IPO here, folks (my metaphor for a future built on high hopes). We're talking about what's happening this week, right here, right now. . . last week too, in fact.

So somebody somewhere needs to let the advertising copywriters know, so they won't keep writing stuff so easy to ridicule, touting GARZARELLI EDGE products so inferior to:

thinking for yourself

ignoring the gooroos

the Dow Dividend approach

the amazing financial info now online

OK, OK, I'm hopping off the soapbox now. Sorry, but junk mail just does this to me.

By the way, the Fool Portfolio did well today, on a day that may have had some Chicken Littles clucking. Three of our 9 stocks were up $2 or more, thanks in part to a little lucky timing of our own. For one, our semiconductor stocks did nicely, due perhaps to the release of new book-to-bill numbers tomorrow. And on a very bad day for the market overall, we were able to continue to ride the tails of the Iomega short squeeze. . . the one driven by misguided (mainly, media-led) short sellers. The April snow's looking pretty good to us.

Of course, we're quite confident that Ms. Garzarelli had today's 88.51 point drop in the Dow comfortably forecast well ahead of time for her fans and subscribers. And I don't mind prognosticating myself: Whatever the market does tomorrow, she's predicted that as well.

Fool on.

Today's Numbers

AMER -1 1/2 ...AMAT +1 1/2 ...CHV -1 1/8 ...GE - 3/4 ... GPS -1 3/4 ...IOMG +2 7/8 ...KLAC +2 1/4 ...MDRX +2...S -1 3/8 ... Day Month Year History FOOL +1.70% 6.98% 35.97% 153.89% S&P 500 -1.77% -0.20% 4.60% 40.54% NASDAQ -1.12% 0.39% 5.09% 53.53% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 53.25 632.17% 5/17/95 1005 Iomega Cor 5.04 35.38 602.17% 8/5/94 165 Sears 28.93 47.00 62.49% 4/20/95 155 The Gap 32.55 51.63 58.60% 8/11/95 95 GenElec 57.91 79.63 37.49% 8/11/95 110 Chevron 49.00 56.63 15.56% 1/29/96 250 Medicis Ph 27.86 26.25 -5.78% 8/24/95 100 AppldMatl 57.52 36.88 -35.90% 8/24/95 130 KLA Instrm 44.71 24.88 -44.37% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 36210.00 $31264.44 8/24/95 100 AppldMatl 5752.49 3687.50 -$2064.99 5/17/95 1005 Iomega Cor 5063.13 35551.88 $30488.75 8/5/94 165 Sears 4772.65 7755.00 $2982.35 4/20/95 155 The Gap 5045.25 8001.88 $2956.63 8/11/95 95 GenElec 5501.87 7564.38 $2062.51 8/11/95 110 Chevron 5389.99 6228.75 $838.76 1/29/96 250 Medicis Ph 6964.99 6562.50 -$402.49 8/24/95 130 KLA Instrm 5812.49 3233.75 -$2578.74 CASH $12147.13 TOTAL $126942.76