Fool Portfolio Report
Friday, November 8, 1996
by Jeff Fischer (MF BudFox)
ALEXANDRIA, VA -- November 8, 1996 -- Today the front page of the New York Times business section ran an article titled "S.E.C. Acts on Stock Promotion on the Net." The first sentence reads, "Cynics who suspect the real Internet "revolution" has been in the area of stock fraud got some ammunition yesterday, when Federal regulators brought what appears to be their first lawsuit to stop securities manipulation over the Net."
The story goes on to explain how an electronic newsletter called SGA Goldstar, distributed over the Internet, touted the stock of a small company called Systems of Excellence (which was known by followers as SEXI, no less, thanks to the so-professional ticker symbol). The stock rose from twenty-five cents a share to $4.75, and SGA Goldstar pirates unloaded their shares. What shares?
According to the article, some of these people had been given large amounts of shares in return for hyping the stock. One man at the SEXI company apparently had millions of unregistered shares issued to accounts controlled by his wife, mother, and neice, and dished those shares out in return for the stock hyping (hey, I guess he was a giving man). The man also issued false press releases from the company, while selling his own shares.
The article also mentions -- surprise! -- Comparator Systems (symbol: IDID), a little joke of a stock which rose this spring from pennies to about $3.00, before trading was halted. CNBC talked about this stock several times per day last spring while it was rising on massive volume. Then -- the kicker -- CNBC interviewed the CEO of Comparator Systems, and gave him a good five minutes air-time, in a serious interview.
I wrote CNBC at the time, asking why they were devoting so much time to a penny stock, and why, in the name of the Great Fool, would they interview the CEO? I guess it was a story, and stories, as they say, need to be followed. But the irony is that CNBC very likely MADE much of that story, and a mere few days after CNBC interviewed the CEO, who touted the company's "revolutionary products," the stock was halted and is now all but worthless.
The Fool of course has nothing to do with penny stocks. If a stock is below $5 we won't grant it a folder, or even a second thought. The Fool also has thousands of intelligent readers who don't allow hype and shoot it down the minute they see it. We also have dozens of great Fool volunteers who sweep the boards to ensure no such blasphemy stands, if it were even to occur. The Fool has never tried to make a quick buck. Fools invests in great companies for the long-term, and the Fool is indeed an online Revolution. A Revolution of the best kind.
The Fool has put up a market killing return of 182% in little over two years. How? By investing in Dow stocks and in high growth world-leaders, such as America Online and Iomega, and giant masters of their domain, brilliant companies, such as 3Com. The Fool has achieved record smashing returns while investing in mega-giants Chevron, 3M, and General Motors, and in the past, companies such as Sears and General Electric, and The Gap. But the best part about all this? The best part?
The best part of our Revolution, indeed the Revolution itself, is showing the Foolish process to others, to hundreds of thousands of readers, so they can beat the market as well. And we receive hundreds of emails per week from people who have done just that. People who have learned the Foolish Four, who have learned the 13 Steps to Investing Foolishly, and who proudly write email along the lines of, "My account is up 35% this year thanks in a large part to you guys, and also I'm getting ready to do the Foolish Four switch again! Exciting! But how simple, too!" A Revolution is the redistribution of power; and a spreading of power to the masses is the best kind of Revolution possible. This is our Foolish Revolution, and we're all a part of it.
Dozens of journalists have written excellent articles about Fooldom, but just as many don't yet understand what the Fool represents. They lump it with the Internet in general. Perhaps they've never taken the time to read the Fool. Or, surely many journalists looking for a story are given some memo on their desk, and a phone number, and give a call to Fool HQ to follow some lead.
I sit beside David and hear him on the phone on a near daily basis. Often he says things like, "Yes, sure, I'll buy some eggs and cheese on the way home, if it isn't raining." (David usually rides a bike to Fool HQ -- completely Foolish!) But wait, I digress...
David, a great percentage of the time when he speaks on the phone, is speaking to journalists. And lately, even now in October and November, I often hear David having to strike down Comparator Systems as a topic, and explain to the person on the other end of the line that the Fool doesn't follow penny stocks, doesn't care about penny stocks, has nothing to do with penny stocks, and invests with complete accountability and only in high quality -- and then he is interrupted. He waits, listens, and then he repeats himself.
When he is allowed to tell the full story behind the Fool, what the Fool aims to do, what the Fool is accomplishing, and the Foolish Revolution, he tells it brilliantly. But I don't see that printed very often. It's a funny world.
But enough about that. It's a distraction from our purpose -- it's a nuisance to the Foolish soul. Tens of thousands of Fools will click in and read this recap over the weekend. We're grateful there are so many fellow Fools, and we're happy to see the Fool growing so impressively in both size and services.
And we at Fool HQ, and the remote Fool staff, will continue to work at Foolishly teaching people how to invest for themselves intelligently, diligently, and patiently, until the Fool caps on our heads wither and fade. And then we'll get new Fool caps. Because this online Revolution has just begun, is still in infancy, and is growing each day; and the Fool is the one place that truthfully has all the lights turned on bright, and all the doors opened wide, 24 hours a day, seven days a week. (Well... except when AOL crashes).
