Fool Portfolio Report
Tuesday, December 17, 1996


by Jeff Fischer (MF BudFox)

ALEXANDRIA, VA., December 17, 1996 -- Forgive us. We can't keep up with the stock market as well as we should. In the past we've let many events go by without so much as a mention. Many important events. But we're going to work on this in the future, beginning today. So, right now, we'll certainly mention the big news first. The big, over-riding announcement for the day.

The Federal Reserve, led by Mr. Greenspan, met today. They met through the afternoon while the collective world held its breath. Everyone here at Fool HQ held their breath, too. (It was a long day). The future of investing rode on this man's tongue, and perhaps the future of the entire financial world. Mr. Greenspan, some say, is more powerful than the President of the United States. Stocks of course were down in the morning, nervous and weak-kneed.

Finally the Federal Reserve concluded its last meeting of 1996 in the late afternoon. The decision arrived at: leave interest rates unchanged. The immediate reaction by the media: "The door is wide open to speculation about the direction and timing of [the Feds] next move."

The Fed, as people lovingly call it, last took actions with interest rates on February 1st. The Fed has not made a move since, and this has been the longest period of inaction since 1993. As such, many market mavens are trying to guess the next move the Fed will take, and what that move will be. Well, here at the Fool we're going to try to learn how to Guess The Fed, too, so we can share our guesses with our readers, and you can act accordingly and in a timely manner.

But just as professionals don't have all that much time to play Guess The Fed, we don't have all that much time, either, especially as we're now working to serve you better with all the financial information you need each and every day. This endeavor will now take a large portion of our time, and yours, too, if you read the recap each night. But that's all good, because we're going to start covering the news that you need to make informed decisions, all the news the professionals read each day to make their daily decisions, all the news we've avoided because we were trying to be too "cool" for it. But no more.

We'll start next week, right here, and some of the things I'll be writing about in great detail include:

Housing starts

Unemployment

Producer Price Index

Consumer Price Index

Factory orders

Internationl trade

The Money Supply

Mortgage rate surveys

Philadelphia Federal Reserve Bank surveys

Initial jobless claims

New job creation

The precarious nature of my job

Mortgage applications index

Money-market mutual fund assets

Import and export price indexes

Federal budget report

Federal reserve treasury auction

Options expirations

Triple witching

Socks the Cat

Oil stocks and petroleum data

LJR Redbook numbers (same-store sales)

MF Czar's witty remarks

Manufacturers' profits

Ian Curtis

Industrial production

GNP

GDP

Trade deficits

The Agricultural Department

Adam Sandler

Buy Programs

Sell Programs

Trading Curb Programs

Stop limits and limit orders

Limited stop orders for limits

Hedging

Hedging on the Cardboard Box

Technical Analysis

Weekly Charts

Daily Charts

Hourly Charts

And that's just a start, good Fool. We'll be going much more in-depth than that, rest assured. And why not? These items fill the papers and news-wires each and every day. These things over-flow the respected pages of papers such as The Wall Street Journal, while the minds of investment professionals are brimming with these facts, and always making decisions on them.

The objective of investing in vehicles other than index funds is to beat the market. To do that you need information, just like the information professionals use -- the type of information that allows you to make daily decisions about your investments, or to try to time the market, or to only invest partially in stocks at certain times, and buy bonds instead, or use options, or buy t-bills, or gold, or sell the French franc into the ground. With all the information we're going to provide to you, you can.... You can... Well....

Enough of that.

The majority of investment professionals do follow such information, and 8 out of 10 underperform the market consistently. While we don't worry about ANY of that information, and the Foolish investment philosophy outperforms the market consistently. All that daily information we don't *need* to care about, and that IS very nice.

Some people work all their lives to beat the market, analyzing, charting, figuring.... While the Foolish Four will take 20 hours total over 40 years of an investing life-time, and then outperform the market: 22% for the Foolish Four vs. 11% for the market, on average, each year. Meanwhile, you never need to wake up and read the business page. You can skip right to the Sports page. Or to the Life section.

Perhaps the strangest thing about fretting over each news item to be produced by this giant monster of a financial world, is that many people are slaves to it all in order to avoid a falling market. We always hear about the Big Crash of 1987, in which the Dow fell 25% in one day. But we don't often hear that the next day the Dow gained back nearly 6%, the day after that it gained over 10%, and a few days later it gained another 5% -- and we all know what it has done since. While many, many investors have missed market gains because they "guessed" themselves out of the market, utilizing too much "information."

Watching the market too closely is a very poor investment style. Period.

The Fool was up 1.20% today. The market ended up, too, but only marginally. The Fool is up over 40% this year, doubling the returns of the market.

AMERICA ONLINE (NYSE: AOL) was up $1/2 today as the company announced the launch of the new AOL Computing Superstore, which will offer "AOL members the powerful combination of unsurpassed product selection with an array of unique personalized shopping services." The service is available now for AOL members at keyword: Computing Superstore. (I quickly checked it out and was greeted with an ad from Iomega). AOL also announced they are working with Cybercash (Nasdaq: CYCH) on online transactions. Credit card acceptance and approval will take but seconds. (Bad news for you, good for AOL).

Finally, speaking of investing long-term and in great companies, don't miss tomorrow night's Foolish special, our introduction of the "Industrial Evolution." In this Foolish investment primer Fools share their favorite stock for 18 different industries, presenting 22 most liked stocks in all and, most importantly, WHY the Fools like these stocks. At for the event will be Tom Gardner, MF Edible, MF Templar, MF Parlay, MF Uptrend and others, and hopefully YOU!

Fool On!

TODAY'S NUMBERS


Stock Change Bid -------------------- AOL + 1/2 32.13 T - 1/8 39.00 ATCT + 1/2 13.75 CHV + 1/8 63.25 GM + 3/8 55.88 IOM + 3/8 17.38 KLAC - 1/2 34.00 LU - 1/2 45.75 MMM - 3/4 80.25 COMS +1 1/8 72.25
Day Month Year History FOOL +1.20% -10.18% 40.49% 162.33% S&P 500 +0.70% -4.09% 17.88% 58.39% NASDAQ +0.41% -2.03% 20.36% 75.83% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 17.38 589.77% 8/5/94 680 AmOnline 7.27 32.13 341.71% 8/13/96 250 3Com Corp. 46.86 72.25 54.18% 8/11/95 125 Chevron 50.28 63.25 25.78% 8/12/96 110 Minn M&M 65.68 80.25 22.19% 8/12/96 280 Gen'l Moto 51.97 55.88 7.51% 8/12/96 130 AT&T 39.58 39.00 -1.46% 10/1/96 42 LucentTech 47.62 45.75 -3.92% 8/24/95 130 KLA Instrm 44.71 34.00 -23.96% 10/22/96 600 ATC Comm. 22.94 13.75 -40.05% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 34923.75 $29860.62 8/5/94 680 AmOnline 4945.56 21845.00 $16899.44 8/13/96 250 3Com Corp. 11714.99 18062.50 $6347.51 8/11/95 125 Chevron 6285.61 7906.25 $1620.64 8/12/96 110 Minn M&M 7224.44 8827.50 $1603.06 8/12/96 280 Gen'l Moto 14552.49 15645.00 $1092.51 8/12/96 130 AT&T 5145.11 5070.00 -$75.11 10/1/96 42 LucentTech 1999.88 1921.50 -$78.38 8/24/95 130 KLA Instrm 5812.49 4420.00 -$1392.49 10/22/96 600 ATC Comm. 13761.50 8250.00 -$5511.50 CASH $4291.89 TOTAL $131163.39 Transmitted: 12/17/96