Fool Portfolio Report
Wednesday, February 18, 1998
by David Gardner (DavidG@Fool.com)

ALEXANDRIA, VA (Feb. 18, 1998) -- Ring that Double Gong, Fools. LU hath doubled.

Long-time readers know that the day a Fool Portfolio stock hits the 100% return mark for the first time, we wheel out the Double Gong and smash the heck out of it in our daily report. GONG! GONG! GONG! GONG!

In fact, that's a direct quotation from the report of August 7, 1996, when we reached our previous most recent double: the since-sold Medicis (Nasdaq: MDRX).

(ACCOUNTABILITY FLASH UPDATE: We exited Medicis on September 13, 1996, at a now split-adjusted price of $26 1/2. After today's drop of $1 1/4, Medicis closed at... $45 1/8! Up another 70% since our sale! Nice move, Fools.)

(Those familiar with our "Don't Look Now!" sell game written about in The Motley Fool Investment Guide know that we give ourselves a "Total Defeat" for this decision. The S&P 500 over that time? It's up 52%.)

Lucent (NYSE: LU) announced a 2-for-1 stock split at its shareholders meeting today, setting off that speculative frenzy that often occurs after split announcements. The stock quickly rushed up and kept going up, closing at $97 7/8, up $5 5/16 today. LU also increased its scanty dividend by 6%.

GONG!

The stock came to us as a spinoff, so that our biggest regret is simply that we've never added to it. We're still considering whether or not to jettison the holding when we announce our Dow switch tomorrow. Anyway, congratulations to all Lucent shareholders. The market has generously rewarded a great company.

One of my favorite contributors to our Web boards, AngryCandy, wrote, "The P/E is still not too high for my taste. With '98 earnings estimates ranging from $3.00-$3.10 [now, pre-split], LU is trading around 30-34 times earnings. They are growing earnings at 20% annually and, IMHO, that's a conservative estimate. I only regret that it took me so long to realize how good LU is."

We really don't believe long-term shareholders should take short-term valuation that seriously, inducing incorrect sell decisions. However, for those who are not ultra long-term, the present price of Lucent does place its YPEG fair value closer to $70 than $100. That said, great companies often look overvalued FOR YEARS!

Double Gong and all, the Fool Portfolio fell to the market today. The S&P 500 rose 0.91%, the Nasdaq lifted 0.72%, and the lowly Fool stumbled forward 0.05%, just happy to be up like the big guys. We still have the lead for the month of February, but not enough to make up for a dismal January that has left us a six-point deficit to the S&P.

But while the year may be down for the Fool Port at the moment, it's definitely not down for Fooldom at large. I'm amazed by the outstanding articles and features popping up everywhere today. If you have a few extra minutes, just look at what's new in Fooldom: a new Dueling Fools featuring the always interesting Rainforest Cafe, a Foolish Fribble by a fellow who has NO credit cards (can someone live this way?!), and the debut of our Foolish section on Investment Clubs. All that, just a fraction of what's going up today. Sheeesh!

We live in an Optimistic Age, if you ask me, which I of course consider all to the good. I was wondering today how much of that has to do with coming upon a new millenium. I have to believe this all plays into our collective conscious, the notion that we're about to embark upon the third millenium after Christ. I mean, 2000, my friends. 2000! It is a bracing feeling, and could be partly responsible for everything from stock market valuation to declining crime rates in major cities to a travel industry mini-boom. Who knows?!

(If you have a question about the Year 2000 problem -- a horse of a different color -- you can look into our most recent Industry Snapshot on the subject.)

Anyway, we're constantly in danger of taking it all for granted. Even just financial education. I got a lovely note from a recently engaged Houston couple whom Tom and I met at a booksigning. Matt and Karen wrote, "Think how lucky we are.... Our parents (and theirs) didn't have the financial opportunities or the screaming wake-up calls regarding retirement that the average 29-year-old does today -- not even close. We're privileged beyond our wildest dreams in that regard. Information was purposefully inaccessible and expensive, tailored towards the 'haves,' and not the 'have-nots.' "

That is a privilege, one that has only shown up in the past couple years. Anyway, that now means it's very satisfying (and a lot more fun) to be among the have-nots. They always get theirs anyway, during revolutions, no?

GONG!

-- David Gardner, February 18, 1998

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TODAY'S NUMBERS

Stock Change Bid ---------------- AMZN - 3/8 60.88 AOL + 1/2 112.50 T + 3/8 64.13 CHV +1 3/16 78.75 DJT + 3/16 10.81 GM + 3/4 65.56 INVX - 1/8 24.38 IOM - 3/16 9.00 KLAC -1 3/16 42.50 LU +5 5/16 97.88 MMM - 1/4 87.88 RTN.A + 5/16 53.31 COMS + 3/16 33.56 TDFX + 1/16 23.63 SPY + 15/16 103.44
Day Month Year History FOOL +0.05% 6.82% 0.62% 237.67% S&P: +0.91% 5.28% 6.35% 125.14% NASDAQ: +0.72% 5.95% 9.26% 138.24% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 112.50 1446.84% 5/17/95 1960 Iomega Cor 1.28 9.00 602.90% 10/1/96 42 LucentTech 47.62 97.88 105.55% 8/12/96 130 AT&T 39.58 64.13 62.02% 9/9/97 290 Amazon.com 38.22 60.88 59.27% 8/11/95 125 Chevron 50.28 78.75 56.61% 8/12/96 280 Gen'l Moto 48.74 65.56 34.51% 8/12/96 110 Minn M&M 65.68 87.88 33.80% 1/8/98 115 S&P Depos. 95.91 103.44 7.85% 12/19/97 17 Raytheon 53.21 53.31 0.19% 8/24/95 130 KLA-Tencor 44.71 42.50 -4.95% 1/8/98 425 3Dfx 25.67 23.63 -7.96% 6/26/97 325 Innovex 27.71 24.38 -12.03% 4/30/97 -1170 *Trump* 8.47 10.81 -27.67% 8/13/96 250 3Com Corp. 46.86 33.56 -28.38% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 39937.50 $37355.63 5/17/95 1960 Iomega Cor 2509.60 17640.00 $15130.40 9/9/97 290 Amazon.com 11084.24 17653.75 $6569.51 8/12/96 280 Gen'l Moto 13647.92 18357.50 $4709.58 8/11/95 125 Chevron 6285.61 9843.75 $3558.14 8/12/96 130 AT&T 5145.11 8336.25 $3191.14 8/12/96 110 Minn M&M 7224.44 9666.25 $2441.81 10/1/96 42 LucentTech 1999.88 4110.75 $2110.87 1/8/98 115 S&P Depos. 11029.25 11895.31 $866.06 12/19/97 17 Raytheon 904.57 906.31 $1.74 8/24/95 130 KLA-Tencor 5812.49 5525.00 -$287.49 1/8/98 425 3Dfx 10908.63 10040.63 -$868.00 6/26/97 325 Innovex 9005.62 7921.88 -$1083.75 4/30/97 -1170*Trump* -9908.50 -12650.63 -$2742.13 8/13/96 250 3Com Corp. 11715.99 8390.63 -$3325.37 CASH $11259.61 TOTAL $168834.49