Fool Portfolio Report
Monday, September 9, 1996

by David Gardner

ALEXANDRIA, VA, September 9, 1996 -- Geez, two days in a row now the Fool Portfolio's losses contrast starkly with the market's overall gains. Monday, we watched our two biggest holdings drop amid robust across-the-board strength for the market indices. America Online gave back another $1 1/4, while Iomega forfeited $1/2. The Foolfolio drifted a percentage point lower, while the market rose a percentage point higher. Argh.

America Online closed bidding just $27, only a couple of points above the 52-week low it established in late July ($24 1/2 was the price). It's been an amazing four-month drop from $70 to $27, and a significant contributor to our weak summer.

Iomega closed bidding $13 1/4, less than a point below its low of $12 5/8 a few weeks ago. Iomega has done an even better job of spoiling our summer than America Online. Look back over the past year using our Historical Quotes feature and you can see the tale told eloquently with a graph. The past 12 months have seen a slow but steady rise from $3 to $10 (by early April) followed by an explosive move from $10 to $55 in just the two months after that. Four months later, the shares are worth only one-quarter of that high. Sheeeesh! It's hard to keep any perspective in such a situation. I guess you can start with pointing out that IOMG is up 60% overall this year -- outstanding -- while at the same time noting that it has gone through one of the more precipitous declines on all major American exchanges this summer. It's the CUBE that hasn't come back yet.

To generalize about common points shared by both these companies, they've both been winners foremost. May not seem like it anymore, given the recent past, but over the time frame of one year, two years, or further back, the overall result has been outstanding appreciation for buy-and-hold long-term shareholders. This is the perspective in danger of being lost when the tide of sentiment and institutional trading turns against you. But let's not be blinded to the long-term truths by short-term woes.

The painful aspect comes from having had to undergo such precipitous declines. In retrospect, we would've loved to have sold out at the tops and bought back at the lows. In retrospect. The funny thing, though, is that one can never invest in retrospect. Life doesn't work like that. We can't go back and correct the excesses or dearths of our years raising our children, for example. We must simply accept our children as the often wonderful creatures that they are. Sure, it'd've been nice to have recognized that if we had just forced little Timmy to clean up his bedroom on a regular basis in his pre-teen years, he would be a more organized and responsible adult today. But imperfection is what makes us human; there'd be no point to life and no point to investing if hindsight were foresight. You can love Timmy anyway, and he can be a heck of kid even with the four-day-old dishes in the sink.

So we continue to rue our imperfections, suffering the consequences of them while at the same time working hard to minimize or obliterate them.

From the Fool Portfolio's point of view, your Foolish managers are working hard to look not BACK at its past, but ahead to its future. We're not content with our overall superior returns, because we know we can do better. We're also not depressed by our recent abominable returns because we understand their somewhat inevitable presence in the bigger picture.

But what really matters is what comes next: next month, next quarter, next year. We will continue to evaluate Fool Portfolio holdings carefully to ask ourselves, "At the current price, given our future expectations, do we still want this stock in our portfolio? Is there a better investment opportunity for my money, instead?" Those are the questions that can help guide all investors to improved, market-beating returns.

Finally, I hope you'll join Tom and me for our auditorium event tonight, kicking off our new series The Thirteen Steps to Investing Foolishly. We'll be taking it one Step at a time, beginning with the First tonight: "Understand what Foolishness is." It'll be sort of a group meditation on the meaning of it all, and should provide an engaging hour from 9 to 10 PM ET tonight. Please join us by entering Fooldom and clicking on the main-screen link. Fool on!

--- David Gardner, September 9, 1996

Today's Numbers

Day Month Year History FOOL -0.97% -5.85% 19.08% 122.36% S&P 500 +1.23% 1.81% 7.77% 44.80% NASDAQ +0.82% 0.63% 9.18% 59.50% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 13.25 426.01% 8/5/94 680 AmOnline 7.27 27.00 271.24% 1/29/96 375 Medicis Ph 18.57 40.00 115.36% 8/11/95 125 Chevron 50.28 60.38 20.07% 8/12/96 110 Minn M&M 65.68 68.38 4.11% 8/13/96 250 3Com Corp. 46.86 48.00 2.43% 8/12/96 130 AT&T 54.96 53.38 -2.89% 8/12/96 280 Gen'l Moto 51.97 48.25 -7.16% 8/24/95 130 KLA Instrm 44.71 17.63 -60.58% Rec'd # Security Cost Value Change 5/17/95 2010 Iomega Cor 5063.13 26632.50 $21569.37 8/5/94 680 AmOnline 4945.56 18360.00 $13414.44 1/29/96 375 Medicis Ph 6964.99 15000.00 $8035.01 8/11/95 125 Chevron 6285.61 7546.88 $1261.27 8/12/96 110 Minn M&M 7224.44 7521.25 $296.81 8/13/96 250 3Com Corp. 11714.99 12000.00 $285.01 8/12/96 130 AT&T 7144.99 6938.75 -$206.24 8/11/95 280 Gen'l Moto 14552.49 13510.00 -$1042.49 8/24/95 130 KLA Instrm 5812.49 2291.25 -$3521.24 CASH $1379.61 TOTAL $111180.24 Transmitted: 9/9/96