Fool Portfolio Report
Thursday, October 10, 1996
By Tom Gardner
ALEXANDRIA, Va., October 10 -- I had a nightmare this morning before I woke up.
I walked into a classroom full of students already huddled over exam booklets. Damn, I'm late. I scanned my eyes over all my notes once more, then accepted the exam sheet and blue books from my instructor. Pencils scratched pages from every corner. As I approached my desk, a pair of wild eyes flashed up at me and then fled back down to the page.
I zipped open my knapsack, tossed into it my notebook full of scattered knowledge, pulled out three #2 pencils and went to work. Pow! At the top of the exam sheet read:
YOU WILL NEED A SCIENTIFIC CALCULATOR.
Vwoooom. My mind's eye raced back to the floor of my bedroom, under my damned chemistry textbook, where sat my trusty Texas Instruments XL0-114342 calculator. There it was, here I was. Someone was frantically erasing to my left. The scritch-scritch-scratch of pencils the taptaptap-tip-taptip-tap- of the counting machines harmonized like industrial equipment stitching together car seats or shaping metal trash cans or stamping out frames of glass. The production of education was in full force, the end product being heat, chemical messengering, neurotransmission, better brains and an order to things.
I turned open my bluebook and bore down on the four questions sitting on the first page of a booklet of questions. I couldn't read a single question, the writing was so faint; all I saw, or didn't see, was:
1. Compare and contrast the discourse theory and concretive theory of second language acquisition.
2. Using the standard gravitational equation of F = G m1 m2 / R X R in which F is the force, m1 and m2 are the masses of the two gravitating objects, R is the distance between them, and G is the universal gravitational constant (6.670 X 10 to the power of -8 dyne cm squared/gm squared) present your own gravitational proof and solve it.
3. f(x) = 6x2 - 5x + 32
4. Walk through the earliest stages of the application of applied mathematics to the theory of motion in the 17th century. Consider the major players in the progression of events leading up to Galileo's work on the parabolic path of projectiles. Then conclude your essay by creating your own analysis of the speed and path of the descent of a given conic section.
It could drive you tears or maniacal laughter. Gravitational forces, second language acquisition, parabolic equations, functions, and this just on the first page. Damn the calculator back in my room. Damn the notebook strewn with a semester's worth of notes. Damn the blizzard of penciling and thinking. And damn the silence.
My telephone rang with a call from the office and a query about whether I could fly out to San Francisco on December 3rd to speak at Business Week's technology conference. "What was that? Wait. On the 3rd? January or December? December. Well, I guess, yes. Ok. Ok, well, I'll be in an hour from now."
From that welcome interruption, most of the dream was vacuumed out of reach, squirreled away to an inaccessible corner of my brain, and stored amongst tens of thousands of midnight visions, succubi and apparitions, whimsy and invention. Gone. But what remained was a queasiness from being seasick on a sinking academic boat. Not that I did poorly in school, just that rarely did I ever have much fun, rarely did I ever collaborate on projects, rarely did I feel like a contributor, building collective knowledge.
If your schools were like mine, you had great instructors mired in a lousy system that cherished isolated scholarship, term papers, and long exams. If you're like me, you had little clue of what others in the group were working on, what particular expertise they brought to the group, and if you're like me, you certainly never read the work of anyone else in the group after it was completed. Term papers were turned in at the end of the term, and one individual graded them. I remember coming to the close of a brutally cold quarter of winter studies, sitting in front of a friend in tears who'd landed a C- for American literature, and offering to her, "Hey, I learned a lot from you in this class."
But what was that worth? In a deficient educational system that favored hermetical study, long and non-collaborative testing, standardized bubble-fillers rather than workgroups and projects, what was my semester-end comment to my friend worth? Very little, verging on nothing. What do I recollect from that class that I use today? The same. Why do I think that's so? Because under the present system, we do not connect our learning with people and communication and a sense that we're building toward something. We connect it with final exams, closed-system word-processing, silly mnemonic devices, and grades. As good as the instructors are, and it was my good fortune that those who taught me were masterful, they operate in a flawed model.
It is a model that the Internet will stomp and is stomping like a brown grape. The Internet will take our children into national classrooms; it will bring sound and motion to their three-inch textbooks; the Internet is ushering in the most dramatic educational revolution in the history of humankind. Much as I love the slice of it here that we dedicate to financial instruction, much as I treasure our aims to beat the stock market, much as I delight in the re-direction of money flows back out across America, Foolishness for me is about the entire educational reform, reaching beyond finance. It's about inextricably linking together interaction and scholarship. About forcing humor, skepticism, camaraderie, conversation, project-building, and inclusion into the learning process. About tying every community in America into this process.
