Fool Portfolio Report
Friday, May 17, 1996

by David Gardner (MotleyFool)

ALEXANDRIA, VA, May 17, 1996 -- I like to play with numbers. I don't know how or why this started, but early on in life I found myself driving down the highway and inspecting the license plates of passing cars for numerical relationships. And I still do it.

So, for example, I'll see a Virginia plate that reads 168 042 and note that 168 is four times 42. How nifty. It doesn't mean anything. It doesn't matter. But my mind just does this, and I can't help it.

Another plate will read 237 012. . . in this case, 2+3+7 makes 12. . . how coincidental. I wonder if the driver realizes it. . . not that he'd care, probably. Not that it means anything.

Same thing happens, I was just noticing, as I look over the Fool numbers today. I see, for starters, that the S&P 500, the NASDAQ, and the Fool Portfolio all have 1996 returns that end with eights. As of market close, the S&P 500 is up 8%, the NASDAQ is up 18%, and the Fool Portfolio is up 78%.

Even less importantly, our overall return on Iomega is now 1274.57%, almost EXACTLY double (my wandering, irrelevant thinking observes) the return of our second best stock, America Online, which is up 637.33%. (637.33% doubled is 1274.66%---darn close).

Again, it doesn't mean anything, but it's there. Anyone else can't help doing this? If you do, e-mail me and let's form a club. I'm thinking of Richard Dreyfus in "Close Encounters of the Third Kind" sculpting a pile of mashed potatoes on his supper plate as he strove frantically to express visions of Devil's Tower that were haunting him. Who knows. . . you send me some numbers, I'll send you back numbers, maybe we meet high up somewhere and encounter aliens.

The Fool Portfolio had a fine day today, borne on the wings of Iomega and Medicis Pharmaceuticals, plus a coupla rock-solid Dow stocks.

After spending most of the day bouncing around $66 1/2, Iomega zoomed at day's end to close at a new all-time closing high: a bid of $69 1/4. The stock splits 2-for-1 on Monday. What does that mean? It means that you'll see the price cut in half on TUESDAY, at market open. If you have a question about stock splits, we have answers. Just click the Index button at the bottom of this window (opening up an index to ALL our Foolish offerings) and select FAQ. . . there, you'll find a full entry on stock splits!

Medicis exploded on high volume Friday, rising $2 1/8 to bid $30 1/4. The stock traded 541,000 shares. . . way above its recent declining volume, and the highest single-day volume since we've held the stock. Nice to see it going the right direction.

We can't know for sure, but we expect that an article about The Motley Fool approach on the front page of INVESTOR'S BUSINESS DAILY today may have had something to do with that. (Click over to keyword IBD to find it.) It was a very nice article, outlining our investment approach which has you starting with the Foolish Four, moving to small- and mid-cap growth stocks, then mixing in some shorting. The article also listed our current portfolio holdings, Medicis among them. (For some reason, the writer erred on reporting MDRX's performance, calling it up 87% for us this year---we wish! After market close today, you can move the decimal point one place to the left---there's that numbers game again---and come close to our overall return: 8.7%. Or actually, 8.58%.)

For the week, we had another good 'un, as the Fool Portfolio returned 4.15%, vs. the S&P 500's 2.58% and the NASDAQ's 3.25%.

America Online got taken out and shot again today, dropping another $2 despite another record-setting day for the overall market. AMER is now down 24% from its high of two weeks ago. No news issued from Vienna, VA today, so I expect it's more negative sentiment following the Merrill Lynch earnings downgrade from yesterday. As you'll recall, analyst Lou Kerner dropped his estimates from $1.15 per share for fiscal '97 (ended 6/97) to $1.00 per share. Reasoning? Lower anticipated revenues per subscriber due to the new 20 hours for $20 pricing plan, to be unveiled July 1st. Near-term sentiment remains contra this stock.

How 'bout them Dow stocks?! General Electric up $1 5/8, Chevron up $1 1/8, and Sears closes even. We'll take that any week of the month, let alone any day of the week! New highs for both, with GE now up 41%, and Chevron (can't help noticing) right about half that, up 21%. (In fact, we talked earlier about how Iomega is now double America Online. Well, take Medicis's return of 9% and about double it to get to our next stock, Chevron, up 21%, which you can double to reach GE, up 41% which you can also about double to reach Sears, now up 74%.)

