Fool Portfolio Report
Friday, September 27, 1996
(FOOL GLOBAL WIRE)
by David Gardner
ALEXANDRIA, VA, September 27, 1996 -- Not much to write about in The Fool Portfolio today. The market glided downwards and most of our stocks with it. Iomega and America Online both closed up on the day, but each of our other holdings gave back ground. 3Com sagged $7/8. Presumably there's some profit taking there. After all, 3Com has really been motionless all year. There may be some investors out there that want to take profits before the New Year, to buoy Uncle Sam.
The big news of the day was our decision not to yet carry out our shorting of Quarterdeck. We now leave ourselves four remaining market days to transact. It isn't that we weren't considering the trade today. But I took a quick quote in the morning, and the Aufhauser broker said: "It's $6 3/8 bid, $6 7/8 ask."
Not only had the stock opened down $1 3/8 from its bid close yesterday, but it suddenly had an ugly (though temporary) spread of fifty cents. On a $6 1/2 stock, that's a spread of 7.5%. And the stock traded 1 million shares today. We didn't witness a broad spread due to the lack of demand there, as has so often been the market-maker explication of the dreaded wide spread. Nope.
Soon after, the stock recovered somewhat, moving back above $7 for the rest of the day. Nevertheless, catching the necessary uptick at a price we liked just never occurred today, so we stood pat. We're by now pretty well used to not always getting the prices we like; that's part of the self-imposed Foolish penalty of actually announcing our moves before we make them (part of our effort to change an industry that is only too happy not to tell you what it's doing at all, or -- perhaps worse -- let you know what it's done AFTERWARD -- neat trick!).
Our broadening subscriber base often causes stocks to gap up or down at the open, with the SOES bandits and the market makers influencing even greater price volatility. That comes with the territory. But when it happens in a significant enough way, we'll hold off trading that day. And possibly the next, and the next. The self-imposed Fool Portfolio trading policy gives us five market days to accomplish any given transaction. Our Quarterdeck short will be one of those we accomplish in the latter four days. So consider us front-run at this point!
Elsewhere in Foodom. . .
We appreciate the recent mention in Rolling Stone magazine this month, in an interesting article by Jeff Goodell. Jeff came and hung out at Fool HQ for an afternoon, and clearly knows a fair amount about America Online (the subject of the article). But I do want to correct a perception put forth in the article. Here's the text:
"One of [AOL President] Leonsis' first moves was to start a group within the company called the AOL Greenhouse. It was a simple but brilliant innovation: start an in-house venture-capital firm, giving advice and money to outsiders who want to create original programming on AOL. It was inspired by the success of the Motley Fool, which began when a couple of scruffy kids named David and Tom Gardner pitched Leonsis their idea of developing a site on AOL targeted at small investors. The Fool would be witty, highly opinionated and informed by the basic assumption that most of the traditional financial advisers are either corrupt or unwise. Leonsis gave the pair the go-ahead, and before long, the Fool was one of the most popular sites on AOL, and the Gardners were on their way to becoming the bad boys of the investment community."
"Scruffy kids"? "Bad boys of the investment world"?
On the one hand, those terms have some allure. What NFL defensive unit wouldn't crave to earn the tag "The Bad Boys" from our media? The phrase does have a certain sex appeal. That said, we have no interest in being bad boys. I grant you, the image of scruffy is no doubt interpreted to mean "cool" by most Rolling Stone readers, so I'm not whining here. Just trying to share my side of things.
(Of course, you'll be hard-pressed to locate many neckties around Fool HQ on any given day!)
We do not, I state emphatically, maintain any basic assumption that "most of the traditional financial advisers are either corrupt or unwise." Some few are. Some others are excellent. The system is flawed. But we don't spend much time talking about corruption; we focus on accountability, excellence (or lack thereof), and serving one's customers
Finally, quite contrary to being "bad boys," our aims are inherently good, fairly placid and to our thinking, entirely non-controversial: to teach, to learn, to reform, and to amuse. That some of our teachings, some of our attempts at reform, inevitably criticize or undercut the existing establishment -- addressing its excesses or its dearths, its faults as well as its strengths -- may make us appear to some to be bad dudes. But I have to say, as a 30-year-old father of two, I just don't feel that much like a "scruffy kid" or a "bad boy."
The reality of being a public figure is that people can call you whatever they like, and you'll never have time to respond to all of them. And it's our good fortune that most of the stuff that's written and broadcast about us has been complimentary, enthusiastic, supportive. But I just wanted to make it clear to our regular readers at the close of this fantastic week that I continue to harbor no aspirations to be a bad boy, or a bad guy, or a bad dude. While some Wall Street types wear leather jackets and write about their international motorcycle exploits, I'm more interested in raising a family, engaging a community, obtaining the good opinions of good people, and helping to teach a nation how to manage its own money.
That's what Foolish means to me.
Day Month Year History FOOL +1.10% 18.65% 50.08% 180.23% S&P 500 +0.05% 5.25% 11.41% 49.69% NASDAQ +0.17% 7.76% 16.91% 70.80% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 23.13 818.03% 8/5/94 680 AmOnline 7.27 34.88 379.52% 8/13/96 250 3Com Corp. 46.86 62.00 32.31% 8/11/95 125 Chevron 50.28 61.63 22.55% 8/12/96 110 Minn M&M 65.68 69.75 6.20% 8/12/96 130 AT&T 54.96 51.50 -6.30% 8/12/96 280 Gen'l Moto 51.97 47.25 -9.09% 8/24/95 130 KLA Instrm 44.71 22.00 -50.80% Rec'd # Security Cost Value Change 5/17/95 2010 Iomega Cor 5063.13 46481.25 $41418.12 8/5/94 680 AmOnline 4945.56 23715.00 $18769.44 8/13/96 250 3Com Corp. 11714.99 15500.00 $3785.01 8/11/95 125 Chevron 6285.61 7703.13 $1417.52 8/12/96 110 Minn M&M 7224.44 7672.50 $448.06 8/12/96 130 AT&T 7144.99 6695.00 -$449.99 8/11/95 280 Gen'l Moto 14552.49 13230.00 -$1322.49 8/24/95 130 KLA Instrm 5812.49 2860.00 -$2952.49 CASH $16258.37 TOTAL $140115.25 Transmitted: 9/27/96