Fool Portfolio Report
Wednesday, December 18, 1996
by David Gardner (MotleyFool)
ALEXANDRIA, VA., December 18, 1996 -- Another nice bounceback day for the Fool Portfolio and the overall market, following a rough week last week. Fool Port shot up 4.48%, vs. gains of 1.50% for the Nasdaq and 0.75% for the S&P 500.
Y'know it's funny, because just last night Ted Koppel on Nightline had Jimmy Rogers ("the investment biker") on his show to forecast the market for 1997. I didn't watch it, since I generally ignore people who presume to call the stock market. But my brother Tom did, and Tom reports that in a surly manner Rogers forecast doom for 1997. So what happens the next day? Bang. Market up big, Fool up bigger. Gotta love it.
We were powered by great moves today in 3Com (up $5 1/8) and America Online (up $4 1/4), and some nice additional moves for KLA Instruments (up $2 5/8) and Iomega (up $1). News? None, really. I did stop in for a bit of shopping at Circuit City today, where the salesmen took 45 minutes to try to process my order for a cellular phone. After 45 minutes, they still hadn't managed to do it, so I tore up the contract and walked out. (I look forward to the age of Internet commerce!)
Anyway, over the course of that trip I got to see the new HP Pavilion computer with the built-in Zip, and the Packard Bell with the built-in Zip, etc. The Packard Bell in particular looked like a fairly amazing machine: for less than $3000 you get a 200 mHz Pentium with 32 megs of RAM, Zip, TV hookup, speakerphone, digital answering machine, and video camera hookup for videoconferencing. Geez... imagine the cost of those things, each on their own, five years ago. Amazing. In fact, it takes me to my story for today, "Computers Blasting Off." Let's go to outer space.
One of my closet passions has always been astronomy. I say "closet" because I'm embarrassed to admit just how little I actually know about the subject, despite its ongoing fascination for me.
But I do know that tomorrow our Galileo spacecraft performs its first mission flyby of Europa, Jupiter's smallest moon. And thereby hangs a tale.
The Galileo mission launched in 1989, for the purpose of obtaining a thoroughgoing look at Jupiter. (The spacecraft acquired the name "Galileo" because it was that Italian astronomer who first observed Jupiter's four moons in 1610, through his tiny self-made telescope.) We've sent smaller probelike spacecraft out there in the past (Voyager, before Galileo), but none had ever established a long-term orbit to make detailed observations.
After six years of travel, the Galileo spacecraft finally arrived at Jupiter a year ago, December 1995. The craft will perform 11 orbits in its two-year mission around Jupiter. It's there primarily to monitor and study Jupiter's atmosphere and investigate its moons. Tomorrow is its first-ever run past Europa.
Enough space stuff. The story's actually about computers, about technological progress.
Do this for me: click the weblink at the end of this paragraph. It comes from the outstanding Today@NASA website (http://www.hq.nasa.gov/office/pao/NewRoom/today.html), which is a feast for anyone with even a remote interest in space exploration. The picture on the other end of the following link shows a "before/after" shot of the surface of Ganymede (Jupiter's largest moon). The "before" shot (on the left) comes from Voyager 2, a picture taken in 1979. The "after" on the right comes from Galileo's significantly more powerful computers. With a span of 17 years separating the two shots, the improvement in resolution is a factor of 17 times. Check it out: http://www.jpl.nasa.gov/galileo/ganymede/p47058.html
Impressed? Now ask yourself this: what sorts of computers on board the Galileo took that awesome second shot (on the right), anyway? If you said, "Pentiums," go directly to Jail, do not pass go, do not collect $200. Remember, this spacecraft launched seven years ago. Now, if you instead said "8-bit machine comparable to an old Apple II," you got it right. The processors aboard that craft run at a "clock speed" of 1.6 megaHertz (mHz), about 41 times slower than the top speed of Intel's 486 chip (66 mHz for that one). The Pentium I typed this report on runs at twice that speed, 133 mHz, or a whopping 83 times the computing power aboard the Galileo.
This almost makes me feel guilty. My silly little computer completely blows away the ones aboard the Galileo, and I'm only doing word processing.
OK, so what's the lesson in all this for investors? It's obvious! Learn about technology. We are living through the most rapid advance of technology in the history of mankind, and the bears and idiots who talk it down, who don't understand it, are just that: bears and idiots.
A second lesson to investors is to consider picking up some Intel stock if you haven't already. It may look pretty expensively priced right now, but that's been the case at many times over the past decade, and you wouldn't have gone wrong ever buying it and holding it before. Earlier this week, the company announced that in partnership with Sandia Labs it had built the most powerful parallel supercomputer ever, capable of performing over one trillion "operations per second." (That's the way these things are measured; for computer techies, one trillion ops is called "one teraflop"... though if you're a techie you probably already knew that!) That achievement breaks the previous record by more than 250%... that computer alone.
We may not own Intel in the Fool Portfolio yet, but it's nice to hold 3Com, America Online, KLA Instruments, and Iomega. They're all focused in this same field, and these are golden years. For investors Foolish enough to buy, hold, ride out the bad waves, and have faith in American capitalism, I believe we'll see amazing long-term performance.
Sometimes you have to fly by Europa, and think about it a bit, to realize this.
-- David Gardner, December 18, 1996
Stock Change Bid -------------------- AOL +4 1/4 36.38 T - 1/8 38.88 ATCT - 7/8 12.88 CHV + 7/8 64.13 GM -1 3/8 54.50 IOM +1 18.38 KLAC +2 5/8 36.63 LU +1 1/2 47.25 MMM +1 81.25 COMS +5 1/8 77.38
Day Month Year History FOOL +4.48% -6.16% 46.78% 174.08% S&P 500 +0.75% -3.37% 18.77% 59.59% NASDAQ +1.50% -0.56% 22.16% 78.47% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 18.38 629.46% 8/5/94 680 AmOnline 7.27 36.38 400.15% 8/13/96 250 3Com Corp. 46.86 77.38 65.12% 8/11/95 125 Chevron 50.28 64.13 27.52% 8/12/96 110 Minn M&M 65.68 81.25 23.71% 8/12/96 280 Gen'l Moto 51.97 54.50 4.86% 10/1/96 42 LucentTech 47.62 47.25 -0.77% 8/12/96 130 AT&T 39.58 38.88 -1.78% 8/24/95 130 KLA Instrm 44.71 36.63 -18.09% 10/22/96 600 ATC Comm. 22.94 12.88 -43.87% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 36933.75 $31870.62 8/5/94 680 AmOnline 4945.56 24735.00 $19789.44 8/13/96 250 3Com Corp. 11714.99 19343.75 $7628.76 8/11/95 125 Chevron 6285.61 8015.63 $1730.02 8/12/96 110 Minn M&M 7224.44 8937.50 $1713.06 8/12/96 280 Gen'l Moto 14552.49 15260.00 $707.51 10/1/96 42 LucentTech 1999.88 1984.50 -$15.38 8/12/96 130 AT&T 5145.11 5053.75 -$91.36 8/24/95 130 KLA Instrm 5812.49 4761.25 -$1051.24 10/22/96 600 ATC Comm. 13761.50 7725.00 -$6036.50 CASH $4291.89 TOTAL $137042.02 Transmitted: 12/18/96