(OK, I'll stop now.)

Two things to leave you with. First, Business Week.

I like Business Week. . . I know some of the people there, and I think some of their articles are useful. But whenever the magazine starts trying to talk about---let alone understand---the online medium, intelligent people turn the page. Next week, you're going to find another such abysmal article from the predictable pen of the abysmal Internet writer. Of course, we HAVE to have someone else suggesting that the Fool is propping up Iomega, a company that now trades over $150 million a day, with a $4.4 billion market cap. . . that's standard fare among the very Wise. But let's throw in a bonus: the writer equates the work of MF Boring with somebody called the Waaco Kid, whose Internet page sometimes moves (surprise!) tiny-cap penny stocks. Anyone who knows our disdain for penny stocks knows how far we disassociate ourselves from that junk. Anyone who knows our past work well knows that we continue to actively point out the dangers of using the online medium to manipulate share prices of nickel-and-dime stocks. So to compare the Boring Portfolio and Zytec, or The Motley Fool and Iomega, to the Waaco Kid is demonstrative of a writer who would also have difficulty distinguishing between, say, computers and calculators, or Tchaikovsky and Madonna.

Predictably, I hear from Greg that out of the 20-minute interview he had with the BW guy, exactly one line was printed---out of context, of course, and in service of the writer's misguided angle. Sorry, my fellow Fools, but this is too, too typical of what we continue to call the fading old media. Not really serving, not really teaching, not really helping. . . sensationalizing, for advertising sales.

That's why, indeed, it continues to fade.

Ah, but to close we shall move from the bad to the good. The other thing I wanted to leave you with this weekend is a plug for the latest Fribble by MF Yakko. Entitled "Too Cool for the Fool," Yakko reminds us that the Fool's objective remains to promote collaboration between individual investors, with the goals to educate, inform, and amuse. Yakko points out that some people have lost sense of this mission, thinking particularly of the arrogant tone that some adopt for their message-board postings. In his eminently Foolish style, replete with humorous insight, MF Yakko deserves five minutes of your attention. You can find that Fribble by once again hitting the Index button below and selecting "Fribble."

Fool away your weekend!

---David Gardner, May 17, 1996

Today's Numbers

Day Month Year History

FOOL +1.56% 6.27% 78.52% 233.34%

S&P 500 +0.61% 2.25% 8.60% 45.92%

NASDAQ +0.21% 4.31% 18.03% 72.43%

*Scroll down or expand screen for full portfolio accounting

AMER -2...CHV +1 1/8 ...GE +1 5/8 ...GPS - 1/2 ...IOMG +3 1/4 ...KLAC ---...MDRX +2 1/8 ...S ---...

Rec'd # Security In At Now Change

5/17/95 1005 Iomega Cor 5.04 69.25 1274.57%

8/5/94 680 AmOnline 7.27 53.63 637.33%

4/20/95 310 The Gap 16.28 32.88 102.00%

8/5/94 165 Sears 28.93 50.38 74.16%

8/11/95 95 GenElec 57.91 81.38 40.51%

8/11/95 110 Chevron 49.00 59.50 21.43%

1/29/96 250 Medicis Ph 27.86 30.25 8.58%

8/24/95 130 KLA Instrm 44.71 29.50 -34.02%

Rec'd # Security Cost Value Change

5/17/95 1005 Iomega Cor 5063.13 69596.25 $64533.12

8/5/94 680 AmOnline 4945.56 36465.00 $31519.44

4/20/95 310 The Gap 5045.25 10191.25 $5146.00

8/11/95 95 GenElec 5501.87 7730.63 $2228.76

8/11/95 110 Chevron 5389.99 6545.00 $1155.01

1/29/96 250 Medicis Ph 6964.99 7562.50 $597.51

8/24/95 130 KLA Instrm 5812.49 3835.00 -$1977.49

8/5/94 165 Sears 4772.65 8311.88 $3539.23

CASH $16434.53

TOTAL $166672.03