Fool Portfolio Report
Friday, December 27, 1996
by Jeff Fischer (MF BudFox)
CHICAGO, IL., December 27, 1996 -- With only two market days remaining in 1996, it's time to make some predictions for 1997. The coming year has a magical ring to it, does it not?
Whatever is to come, if anyone is qualified to make predictions, it is me. How so? For one example, on Monday I predicted what would happen this week, and though I forgot to announce my predictions, they came true. I figured the market would trade lightly with little news and end the week as follows: the S&P rose one percent and the Nasdaq gained 0.23%, while the Fool lost 0.60%. I predicted those weekly numbers accurately, so we best get to my following predictions without further hesistation. So, presenting... predictions... for 1997!
AMERICA ONLINE (NYSE: AOL) is facing large changes now that Bob Pittman, founder of MTV, is aboard. MTV promised "All music videos, all day," but before long the network began airing anything *but* music videos. Currently, MTV airs only about two hours of music videos per day.
At AOL next year, Bob Pittman is going to make the claim of offering, "All the online content in the world, 24 hours per day, seven days per week!"
Three months later, in the summer of 1997, AOL will go almost completely off-line. The company will instead offer two hour stretches of online services per month, during which time all members should try to log on and take care of their e-mail. AOL will still be a "god of content," but in order to better control the content, AOL is going to publish all of its daily content on its own, in print, and have it delivered to the door-steps of members in a 280 million page daily. In the fall of 1997, AOL will offer "The Internet At Your Door-step!," and will begin publishing the entire content of the World Wide Web in a daily volume. Paper costs and delivery complications will soon put the former online leader out of business.
AT&T (NYSE: T): Founded in the 1870's, this giant company will close its doors in early 1997 and call it quits. AT&T is getting out of the business, citing confusion about where the communications market is going and the costs of getting there. Indeed, in the past decade the possible means of communicating have changed tremendously, and it's easy to understand why AT&T wants out. It's become too complicated, too vast, too varied, and there are too many rate wars going on, even for the most simple of services.
AT&T longs for the good old days when they ruled the communications world. But rather than be reminded of that grand past every single day upon walking into buildings with "AT&T" on the front doors, the company will close headquarters and give all company assets to the "Adopt a Pet" foundation, claiming, "Pets are the one thing that never switched their long-distance carrier on us at least once." Exactly how AT&T's disappearance will affect its millions of customers and the Fool Port, that I can't predict.
ATC COMMUNICATIONS (Nasdaq: ATCT) will see its stock rise in 1997, mainly thanks to its contract with America Online. When AOL goes off-line, call volume from confused customers will soar, and AOL will quintuple its business with ATC. Of course, when AOL goes under, and as AT&T folds as well, ATC Comm will be impacted negatively.
Meanwhile, in one of the most bizarre discoveries of history, next year the world is going to determine that CHEVRON CORP (NYSE: CHV) caused the 1991 Gulf War. Arming vast legions of devoted temporary workers with outdated weapons and poor training, Chevron shipped the temps to the Middle East and ordered them to invade Kuwait. The temps were able to walk over the unsuspecting country, but George Bush and NATO didn't allow the aggression to stand unchallenged. This was Chevron's fatal flaw. They did not think the world would get involved.
Thinking Iraq was to blame, America unleashed its war machine on the area, and the temps surrendered by the thousands. Most the temps have quietly been shipped back to America by Chevron, and many still work for firms such as Kelly and Accustaff. Chevron will spend the next eighty-five years in the American court system.
In a move that suprises investors and confuses the competition, networking leader 3COM (Nasdaq: COMS) will complete a 100% stock swap with other networking leader, Cisco Systems (Nasdaq: CSCO). Analysts will be baffled, as 3Com signs agreements giving all of its company's stock to Cisco, and Cisco does the same back for 3Com. In addition, 3Com will pay Cisco several billion dollars to keep the swap even.
Both companies will opt to keep their original names and products, and eventually will decide not to switch headquarters with each other, either, citing the complications of having to change the corporate signs out front, and their business letterhead. The two companies will swap all current customers, though, in aims of "Keeping the competition guessing." Both companies will prosper and in the late fall, in a copy-cat move, Bay Networks (NYSE: BAY) will attempt to swap its stock and customers with those of Cabletron Systems (NYSE: CS). Cabletron will refuse the offer repeatedly.
