Fool Portfolio Report
Wednesday, April 24, 1996

Tom Gardner (TomGardner)

I don't know if Shakespeare could have handled this.

The Motley Fool Portfolio slipped back 1.04% after an utterly staggering race through the month of April. Looking back to our annual red-letter day, April Fools Day, wow. . . just over three short weeks ago, The Fool Portfolio was glowing:

Year History

FOOL +27.30% +137.70%

S&P 500 +6.14% +42.61%

TOTAL $118,849.63

We were happy all day. We danced jigs, told tall tales, took long bike rides, drank midday mimosas on the Potomac, engaged passers-by with frivoloties, played nerf football under a golden evening moon, threw together a midnight barbecue outside Fool Grand Central Universal HQ, and danced even more.

(If you have to know the truth, on April Fools Day, we sat over laptops answering e-mail, pumped ourselves up in the traditional media---the hard realities of subscriber "acquisition," and crunched down peanut brittle for dinner. But imagination heals.)

Fast-forward with us now to the present and a day upon which The Fool lost to the market by 0.82%. The hair-raising pony ride of the last 23 days has left us with the following numbers:

Year History

FOOL 63.70% 205.67%

S&P 500 5.56% 41.83%

TOTAL $152,832.76

This is certainly the greatest three-week run for David and I, and I expect you'll never see anything like this again in Fooldom. Newcomers need to be notified that we Fools plan to be here for the next five decades at least, publishing our investment models, our investments in advance of making them, and our *bottom-line* returns. And I think it not at all exaggerated to claim that we'll never again catch a 29% climb ($152k / $118k) in less than a month.

Today saw more improvement for our semiconductor holdings. Applied Materials rose another $3 3/8 to $42 1/8. Funny how gratifying it is to read aloud here computer-side, "Applied Materials is now down *only* 26.77%." It's relative, eh? In the month of April, AMAT is up 18.6%.

Not to be outdone by much, KLA Instruments (NASDAQ:KLAC) stepped up another $1 1/4 to close bidding $31. KLAC is our second-best holding in April, having climbed over 39%. These two issues were up today on the news that SoundView Financial released upgrades on a handful of semiconductor companies.

Ever on the lookout for kooky terminology, The Fool noticed that Applied Materials was in a cluster of stocks vaulted from "sell" into the realm of "intermediate-term hold." So, how do you hold a stock that you've already cashed out of? Mind you, we can interpret the call. It's just kinda kooky, no?

Two of our stocks closed at all-time highs, America Online and The Gap. Gap shares closed up $5/8 to $29 5/8 and are now up 82% for us in 368 days. This reminds us of the father and son investment team in Manhattan, Walter and Edwin Schloss. In an interview in Outstanding Investor Digest, the two Buffett-celebrated investors made this claim:

Question: What percent invested have you been over the years on average?

Walter: Very close to 100%.

Question: What's the most out of the market that you've ever been?

Walter: 10%. We try to buy good values and not worry too much about what the market is going to do. [While] I think that the market may be vulnerable. I don't know what's going to happen. But I sleep better owning stocks than owning cash.

The results posted in this 1989 interview tell the tale. Walter J. Schloss Associates had more than doubled the market over the long-haul. From 1956-1988, the Schlosses compounded 21.6% annual growth versus 9.8% returns for the S&P 500. Lookie there, more than 21% annual growth during a period which saw inferior returns in stocks relative to the historical figures.

And therein sits the sheer Folly of quality investing. While the pundits screech that the market is too high, that stocks are frothing, that Fools are herding into the Valley of Death, long-term business investors are habitually searching the markets for undervalue, fair value, and overvalue. The discipline that drives great companies drives great investors.

America Online was our other investment to slap through all-time highs today. AMER closed the day up $3/4 to $65 3/4. One of the most shorted stocks in the nation is also the leader in online technology and electronic publishing. Shorting consumer demand is a bit like dropping down into a three-point stance, shouting loudly, biting down into your mouthguard, and firing out into three-lanes full of oncoming Indy car traffic. We wouldn't advise it. America Online is up 804%, with news today that they're prepped to launch new technology from wholly-owned subsidiary, Ubique Ltd., that will enable chats and instant messaging on their GNN Web Site.

New highs from two of our three biggest winners, a continuation of the turnaround in semiconductors. . . and The Fool Portfolio falters 1%? What gives?

Well, Iomega Corporation (NASDAQ:IOMG) opened up, touching as high as $53 7/8, then slipped back to $48 7/8, down $2 7/8 on the day. Iomega has become the single largest investment in our portfolio. Furthermore, neither of us has ever invested in a stock that has appreciated so significantly and so immediately. Iomega is up more than 870% for us in less than a year, and what was $5063 at the entry---an entry that made up less than 10% of total assets---is now priced at $49,000.

MF Czar wrote very eloquently yesterday about the frustration of not yet being in on Iomega. Our response: Man, we've missed so many great stocks over the last two years, stocks that have been literally dropped in our laps by readers and staff members. Here are a few examples:

Rainforest Cafe (MF Edible)

Structural Dynamics (SONDO, CARDRX, Acisman, MF Cubster)

C-Cube Microsystems (MF Ben)

Prime Medical (MF Uptrend)

Remedy Corp (MotleyFool: quote it today, RMDY)

As painful as it is, that just comes with the territory. What can be said with great assuredness is that if you focus on great companies in great industries with a management team that is aggressive, creative, consistent, and forthright you should cobble together so many great investments to sit on through market-smashing returns that the ones you missed won't register in your intermediate- or long-term memory.

I can't place a strong enough emphasis on being involved as an investor and businessperson with the very best people: those focused on long-term collaborative capital and intellectual growth, and growth in spirit. At last night's farewell festivities in Utah, the ballroom was overflowing with just these sorts of Fools from small towns and big cities across the U.S. A comment the previous night from a Missourian Fool kept ringing in my head:

"This is about far more than profits. It's about being among all of these great people. I go on the permanent list. When I'm gone, my grandchildren will see my name there, numbered with those who led these sweeping changes. I'm here, altering the world for the better. You can't take this away ever. My name goes on this list."

She hit it just right. In fact, it's so true, it hurts a little just to think on it. Shakespeare might have been able to handle it; we can't.

Transmitted: 4/24/96 7:02 PM