Fool Portfolio Report
Tuesday, June 11, 1996
Tuesday, June 11, 1996 (FOOL GLOBAL WIRE)
by Tom Gardner
ALEXANDRIA, VA, June 11, 1996 -- The Fool Portfolio gave back 2.18%, as Iomega Corporation dropped $2 to $41 3/4. Iomega fell in the wake of an earnings upgrade and positive comments from secondary underwriter, Hambrecht & Quist. Yesterday, Iomega rose $5 3/4, or 15%, on news that the Zip would find a new home in select models of IBM's new Aptiva line of PCs. That puts the likes of Hewlett-Packard, Packard Bell and IBM on the list of monster PC manufacturers that are featuring specific Zip-driven machines. Our $47-$50 target pricing based off estimates of $1.5 billion in sales for 1996 did NOT include new OEM contracts.
The Fool Portfolio was also snookered late this afternoon by drops from General Electric (-$1 3/8), Sears (-$1 3/8), Medicis Pharmaceuticals (-$3/4) and The Gap (-$1/4). Nope, no news from any of these companies. The Sears and Gap declines come right before expectations of strong retailing reports 'round the corner.
Not all was wrong in Fooldom today, though. Foolishness was defended by strength from America Online (+$3/4), Chevron (+$3/8), and KLA Instruments (+$3/4).
In Fool stock news today, AOL France, a joint venture of America Online and Germany's Bertelsmann, announced that it now has 10,000 paying subscribers. The service, which launched some six weeks back on March 18, 1996, is targeting younger computer users.
Chevron's $3/8-ascent today came as recent drops in crude oil pricing spread to gas stations across America -- just in time for summer. Additionally, in yesterday's "Fool-4 Model Portfolio" recap, MF DowMan reported Chevron had announced that crude oil is now flowing from the N'Kossa offshore oil field in the Republic of Congo. The Company holds a 30% stake in the field.
FYI, each day DowMan reports on the progress of The Fool Four portfolio (opened on January 1, 1996), with news and performance reports. That section is accessible via our Fool's School button on the mainscreen. Also, DowMan offers which stocks are presently in the select group for anyone looking to begin Dow investing, Foolishly. The four stocks in the The Fool Four Dow group today are: General Motors, Chevron, Caterpillar and Minnesota Mining.
Again, this approach has compounded 22% per year over the past twenty-five years and it puts you into multi-billion-dollar giants. If you take nothing away from your time spent in Fooldom, take this: You need to outperform this model over the long haul.
It requires no subscription to magazines, no research costs, no anxiety, and no high-priced financial advice. You don't have to go on Fool boat rides, or pay us loads of denarii to sit through the filming of our infomercial to get a chance to shake hands with Dave, or watch any financial television, or buy gold coins, or listen to your Aunt Ester talking up her portfolio, or Uncle Ronald, at the next annual Labor Day family picnic. Nope, you won't have to worry about your long-term financial success because we expect that the Dow Dividend Approach will beat the market which most likely beats the average fools' collection of mutual funds. Pretty much risk free over the next 20 years.
So why go anywhere else beyond those four stocks?
Well, now twenty-four hours after Time Magazine hit the newsstands with the broadest-reaching article ever (and a fine one) on The Motley Fool, we're bearing down on continuing to provide you the best electronic financial services available anywhere, services designed to help you squash the market and beat Beating the Dow.
This past weekend, at MF Bogey's wedding, I had an opportunity to speak with a number of full-service and discount brokers -- all of whom are users of The Fool. (Hefty commission coming Bogey's way.) Not surprisingly, in the 250,000 households we're reaching each month, we're connecting with a number of institutional investors: fund managers, newsletter publishers, brokers, et cetera. And not surprisingly, each of them recognizes that the whole business model on the Street has to change dramatically. In the information age, future profits rely on education, information, and accountability -- and in varying degrees those are new to Wall Street.