Also foreseen for 1997: In an effort to further increase its popular Post-It Note business, 3M (NYSE: MMM) is going to offer "lick-able" Post-It Notes flavored with your choice of bourbon, rum, vodka, or Cherry Coke -- for those under 21. A single new Post-It Note will have alcohol content well below a typical flask of Jack Daniel's, for example, but still one lick of each Note will be potent, being equivalent to one shot of 80 proof whiskey. And remember, Post-It Notes come packaged by the hundreds.
The product's popularity will soar, sadly, especially in the former Soviet Union and other parts of Eastern Europe. 3M will struggle to keep up with the demand for "Vodka Post-It Notes" in some areas of the world. The success of the product will draw 3M to produce other mis-conceived ideas which they had been kicking around, such as non-abrasive sandpaper, and dual purpose/double-sided scotch tape/fly-paper. 3M's bubble will burst when Chelsea Clinton is found in the Oval Office, hammered off Bill Clinton's special "Presidential Jack Post-It Notes," with Socks the Cat sprawled out at her feet, licking a note and faring no better.
3M will return to producing regular old Post-It Notes, but, while Coca-Cola enjoyed increased success after its failed "New Coke" idea in the 1980's, 3M will not be so lucky. The mere sight of Post-It Notes will now make many people queasy, and the product's popularity will wane.
As for the Motley Fool in 1997: in the month of April, a pack of wild monkeys will take over the office and all employees, local and remote, will scatter, indefinitely. The monkeys will take over the show, divesting the Fool Port of all holdings and investing entirely in Chiquita Brand bananas (NYSE: CQB). The popularity of the forum will soar, they'll will publish a book and hit the television circuit, and they'll handily outperform many mutual funds.
Also in 1997, the stock market will remain fluid. Whenever the exchange is open for business, not a single day will pass without at least one trade being made. The popular market averages will end trading for the year when the year ends, and will see typical volatility now and again.
1997 will be followed by 1998, that by 1999, and that by 2000. After that, we hit 2001, and Space Odyssey buffs the world over will go nuts with joy. All in all, it should be a great time to be a long-term investor.
Stay Foolish out there, everyone!
Stock Change Bid -------------------- AOL --- 35.38 T + 5/8 43.63 ATCT + 5/8 12.38 CHV - 1/8 66.00 GM - 3/8 55.63 IOM - 3/8 17.38 KLAC + 1/8 36.00 LU + 5/8 47.63 MMM + 1/4 85.50 COMS + 5/8 78.25
Day Month Year History FOOL +0.06% -6.98% 45.50% 171.68% S&P 500 +0.12% -0.03% 22.86% 65.09% NASDAQ -0.23% -0.08% 22.75% 79.34% 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 35.38 386.40% 8/13/96 250 3Com Corp. 46.86 78.25 66.99% 8/11/95 125 Chevron 50.28 66.00 31.25% 8/12/96 110 Minn M&M 65.68 85.50 30.18% 8/12/96 130 AT&T 39.58 43.63 10.23% 8/12/96 280 Gen'l Moto 51.97 55.63 7.03% 10/1/96 42 LucentTech 47.62 47.63 0.02% 8/24/95 130 KLA Instrm 44.71 36.00 -19.48% 10/22/96 600 ATC Comm. 22.94 12.38 -46.05% 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 24055.00 $19109.44 8/13/96 250 3Com Corp. 11714.99 19562.50 $7847.51 8/12/96 110 Minn M&M 7224.44 9405.00 $2180.56 8/11/95 125 Chevron 6285.61 8250.00 $1964.39 8/12/96 280 Gen'l Moto 14552.49 15575.00 $1022.51 8/12/96 130 AT&T 5145.11 5671.25 $526.14 10/1/96 42 LucentTech 1999.88 2000.25 $0.37 8/24/95 130 KLA Instrm 5812.49 4680.00 -$1132.49 10/22/96 600 ATC Comm. 13761.50 7425.00 -$6336.50 CASH $4291.89 TOTAL $135839.64 Transmitted: 12/27/96