As for the week, the Foolfolio was exceptionally strong, blasting 7.15% higher, while the Nasdaq and S&P 500 gained a very healthy 2.92% and 3.85%. And to think in the past months how often gooroos had predicted a swift market decline just after the election. What a waste of time (and money!) if you listened to such arbitrary nonsense. Most of those bearish sages have probably now bought shares back after stocks didn't fall this week, and they actually may have helped cause the recent sharp rise in the market, while all the long-termers sat back and enjoyed. Ahh, the sweet Foolish irony....
For news today, Iomega (IOM) moved to the New York Stock Exchange and announced further on their plans for new storage technology in handheld consumer electronic devices. Their reusable data storage system is to be known as "n-hand," and could be used in products such as digital cameras, cellular phones, and handheld personal computers (known as digital assistants).
Iomega CEO Kim Edwards said, "Our n-hand technology... has the potential to change the way consumers use portable electronic devices."
It's a beautiful thing when your company is the leader in its field. While the competition is working fervently to merely catch up to Iomega's current leading products (Zip, Jaz), Iomega, in the mean-time, while crushing that market, is able to develop revolutionary new products which have a great chance to lead yet another market segment. Is it a snowball effect when a brilliantly run company gets ahead of the game, finds its pace, and starts cranking out Success with a capital "S"? Sometimes it is, and it can be Sweet, again with a capital "S."
The n-hand disks are expected to cost less than $10 for a 20-megabyte disk, and could be available as early as the second half of 1997. The disks are about half the size of a business card. Let's hope the new Iomega technology can be all that Iomega plans -- perhaps it can even be another award-winning feather in the company's cap.
Meanwhile, Thursday America Online (AOL) announced earnings for the first fiscal quarter of 1997, and of course the Fool offers complete coverage of the event. Also this week, the Boring Portfolio, run by Fool Greg Markus, had a celebration of sorts: every stock in the port is now profitable, in the black, above water (not that any were ever very far underwater, but still... it's a nice accomplishment). Boring has put together a pretty tight collection of diversified stocks, and currently has more than $15,400 in cash to invest. It will be interesting, when MF Boring is ready, to see in what the Boring Port next invests.
Finally, Tom and David wrote of all Fools in the end of their book, The Motley Fool Investment Guide, that, "Together we are creating, as somebody said in one of those space movies, 'Something wonderful.'" That statement has never been more true. Many people realize it right now, many more people are realizing it each day, and many more thousands will realize it as the days and weeks and years go by.
Have a great and Foolish weekend!
Stock Change Bid ------------------- AOL +1 1/4 26.00 T + 5/8 35.75 ATCT -1 1/2 15.38 CHV + 1/2 66.25 GM + 5/8 55.50 IOMG - 7/8 24.50 KLAC - 1/4 27.00 LU - 5/8 48.88 MMM + 1/8 80.00 QDEK - 1/16 5.06 COMS --- 71.50
Day Month Year History FOOL -1.04% 4.20% 51.19% 182.30% S&P 500 +0.44% 3.62% 18.65% 59.43% NASDAQ +0.27% 2.95% 19.52% 74.61% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 24.50 872.62% 8/5/94 680 AmOnline 7.27 26.00 257.49% 8/13/96 250 3Com Corp. 46.86 71.50 52.58% 8/11/95 125 Chevron 50.28 66.25 31.75% 9/27/96 -890 Quarterdec 7.08 5.06 28.54% 8/12/96 110 Minn M&M 65.68 80.00 21.81% 8/12/96 280 Gen'l Moto 51.97 55.50 6.79% 10/1/96 42 LucentTech 47.62 48.88 2.64% 8/12/96 130 AT&T 39.58 35.75 -9.67% 10/22/96 600 ATC Comm. 22.94 15.38 -32.97% 8/24/95 130 KLA Instrm 44.71 27.00 -39.61% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 49245.00 $44181.87 8/5/94 680 AmOnline 4945.56 17680.00 $12734.44 8/13/96 250 3Com Corp. 11714.99 17875.00 $6160.01 8/11/95 125 Chevron 6285.61 8281.25 $1995.64 9/27/96 -890 Quarterdec -6304.75 -4505.63 $1799.13 8/12/96 110 Minn M&M 7224.44 8800.00 $1575.56 8/12/96 280 Gen'l Moto 14552.49 15540.00 $987.51 10/1/96 42 LucentTech 1999.88 2052.75 $52.87 8/12/96 130 AT&T 5145.11 4647.50 -$497.61 8/24/95 130 KLA Instrm 5812.49 3510.00 -$2302.49 10/22/96 600 ATC Comm. 13761.50 9225.00 -$4536.50 CASH $8801.62 TOTAL $141152.50 Transmitted: 11/8/96