Fool Portfolio Report
Tuesday, September 3, 1996

by Tom Gardner

SAN FRANCISCO, Ca., September 3, 1996 -- Labor Day rung in a quiet day for the market and for The Fool Portfolio. The S&P 500 gained XYZ% and we Fools watched our savings contract XYZ%.

The big winner on the day was sleepy old Chevron, which rose $1 to $59 7/8. This morning Paine Webber upgraded Chevron from "unattractive" to "neutral." On any other street, this change in classification would not flatter. How inspiring would it be to hear that the girl or boy you had a crush on in high school had upgraded you from "ungainly" to "bearable." Ouch. But on Wall Street, it drives investors into an issue.

Chevron also completed the merger of its subsidiary Natural Gas Business with NGC Corporation. The merger loads 39 million NGC common shares, 8 million preferred shares, and $285 million in cash into CHV chests. Chevron will own 25% of NGC, which projects a sales increase from the partnership of 67% in the year ahead.

We're now up just short of 20% in Chevron off cost bases one year apart.

Elsewhere in The Fool Portfolio, not much to report. All of our other holdings were flat or down on the day, with Medicis Pharmaceuticals giving back $1 3/4 to $39 1/4. With our stocks down 0.91% on the day, we're not starting Autumn in style. It's time for the Street's "Come on, Summer's over!" campaign. Get out and buy up equity on the cheap heading into Christmas.

Foolish eyes, of course, focus farther out than just one Christmas. That said, we do expect this to be a banner Christmas. Untouched interest rates, wages rising, the election behind us, exciting new technologies, online services pumping tens of millions of marketing bucks into media and entertainment outlets. It could well present some EXCELLENT short opportunities in late January, if it's one of those years with retailers trading at 55x earnings with reasonable estimates for earnings growth sitting at 15-20% annually. Jest what we like to see.

But, of course, we don't focus too much attention on the total value of our portfolio day in and day out. Today we've got more than $115,000 in our account, tomorrow it could be $110,000. In late October, maybe we're looking at $118,323.64. Whatever. We expect to see this tax-deferred account sitting above $3.3 million in the year 2020.

If you were sitting in my chair and in my shoes today, looking through my eyes, you'd certainly agree that investing is best looked at in 25-year blocks. Why would you agree? I have just the story to convince you.

Three days ago I went hiking around Mount Tamalpais north of San Francisco on a pristine day. To the northeast, San Pablo Bay glistened under the summer glean, and to the southwest, white-caps cut across the Pacific Ocean.

With my three companions---one of my roommates from my junior year at Brown, her sister, and a mutual college friend of ours (a doctor-to-be who donned her sleek black Fool baseball cap)---I pushed up, over, around and back down the Dipsea Trail, pausing for water and to wipe away the perspiration with my t-shirt.

We ended up down at Muir Beach, in a swirl of evening sunlight, dogs chasing tennis balls, kids up to the waist in sand, adults in sunglasses and straw hats looking out at a red-sailed boat or a schooner pushing past on the horizon.

If there's heaven on earth for a Fool like me, it's on a beach in the evening with no computer monitor in range, with my full box of read-but-unanswered email nothing but a strange dream from another life, and with three close friends watching sandpipers skitter down toward the water for food and then race away as the next wave rolls through.

A simple idyll.

Twenty-fours later back in San Francisco proper, I couldn't stop scratching my eyes. From cheekbone halfway up the forehead (for me, a long way), I itched. Twenty-four hours after that, I looked like I'd spent an hour in the ring with Joe Frazier. Any ref would've called the fight by then. My eyes were three-quarters shut. Ooze wept down from eyebrows.

The following morning I was in UC-San Francisco hospital stumbling around answering questions and reading eyecharts. We tried to figure out if the poison oak was in my eyes or just surrounding them on the lids. It turns out that when I'd wiped my shirt across my face while hiking to take the sweat out of my eyes, I'd rubbed in poison oak antigens. Thankfully, though, it turns out that two days later it hadn't gotten past my lids. The UCSF staff loaded me up with steriods and benadryl capsules and I wandered home.

I took a room in a nearby hotel, The Stanyan, to remove my gooey head out of sight and to keep my friends out of harm's way. Even though poison oak isn't contagious beyond those initial antigens, I didn't want to present the exception to that rule! So last night, I spent three hours half-watching Monday Night Fool-ball from behind two cool washcloths and moping.

It's at quiet times like these, half-blind, unable to scratch the ongoing itch, in a room with unfamiliar wallpaper, it's then that Foolishness clicks back in and I remind myself, "Long-term. Think long-term."

The Fool Portfolio may be down for the month of September. We may lose money twixt here and January, 1997. But by gum, my eyes won't be weeping poison oak forever. And when the year 2020 rolls through, I may have more time to spend back at that beach, or one like it, and the eyes to see the waning orange sunset behind a crimson sail miles offshore won't be red and watery.

But even if it happens to me again---all the elements of a dream spoiled briefly by poison---why shouldn't I be thinking even then of the next 25-year period and the ones after that? I may not be there for all of them, but someone will. And I suspect equities will keep climbing at comparable annual rates. And our savings with them.

-- Tom Gardner, a Fool

Transmitted: 9/3/96

Today's Numbers

Day Month Year History FOOL -0.91% -0.91% 25.34% 134.04% S&P 500 +0.41% 0.41% 6.29% 42.82% NASDAQ +0.08% 0.08% 8.57% 58.62% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 15.25 505.41% 8/5/94 680 AmOnline 7.27 29.88 310.77% 1/29/96 375 Medicis Ph 18.57 39.25 111.32% 8/11/95 125 Chevron 50.28 59.88 19.07% 8/12/96 110 Minn M&M 65.68 68.38 4.11% 8/13/96 250 3Com Corp. 46.86 46.75 -0.23% 8/12/96 280 Gen'l Moto 51.97 49.88 -4.04% 8/12/96 130 AT&T 54.96 52.38 -4.71% 8/24/95 130 KLA Instrm 44.71 19.13 -57.23% Rec'd # Security Cost Value Change 5/17/95 2010 Iomega Cor 5063.13 30652.50 $25589.37 8/5/94 680 AmOnline 4945.56 20315.00 $15369.44 1/29/96 375 Medicis Ph 6964.99 14718.75 $7753.76 8/11/95 125 Chevron 6285.61 7484.38 $1198.77 8/12/96 110 Minn M&M 7224.44 7521.25 $296.81 8/13/96 250 3Com Corp. 11714.99 11687.50 -$27.49 8/12/96 130 AT&T 7144.99 6808.75 -$336.24 8/11/95 280 Gen'l Moto 14552.49 13965.00 -$587.49 8/24/95 130 KLA Instrm 5812.49 2486.25 -$3326.24 CASH $1379.61 TOTAL $117018.99 Transmitted: 9/3/96