Fool Portfolio Report
Wednesday, November 13, 1996


by David Gardner (MotleyFool)

ALEXANDRIA, VA, November 13, 1996 -- America Online up $1, ATC Communications bouncing back $1 1/4, Iomega up, Quarterdeck down... God's in his Heaven and all must be right with the world.

The Fool Portfolio rose 1.54% today, exceeding the mildly up market averages by more than a percentage point. Our monthly return came back into line with the market averages today, all of us up about 3.5%. November has typically been a good month for the market, while December and January have historically been the very best.

Last year, in fact, we saw a total gain of 10.56% from 11/1/95 to 1/31/96, with the S&P 500 gaining a comparable 9.36%. The year before -- a no-great-shakes market year -- the numbers were not as impressive: Fool up 2.09% in total for the period, with the S&P 500 down 0.41%. However, if you take the S&P 500's performance back over the last couple of decades, you'll see that the November-January period represents the best single one for the market. No promises... dem's just the facts.

Not much news today, except for AOL. AOL had several news items, in fact. The company announced it now has 7 million members, for one. New CEO of AOL Networks Bob Pittman had this to say: "AOL continues its strong leadership position as the world's most popular Internet online service. More than 7 million consumers are now benefiting from the diversity of the AOL service -- from the Internet to only-on AOL content and features.... We will continue to build on this momentum with our new unlimited pricing plan and product enhancements introduced this Fall."

Further, in its November issue, PC Magazine stamped its Editor's Choice award on AOL, top pick among online Internet services. I believe that praise like this will continue to reach users of other Internet service providers (ISPs), who'll eventually learn that you can send instant messages to friends over AOL whom you spot on your "buddy list," that artwork downloads on AOL only have to occur once rather than every time you access the site, that message boards and chat rooms are integrated with easy pointers right alongside articles, etc. Given that AOL now offers the same basic price that most ISPs offered to former competitive advantage, I continue to feel good about this investment at this price.

The company also announced yesterday that it had fired 300 people. (I don't go in for crummy euphemisms like "laid off" -- can't believe we've let phrases like that enter our habitual daily gab.) That's part of the belt-tightening they're doing over in Dulles as the company buckles down to leaner, meaner 1997. One analyst in a Washington Post article today called yesterdays firings "probably window dressing with a definite eye on Wall Street." Geez, that's pretty harsh. How would you like to be described as someone else's discarded window dressings? Anyway, our best wishes for speedy relocation to those let go.

OK, if it's Wednesday, it must be time for a good Fool quotation. I save every one I come across, adding each to a file conveniently situated on the Zip disk I transport from home to office every day. Today's comes from Lord Melbourne, Britain's prime minister in the middle of the 19th century (capital "F" below is mine):

Neither man nor woman can be worth anything until they have discovered that they are Fools. This is the first step towards becoming either estimable or agreeable; and until it be taken there is no hope. The sooner the discovery is made the better, as there is more time and power for taking advantage of it. Sometimes the great truth is found out too late to apply to it any effectual remedy. Sometimes it is never found at all; and these form the desperate and inveterate causes of folly, self-conceit, and impertinence.

Forget for a second that Melbourne (whose name was William Lamb) was one of Britain's best known Victorian Age cuckolds. (His wife, Caroline Lamb, had a famous love affair with Byron.) The man was clearly inspired. In particular, remember this: "The sooner the discovery is made the better, as there is more time and power for taking advantage of it."

It will always be one of the great joys of my life that I seized onto all this stuff -- as did a bunch of us at Fool HQ early on -- as a young man. By "all this stuff" I mean many different things. For one, it's great to learn investing early. The earlier you learn, the longer you have time to compound your savings. If you can stick it out 30 or 40 years, the amount that you'll make in that 30th or 40th year alone will most likely come to more than your entire initial investment.

