Fool Portfolio Report
Friday, July 26, 1996

by David Gardner

ALEXANDRIA, VA, July 26, 1996 -- The Fool Portfolio continued its late July comeback, making a desperate effort to reach breakeven for the month.

Yeah, right.

Down 22.71% this month, I don't think there's any way on God's green earth that we're going to close even for the month. But of course, as we so frequently point out... who really cares? I mean, it's just a month. And today's gain of 2.77% was just a day. A nice day in a bad month.

America Online rose three bucks today, appreciating more than 10% overall. Y'know, if the stock could keep doing that for the next few days or weeks, we would... um... oh yeah, but that probably won't happen either.

Why did AMER rise $3? I can't quite figure it out, other than to say that you have a great company with a beaten down stock in the high $20's. No news. Nothing sufficiently notable reported in our AMER folder. (That's where I always head, looking for the straight dope.) So we chalk it up to a NASDAQ recovery.

Microsoft did announce a tie-in partnership with AT&T, in which AT&T promotes Microsoft's browser (instead of Netscape's), and Microsoft gives AT&T an icon on the desktop of Windows95. That hurt Netscape stock (down $2+) on a good high-tech day, but I fail to see a clear inducement to AMER adding three bucks. Just glad to see it occur.

Time for a one-paragraph Foolish aside: Geez, you know, I wish I had a standard operating system. Wouldn't it be fun to sit back and cut multimillion-dollar deals with huge entities, in which they give you the big bucks and you effectively just offer them a button on your desktop? The situation is enviable, to say the least. A Fool can only sigh.

OK, so what else? Well, not much more. GE rose $7/8, and Chevron lost $1. Iomega picked up a quarter, and Medicis brought in another $3/4... it splits 3-for-2 in another week.

I'm pleased to see the market regaining sanity, and losing volatility, following so much topsy-turvy silliness over the past two months. The Fool Portfolio has been substantially hit, of course, and shows numbers much lower than it was sportin' in April. But that's part of investing in the stock market, and we're still saying the same thing today that we were saying way above this level a few months ago. Well, of course we're able to take more self-effacing jabs at ourselves, because our recent performance merits it, but that's part of the point. We like that. We like it partly because we almost never see Wall Street doing anything of the sort. Self-effacing humor? Tossing aside pinstripes in favor of motley garb? Maybe one day... not this year, though.

The Fool Portfolio -- concentrated ever on long-term performance, on sanity in the face of extremism and hype, on analyzing business instead of stock-price charts -- shows at market close today a 1996 gain of 24.22%, substantially ahead of the 3% returns you see for '96 from the market averages we compete with. If you'd told me on January 1st of this year that we could do this, I'd've said, "Yes! Great! I would like to beat the market by 18 percentage points every year. You could call me George Soros."

Please don't, of course... I don't think Tom or I really want to be George, or ever could be George. (By the way, Rogue -- keyword ROGUE -- did a great feature on George Soros last week that I hope you'll make part of your weekend reading, if you missed it.) But the point is once again to keep your eye on the long term and invest in what you know and believe in. And compare your performance, please please please, to the market averages... or to the mutual funds you used to invest in.

But all the above is largely just prelude to the delightful tale and quotation I want to bring you below. It's just so on the money, and a great thought with which to close the week.

Earlier this month, just prior to Independence Day, I had the fortunate opportunity of writing about one of my heroes, Benjamin Franklin. My little essay actually compelled me to go back and read Franklin's autobiography, which is a delightful short read that I think should almost be made mandatory reading for every American.

Thirty-five thousand feet high earlier this week, I opened to my bookmark and cruised on at my own slow pace through Franklin's pages. The fellow next to me leaned over and said, "Great book. Don't you love him?" Surprised, I said that of course I did. But at the same time, I was hoping to avoid a long conversation with him on the flight, as I prefer to use air travel to read and to think.

I was sitting there reading it some more when this same fellow later on said, "So what do you do?" I said that I worked for an online publishing company, blah blah blah, whose mission was to teach people how to invest their own money. He didn't seem terribly interested, but came back, "Oh yeah? What's it called?"

"The Motley Fool," I said, with the sheepish grin I generally reserve for mentions of our name to people I perceive to be totally unacquainted with us and our work.

"You're kidding! The Motley Fool? Seriously? I read your stuff every day! Say, which one are you?" Etc.

