Fool Portfolio Report
Thursday, December 26, 1996

by Tom Gardner (TomGardner)

ALEXANDRIA, VA.,December 26, 1996 -- What a joy it is to find myself slated to ink the one Fool Portfolio report that follows Christmas Day, 1996. It has been another fine holiday season here in Old Town Alexandria, VA.

At Midnight Mass, the night before Christmas, the local church I attended was candle-lit, rimmed with poinsettias, rounded with crimson cushions. The night's sermon was about actual people offering real acts (however small) that measurably improve the lives of those around them. It was a simple message -- Recognize how consequential you are even in the face of plodding, monstrous institutions, and aspire to offer real value to those around you.

Then yesterday was pristine here in Alexandria, cool and brightly-lit. It was a perfect day to forget all about business and the financial markets, while tearing through Mickey-Mouse-branded everything and reading the holiday cards. Contrary though it may be, I think celebrations can best be measured by the spirit of cards rather than the actual gifts. But maybe I'm just getting slow and sentimental.

And now today, I think it's a perfect day for Fools to reaffirm the philosophical underpinnings of our online activity and of any substantial undertaking. A few of those principles are faith and good humor and durability. As we return to the equities marketplace, crowded in with the colorful variety of bidders and vendors, all positioning themselves for the year ahead, I hope we won't leave behind whatever we've learned, whatever we've been reminded of during the last twenty-four hours of pause and celebration -- no matter what holiday you just celebrated.

Much of what I took from this holiday can, I think, be neatly packaged into a daily life of researching businesses, valuing equity, and cooperating in the construction of what must be (or must come to be) the most valuable resource for private investors everywhere. I was reminded that The Motley Fool is firmly footed in a place where playful skepticism meets enduring faith.

Skepticism and faith. . . how so?

Well, imagine for a moment that we live in a world where our states aggressively advertise to their citizens that on top of their 30% in taxes, they ought gladly return to the state fifty additional cents out of every dollar in profit. Unimaginable. . . but suppose it were true.

Further, imagine that we live in a world where employees of our big moneyhouses turn hundreds of millions of dollars in profit each year by convincing Americans to needlessly and thoughtlessly and persistently buy and sell paper certificates. To, in effect, generate commissions by renting apartments for a day or a week, when the great weight of evidence -- a weight that would snap Atlas' spine like a straw -- clearly demonstrates that home ownership provides maximal value for the customer. So too with public businesses -- Own, Don't Rent.

Unimaginable that this truth isn't promoted, I know, but suppose it were so.

Finally, imagine that we live in a world where the great majority of organizations charged with objectively reporting on these institutions glaringly chose not to provide that coverage. When you put the three biggest state lotteries together, you have a business with considerably greater sales, earnings, and accompanying marketing budgets than Microsoft! And in studying the financial industry, you will find that over the past two years more purposeless wealth has been created via commissions trading on Wall Street than ever before -- by a long shot. If this were true, how could our media establishments not with great addiction report on this madness, on these customer-eating qualities of our multi-billion-dollar institutions?

Unimaginable, but suppose it were so.

Now, as Pythagoras would have you do, to see the truths in life. . . invert, always invert. Because as ludicrous as it seems, the unthinkable is the reality. For example, Dow Jones, presently our largest provider of business publications, has chosen not to provide an ongoing editorial of the Streets it covers. Instead again today, as with many days in the past year, The Wall Street Journal, Barrons, Dow Jones News Retrieval -- what have you -- decided to run a few lines on how The Motley Fool is home to hype and rumors. Today's jab was just dropped on my desk.

Is this the story America needs in order to learn more about its money?

But while many in the press have missed the financial story that history will emphasize -- that customers were not served for decades this century -- they are only one significant slice of the problem. Lottery stubs and commission-trading takes a phenomenal amount of money out of the pockets of individuals, of Fools to be. I'm still waiting for an investment firm to announce that it has altered its allocation model for this quarter to:

30% stocks
20% bonds
20% cash

It's unfortunate when accuracy is Folly; such is life, though. And from state to moneyhouse, we have countless reasons to be disappointed. It's a pretty grim environment, all assembled, and it's certainly the primary reason that most Americans don't want to learn about business, about money. Corporate success in the financial world today too neatly correlates with an obfuscation of the details and an exploitation of the customer. If that claim seems unduly harsh, I again humbly submit as evidence our state-lottery systems, the business structure that presently underlies the retail wings of our investment firms, and the media organizations supposedly responsible for telling it like it is to America.

All coupled, these provide cause for a grim, brooding cynicism.

But cynicism weakens the spirit and makes our problems seem insurmountable. The contrary message of The Motley Fool is that instead we ought concomittantly latch onto a very playful skepticism and an enduring faith that the truth will out. I don't think there is any better time to rigorously study these problems, to cooperatively construct and publish new business models for the financial industry in America, and to exercise our cockeyed wit, often, than now -- with online communications at our bidding.

Fool On,
Tom Gardner


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Stock Change Bid -------------------- Stock Change Bid -------------------- AOL -1 35.38 T +1 5/8 43.00 ATCT + 1/8 11.75 CHV + 1/2 66.00 GM + 3/4 56.00 IOM - 1/4 17.63 KLAC + 1/8 35.88 LU + 7/8 47.00 MMM + 1/2 85.25 COMS +1 5/8 77.63
Day Month Year History
FOOL -0.08% -7.03% 45.42% 171.53% S&P 500 +0.64% -0.16% 22.71% 64.88% NASDAQ +0.54% 0.15% 23.04% 79.76% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 17.63 599.69% 8/5/94 680 AmOnline 7.27 35.38 386.40% 8/13/96 250 3Com Corp. 46.86 77.63 65.65% 8/11/95 125 Chevron 50.28 66.00 31.25% 8/12/96 110 Minn M&M 65.68 85.25 29.80% 8/12/96 130 AT&T 39.58 43.00 8.65% 8/12/96 280 Gen'l Moto 51.97 56.00 7.75% 10/1/96 42 LucentTech 47.62 47.00 -1.29% 8/24/95 130 KLA Instrm 44.71 35.88 -19.76% 10/22/96 600 ATC Comm. 22.94 11.75 -48.77% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 35426.25 $30363.12 8/5/94 680 AmOnline 4945.56 24055.00 $19109.44 8/13/96 250 3Com Corp. 11714.99 19406.25 $7691.26 8/12/96 110 Minn M&M 7224.44 9377.50 $2153.06 8/11/95 125 Chevron 6285.61 8250.00 $1964.39 8/12/96 280 Gen'l Moto 14552.49 15680.00 $1127.51 8/12/96 130 AT&T 5145.11 5590.00 $444.89 10/1/96 42 LucentTech 1999.88 1974.00 -$25.88 8/24/95 130 KLA Instrm 5812.49 4663.75 -$1148.74 10/22/96 600 ATC Comm. 13761.50 7050.00 -$6711.50 CASH $4291.89 TOTAL $135764.64 Transmitted: 12/26/96