That's why I love having on our Fool staff many people significantly younger than I. Take the ultimate, Brent Harris (mfapollo@aol.com), a 14-year-old who moderates our message-board discussion on financial services companies. Gee whiz... the guy knows more than most people ever learn about banks, brokerage firms, and insurance companies and he's one of our remote staff's finest writers. Fourteen. Brent has 16 more years to invest than I. You'll probably be hearing from him.

OK, completely apart from money, it's also great to have discovered Foolishness at a young age. While much of the rest of the world was praising conventional wisdom, some of us (and I refer to increasing numbers of all of us, you and me, every day) are interested in examining the possibilities of doing the exact opposite. We're coming up with contrary -- in some cases, radically contrary -- solutions, asking why the world can't function differently. Do we need a brokerage industry that butters its bread off commissions? Do we want to throw our money at mutual funds that underperform 8 years out of every 10? Should we bother reading the business page if all it typically offers is a day-late market recap along with short-term price predictions made by faceless unaccountable people in Manhattan?

Moreover, do we think the state should sucker people with daily lotteries? And why does the baseball media glorify batting averages, never having taught anyone about on-base and slugging percentages? Why would Americans feel informed by 18 minutes of network nightly news -- much of it quick cuts of moving images with no historical, geographical, or philosophical context provided? Despite constant ongoing coverage by television people of Bosnia and Iraq, most people can't locate either on a map. We may be reporting, but I don't think we're teaching enough.

The earlier one gets turned on to this Foolishness, the "more time and power for taking advantage of it." Working together, the day is ours, my friends.

Some processes change quickly, others take a while. It's taken a while, for instance, for Wall Street to recognize its existing business model is crumbling underneath it. Indeed, it's taken a while for The New York Times to notice this, though notice this it finally did in a front page article earlier this week. The process itself, by contrast, is occurring very rapidly. The beneficiaries are you and me... individual investors who had been getting hosed for decades by a financial establishment which capitalized on its general ignorance. Today, we are armed with our own information, our own broadly distributed Foolish educational material, online teamwork among thousands of participants, and a fervent and eminently American belief in self reliance.

As Lord Melbourne reminds us, the faster the world goes Foolish, the more reasons for hope.

--- David Gardner, November 13, 1996

TODAY'S NUMBERS


Stock Change Bid ------------------- AOL +1 25.75 T - 1/2 37.88 ATCT +1 1/4 16.75 CHV --- 65.25 GM - 1/8 55.00 IOM + 1/4 23.25 KLAC + 3/4 29.38 LU + 1/2 48.00 MMM - 3/4 80.63 QDEK - 3/16 4.56 COMS + 3/8 71.25
Day Month Year History FOOL +1.54% 3.37% 49.98% 180.06% S&P 500 +0.22% 3.67% 18.71% 59.50% NASDAQ +0.33% 3.21% 19.82% 75.06% 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 71.25 52.05% 9/27/96 -890 Quarterdec 7.08 4.56 35.59% 8/11/95 125 Chevron 50.28 65.25 29.76% 8/12/96 110 Minn M&M 65.68 80.63 22.76% 8/12/96 280 Gen'l Moto 51.97 55.00 5.82% 10/1/96 42 LucentTech 47.62 48.00 0.81% 8/12/96 130 AT&T 39.58 37.88 -4.30% 10/22/96 600 ATC Comm. 22.94 16.75 -26.97% 8/24/95 130 KLA Instrm 44.71 29.38 -34.30% 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 17812.50 $6097.51 9/27/96 -890 Quarterdec -6304.75 -4060.63 $2244.13 8/11/95 125 Chevron 6285.61 8156.25 $1870.64 8/12/96 110 Minn M&M 7224.44 8868.75 $1644.31 8/12/96 280 Gen'l Moto 14552.49 15400.00 $847.51 10/1/96 42 LucentTech 1999.88 2016.00 $16.12 8/12/96 130 AT&T 5145.11 4923.75 -$221.36 8/24/95 130 KLA Instrm 5812.49 3818.75 -$1993.74 10/22/96 600 ATC Comm. 13761.50 10050.00 -$3711.50 CASH $8801.62 TOTAL $140029.50 Transmitted: 11/13/96