Once again, I was reminded of our reach and the importance of our overall mission. As always, when I say "our" I'm not referring to those of us employeed at Fool HQ, but rather to everyone who spends any time making Fooldom a better place. The majority of the work done every day at The Motley Fool on America Online -- with its thousands of message boards, its interactive chats, its people helping people -- is done not by our editorial staff, but by our readers. That's what I mean by "our."

But back to the point. I kept on reading Franklin that afternoon, and came across a great passage. I discovered that I'd been sitting next to this guy who loved Franklin, loved Folly, and seemed imbued with the very same unsinkable optimism that is inherent to our Foolish mentality. Then I turn the page, and read Benjamin Franklin on the subject of bears.

Bears. You know bears. They're the guys who think the market's going down with America on its back. Nuclear war, a mutual-fund cavein, Internet brownouts, domestic terrorism, broken 200-day moving averages, you name it. Any one of those, or the works... whatever. Franklin was an optimist in our Foolish tradition, and reminds me very much of myself in this regard, and the fellow next to me, and so many of you who come through Fooldom every day looking to better your own lives and those of your family.

And I expect that Ben probably never would have believed that 220 years after he penned the words below, some Fool would excerpt them for a little wisdom about the stock market. But there they are. Do you know any bears like this?

"There are croakers in every country, always boding its ruin. Such a one then lived in Philadelphia; a person of note, an elderly man, with a [W]ise look and a very grave manner of speaking; his name was Samuel Mickle. This gentleman, a stranger to me, stopt one day at my door, and asked me if I was the young man who had lately opened a new printing-house [read: decided to invest my money in the stock market]. Being answered in the affirmative, he said he was sorry for me, because it was an expensive undertaking , and the expense would be lost; for Philadelphia was a sinking place, the people already half bankrupts, or near being so; all appearances to the contrary, such as new buildings and the rise of rents, being to his certain knowledge fallacious; for they were, in fact, among the things that would soon ruin us. And he gave me such a detail of misfortunes now existing, or that were soon to exist, that he left me half melancholy. Had I known him before I engaged in this business, probably I never should have done it. This man continued to live in this decaying place, and to declaim in the same strain, refusing for many years to buy a house [read: stocks] there, because all was going to destruction; and at last I had the pleasure of seeing him give five times as much for one as he might have bought it for when he first began croaking."

I can hardly be more eloquent than that, so I shan't try.

Have an exceedingly Foolish weekend!

--- David Gardner, July 26, 1996

Today's Numbers

Stock Change Bid


AMER +3 29.88

CHV -1 57.75

GE + 7/8 81.38

GPS + 1/4 29.13

IOMG + 1/4 17.63

KLAC --- 18.75

MDRX + 3/4 44.25

S + 1/8 41.63 Day Month Year History

FOOL +2.77% -22.71% 24.22% 131.95%

S&P 500 +0.75% -5.18% 3.24% 38.72%

NASDAQ +1.60% -8.91% 2.59% 49.88%

Rec'd # Security In At Now Change

5/17/95 2010 Iomega Cor 2.52 17.63 599.69%

8/5/94 680 AmOnline 7.27 29.88 310.77%

4/20/95 310 The Gap 16.28 29.13 78.96%

1/29/96 250 Medicis Ph 27.86 44.25 58.83%

8/5/94 165 Sears 28.93 41.63 43.91%

8/11/95 95 GenElec 57.91 81.38 40.51%

8/11/95 110 Chevron 49.00 57.75 17.86%

8/24/95 130 KLA Instrm 44.71 18.75 -58.06%

Rec'd # Security Cost Value Change

5/17/95 2010 Iomega Cor 5063.13 35426.25 $30363.12

8/5/94 680 AmOnline 4945.56 20315.00 $15369.44

1/29/96 250 Medicis Ph 6964.99 11062.50 $4097.51

4/20/95 310 The Gap 5045.25 9028.75 $3983.50

8/11/95 95 GenElec 5501.87 7730.63 $2228.76

8/5/94 165 Sears 4772.65 6868.13 $2095.48

8/11/95 110 Chevron 5389.99 6352.50 $962.51

8/24/95 130 KLA Instrm 5812.49 2437.50 -$3374.99

CASH $16754.13

TOTAL $115975.38

Transmitted: 7/26/96