The Internet and online services are not without flaw. Right now, they're slow, sloppy and expensive. Most of the content-driver companies in Digitalville care more about equity funding, the value of their stock options, and media glory than they do about studying the technology to better the customer experience. Cash and great publicity are tempting; they're also key components to running a great enterprise. But they're part of the support team to the far more consequential mission of creating value for the consumer.
But while I think the Internet and many of the business plans and models that surround it are weak, the potential is overwhelming. I keep thinking of our band of heroes in Frank Baum's The Wizard of Oz, right after Dorothy soaks to death the Wicked Witch of the West. There's an instant of pause, as the tiny group of four faces the witch's regiment of foot soldiers. What will the old guard say? Are Dorothy and her ragtag band headed to the dungeon? Motionless silence.
Then one of the infantrymen raises his spear in the air and shouts, "All hail Dorothy!" As bumblingly imperfect as the Internet is, the old guard is waiting to hail it, waiting for the model of closed-systems education and business and healthcare and politics and communication, among so many others, to shrink into a little green pool of water on a castle floor. This past week, an educator I admire in Massachusetts wrote to me of her excitement regarding 3Com's nonstop effort to network together the schools in her region. It will introduce collaborative instruction between schools, it will eventually kill off most of our narrow testing procedures, much of the isolation that presently goes with learning, and bring in voice, color, and community from across the planet.
3Com rose $5/8 to an all-time closing high of $67 per share, en route to leading The Fool Portfolio to a blase, market-meeting performance today. America Online gave back another dollar, inching closer by the hour to its 52-week low. At $25 3/4, AOL is trading at a mere 2x sales. Questions about their business model going forward persist. Can AOL effectively manage a thousand partnerships? Is Microsoft's Web site, its pricing plan, its underlying financial might, and its marketing power going to eat into the big-blue-triangle's market share? How defensible as consumer technologies are AOL's chat and email services? The great debate carries on.
To close tonight, I've enjoyed watching our latest group of Foolish Four Dow stocks in there quest for communal profitability in our portfolio. Lucent Technologies has been on a tear since its poor start. Lucent today won a $71 million contract to install wireless networks in Korea, and the former Bell Labs was awarded the "Project of the Year" by the Project Management Institute for its work on AT&T's network. We're now less than $100 away from making money on our blend of T and LU. General Motors fell $5/8, on news that the Canadian Auto Workers union did not expect talks to achieve anything over the weekend. Chevron fell an eighth and 3M rose another $5/8. To date, our Dow stocks since August 13th, 1996 -- the day of our rotation -- have made us around $600.
Enjoy the long weekend, if this is in fact a long weekend for you. If not, heck, why not call in sick on Monday?
Tom Gardner, Fool
Day Month Year History FOOL -0.36% -3.46% 47.37% 175.17% S&P 500 -0.34% 1.05% 12.76% 51.51% NASDAQ -0.08% 0.82% 17.57% 71.76% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 23.25 823.00% 8/5/94 680 AmOnline 7.27 25.75 254.05% 8/13/96 250 3Com Corp. 46.86 67.00 42.98% 8/11/95 125 Chevron 50.28 65.25 29.76% 8/12/96 110 Minn M&M 65.68 70.75 7.72% 9/27/96 -890 Quarterdec 7.08 6.63 6.48% 10/1/96 42 LucentTech 47.62 47.88 0.54% 8/12/96 130 AT&T 39.58 38.75 -2.09% 8/12/96 280 Gen'l Moto 51.97 49.88 -4.04% 8/24/95 130 KLA Instrm 44.71 22.88 -48.84% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 46732.50 $41669.37 8/5/94 680 AmOnline 4945.56 17510.00 $12564.44 8/13/96 250 3Com Corp. 11714.99 16750.00 $5035.01 8/11/95 125 Chevron 6285.61 8156.25 $1870.64 8/12/96 110 Minn M&M 7224.44 7782.50 $558.06 9/27/96 -890 Quarterdec -6304.75 -5896.25 $408.50 10/1/96 42 LucentTech 1999.88 2010.75 $10.87 8/12/96 130 AT&T 5145.11 5037.50 -$107.61 8/12/96 280 Gen'l Moto 14552.49 13965.00 -$587.49 8/24/95 130 KLA Instrm 5812.49 2973.75 -$2838.74 CASH $22563.12 TOTAL $137585.12 Transmitted: 10/10/96