But the wedding this weekend again reminded me that what Foolishness is aspiring to reform are the *systems* that have failed to service consumers. We're not worrying much about reforming the individuals caught up in those bad systems... particularly since, as was the case with a fine fellow from Merrill Lynch this weekend, many of the brokers I talk to chuckle at options, grimace at the thought of how many portfolios they've seen go down in a screaming ball of flames -- due to over-heavy margining, and wince at the thought of accounts churned needlessly for commissions. The people don't like the system.
Now when full-service brokers beat the S&P 500 (and thus, the Vanguard Fund) after the deduction of commission costs, when newsletters hold themselves numerically accountable month after month, when service is more of a priority than is sales in this industry, and when our nation creeps its way out of credit-card and budget deficits via prudent, enterprising, collaborative, high-margined growth... then Foolishness will have integrated itself into the dissolution of Wall Street into Main Street -- a more profitable model for all three. What was not before will now be a consumer business, with investment products sold and guaranteed in the same way that HP delivers a personal computer to your home office, with a focus on quality, service, sophistication, and with a warranty.
Whether that seems radical or practical -- or both, as it does to us -- the future for national savings growth and business education is right now. We've listened very carefully to your requests for improvements -- stuff like searchable message boards, more real-money portfolios, more research on individual stocks, better investment tools, and Foolish financial reform beyond the online world (television, radio, and via Foolish brainpan chip implants).
I expect that the dramatic improvements we'll bring to your keyboard in the next 12 months will astonish you, and hopefully delight you. Our commitment is to help you continually learn more about investing and ownership, to help you learn how to beat the 10.5% long-term annual returns of the S&P 500, to put you into position to meet up with other investors across the nation, and to allow you to have a helluva good time doing it.
If we can't follow through on all this, if the addlebrained Fool isn't up to the task, no big deal for you, right? You can always fall back on your Dow portfolio, with 10% savings off your salary monthly, 20%+ annualized returns on those monies, and the wisdom to know that beating the market needn't take more than 30 minutes of your time each year. If you haven't visited Robert Sheard's Dow Area here in our Fool's School, you should. We think the way you approach your savings account will be forever changed... for the better.
That said, we're betting another couple hundred thousand hours of work here at Fool HQ in the year ahead on the notion that we can help you beat those Dow stocks, as we have, and that you'll take much more away from all of this Folly than mere capital.
Have a great evening.
Tom Gardner, June 11, 1996
Day Month Year History
FOOL -2.18% -4.86% 92.11% 258.71%
S&P 500 -0.18% 0.27% 8.94% 46.37%
NASDAQ +0.05% -1.02% 16.97% 70.89%
*Scroll down or expand screen for full portfolio accounting
AMER + 3/4 ...CHV + 3/8 ...GE -1 3/8 ...GPS - 1/4 ... IOMG -2...KLAC + 3/4 ...MDRX - 3/4 ...S -1 3/8 ...
Rec'd # Security In At Now Change
5/17/95 2010 Iomega Cor 2.52 41.75 1557.42%
8/5/94 680 AmOnline 7.27 49.75 584.05%
4/20/95 310 The Gap 16.28 34.25 110.45%
8/5/94 165 Sears 28.93 51.63 78.48%
8/11/95 95 GenElec 57.91 84.63 46.12%
8/11/95 110 Chevron 49.00 59.38 21.17%
1/29/96 250 Medicis Ph 27.86 33.00 18.45%
8/24/95 130 KLA Instrm 44.71 24.75 -44.65%
Rec'd # Security Cost Value Change
5/17/95 2010 Iomega Cor 5063.13 83917.50 $78854.37
8/5/94 680 AmOnline 4945.56 33830.00 $28884.44
4/20/95 310 The Gap 5045.25 10617.50 $5572.25
8/5/94 165 Sears 4772.65 8518.13 $3745.48
8/11/95 95 GenElec 5501.87 8039.38 $2537.51
1/29/96 250 Medicis Ph 6964.99 8250.00 $1285.01
8/11/95 110 Chevron 5389.99 6531.25 $1141.26
8/24/95 130 KLA Instrm 5812.49 3217.50 -$2594.99