Fool Portfolio Report
Wednesday, July 3, 1996
Wednesday, July 03, 1996 (FOOL GLOBAL WIRE)
by David Gardner
ALEXANDRIA, VA, July 3, 1996 -- Well, first off, it's the Fourth of July tomorrow, and the market's closed. In Foolish celebration, therefore, I am going to create one of the least readable Fool reports ever, for users of AOL's new version 3.0 for Windows. The text is going to be in red and blue, and let's do thirteen paragraphs today in honor of the 13 original colonies.
For starters, happy Independence Day. One of my favorite holidays... much more fun than Thanksgiving, to my way of thinking, and such a great thing to celebrate. I'm a hopeless chauvinist... foreigners be warned. There's nowhere I'd rather live, and no era during which I would rather live. America, 1996. It is truly a dream and a wonder to be alive. Easy to forget that from time to time.
Ben Franklin, my favorite "founding father" and one of my role models, was the fifteenth of seventeen children born to a candlemaker in 1706. For 25 years, Old Ben wrote and published Poor Richard's Almanack, a witty compendium that focused a great deal on commonsense financial advice. He was a brilliant and accomplished printer, a man who knew how to use the press for the benefit of the general public. He also started an academy in 1751 that became what we today call the University of Pennsylvania. At the Albany Congress in 1754, 22 years before the Declaration of Independence was signed, Franklin laid out a Plan of Union for the colonies (later rejected, not surprisingly, by the crown). What emerges is a picture of a man whose life was concerned with education, unity, financial common sense, all imbued with a merry good wit. In short, what we see here, my friends, is a Fool... perhaps, even, the most Foolish fellow in American history.
In our book The Motley Fool Investment Guide, I had occasion to quote Poor Richard in the chapter on Folly. (On a side note, during Franklin's lifetime the French gave a ship to the Americans as a gift; it was named the Richard Bonhomme in honor of Franklin's work.) I'd like to excerpt a bit of pp. 18-19 of our guide, because it's on the money stuff for today.
"Good straight wisdom is a dear commodity. Benjamin Franklin had it, for instance. A glance again through Poor Richard's Almanack: 'Three may keep a secret if two of them are dead.' 'He that speaks ill of the Mare will buy her.' 'He that's content hath enough. He that complains has too much.' What makes these aphorisms tokens of true wisdom [as opposed to the capital "W" version that we see so often all around us] is the way they contradict our basic instincts. For instance, when we hear that the content man has enough, we naturally assume that the discontent man does not have enough. We are told, instead, that he has too much. Our foiled expectations force us to consider this new possibility, and after further reflection on our own experience we recognize that one or another of our grumbling acquaintances does in fact suffer from having too much, not too little.
"True wisdom leads to that kind of insight by challenging our preconceived notions or expectations. A Fool has no quarrel with this wisdom. It is a universal good, beloved by all.
"In the end, every great investment method succeeds not because of its numerical gizmos, magical formulas, or other assorted whizbangs. Rather, it succeeds by using some of the very commonsense wisdom we're talking about. Good investment practices can almost be called studies in good character. Warren Buffett's investment career, for instance, is not so much about balance-sheet analysis as Buffett's own humility, patience, and diligence. Peter Lynch's approach is not so much about price-to-earnings ratios as it is about perceptiveness, optimism, and self-effacing humor. The greatest investors are often outstanding human beings, insofar as they exemplify the highest achievement in one or more human characteristics like patience, diligence, perceptiveness, and common sense."
Like all timeless writers, Franklin's words do of course apply as much to you and me today as they did to readers in his own time. "He that goes a borrowing goes a sorrowing." Yep, I agree with that and always will. I don't mind a little use of margin (borrowing against your account principal), so long as it's done by experienced investors and up to ten percent, absolutely never exceeding twenty percent. In recent weeks, I've encountered some who've gone well beyond that, decisions which have occasioned regret. "He that goes a borrowing goes a sorrowing."
Franklin also wrote the now too familiar, "Early to bed and early to rise,/Makes a man healthy, wealthy, and wise." As someone who routinely stays up past 3 AM, I've just never liked that one. Ah, well, but then again Franklin has something for us lucubrators as well: "Plough deep while sluggards sleep."
Another superb one from Poor Richard? "A little neglect may breed mischief: for want of a nail the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost." That speaks for itself.
The Fool Portfolio spoke for itself today, as every day, and today it spoke poorly. Largely due to AMER sinking $2 5/8, we reported a loss of 2.22%, vs. losses of 0.81% and 0.18% for the NASDAQ and S&P 500, respectively. Very little news of consequence, and the market waited to see if there would be any change in Fed policy announced after market close today. No change in interest rates. And as usual, no change in our portfolio. We haven't done a darned thing in more than five months; fortunately, it's worked out fairly well. I'm sure Benjamin Franklin would have had something pithy to say about that.
The markets are closed tomorrow, and reopen for a half day on Friday. Happy Fourth of July.
--David Gardner, July 3, 1996
Dost thou love life? Then do not squander time, for that is the stuff life is made of.
(c) Copyright 1996, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.
Day Month Year History
FOOL -2.22% -1.25% 58.71% 196.36%
S&P 500 -0.18% 0.26% 9.17% 46.68%
NASDAQ -0.81% -0.30% 12.29% 64.06%
*Scroll down or expand screen for full portfolio accounting
AMER -2 5/8 ...CHV - 1/8 ...GE - 1/4 ...GPS - 3/8 ... IOMG - 3/4 ...KLAC -1...MDRX + 1/2 ...S + 1/2 ...
Rec'd # Security In At Now Change
5/17/95 2010 Iomega Cor 2.52 27.50 991.72%
8/5/94 680 AmOnline 7.27 43.38 496.39%
4/20/95 310 The Gap 16.28 32.13 97.39%
1/29/96 250 Medicis Ph 27.86 46.00 65.11%
8/5/94 165 Sears 28.93 47.75 65.08%
8/11/95 95 GenElec 57.91 87.13 50.44%
8/11/95 110 Chevron 49.00 60.13 22.70%
8/24/95 130 KLA Instrm 44.71 21.13 -52.75%
Rec'd # Security Cost Value Change
5/17/95 2010 Iomega Cor 5063.13 55275.00 $50211.87
8/5/94 680 AmOnline 4945.56 29495.00 $24549.44
4/20/95 310 The Gap 5045.25 9958.75 $4913.50
1/29/96 250 Medicis Ph 6964.99 11500.00 $4535.01
8/5/94 165 Sears 4772.65 7878.75 $3106.10
8/11/95 95 GenElec 5501.87 8276.88 $2775.01
8/11/95 110 Chevron 5389.99 6613.75 $1223.76
8/24/95 130 KLA Instrm 5812.49 2746.25 -$3066.24