Fool Portfolio Report
Wednesday, September 17, 1997
by David Gardner ([email protected])

ALEXANDRIA, VA (Sept. 17, 1997) -- Ever-Whirling Wheel Dipping into the mail bag -- The Fool Portfolio stooped and didn't conquer, Wednesday. Yeah, it just stooped. Third day in a row. The Foolfolio dropped 0.99%, while the overall market as measured by the S&P 500 and Nasdaq dropped only 0.28% and 0.13%, respectively.

Following a gallant return to market-beating '97 numbers last Friday, just three days later we suddenly find ourselves down 5.37% to the S&P 500. "But times do change and move continually," wrote Edmund Spenser, one of those great English poets I read in college and haven't picked up since. (For shame... ah, there will be time again.) In The Faerie Queene, Spenser wrote of

The ever-whirling wheel
Of Change; the which all mortal things doth
sway.

The wheel favored us for the past few months climaxing (temporarily) last Friday, and now it appears to have spun downward against us. We'll root for more whirls before the year is out.

With little news today, I want to dip in to the Motley Fool mailbag a wee bit. But let's get the news items out of the way, first.

AT&T lost $1 3/16 today. The company complained about its difficulties in establishing any local phone business before a Congressional subcommittee today. From the issues AT&T raised today, one can see how tenuous and uncertain all this deregulation really is, emerging from the Telecommunications Act of 1996. AT&T lawyer Mark Rosenblum "noted that AT&T and other potential new entrants need answers to some fundamental [legal] questions." These include, "What are the final prices to be paid for use of the [incumbent Bell's] facilities and are they cost-based? Is the service quality as good for AT&T customers as for the local carriers' customers? Can AT&T and others purchase the full combination of network facilities that the Act requires? Are the local carriers' computer systems able to speak easily to AT&T computer systems and exchange information for service ordering, provisioning, maintenance and billing? Most of all, will customers really be able to choose a new local phone company without suffering delayed or degraded service?"

The obvious lesson: It's one thing to pass something through Congress. It's completely another thing to implement. But if you think this stuck AT&T stock for a dollar-plus fall today, you're probably wrong. More likely is that Brown Brothers downgraded our shares to "Near-Term Hold." (Gotta love that market timing.)

Other stocks that hurt us today were America Online (off $1 7/16), which continued to give away ground gained after the Compuserve acquisition, and Trois Com (off $1 5/8), which really has been a weakling recently. SFGarl in our somewhat hyperactive COMS folder explained it this way, "I have to apologize to my fellow investors. I have big stakes in COMS & ASND and am currently being punished for the negative karma created in my past lives." Not bad. More likely weighing on the stock, however, is the recent news that the 56-kilobits per second standard is delayed until it can be determined who owns the disputed aspects of the technology. Couple that uncertainty with several downgrades of peer ASCEND COMMUNICATIONS (Nasdaq: ASND), some on fears that the company won't make its earnings, and add the old news of insider selling at 3Com (which is likely option related) and you have a stock that is floundering in short-term uncertainty. The company announces earnings during the third week of September.

"I am a man whom Fortune hath cruelly scratched," spake Parolles, in Shakespeare's All's Well That Ends Well. These words were spoken by Fool holding Amazon.com Monday, after the stock tanked $7 no doubt partly due to a Fortune magazine article that my co-manager Jeff Fischer effectively addressed yesterday. Continuing to gain back lost ground, AMZN rose $3/8 today (what unvolatility!) following its rise of $3 1/4 yesterday. We show a 6.29% gain for the one-week anniversary -- not that one-week anniversaries count for anything much more than tossaway lines in Fool recaps!

Speaking of Amazon, and speaking of our mailbag... I loved this post from Web reader Michael Rasmussen, responding to those who say you can't browse Amazon.com and so the company won't make enough sales:

Who said you can't browse at Amazon? Certainly not a satisfied customer like me!

After a Foolish reference to the book Where are the Customer's Yachts?, I cruised over to Amazon, added it to my shopping cart, and then browsed until I found Manias, Panics and Crashes: A History of Financial Crises. Both have proven good reads.

Who said you can't have a Cappucino while browsing at Amazon? Heck, you even get to choose your preferred vendor for the brew.

OK, there's no flirting with the other customers . . .

[email protected] had some further thoughts about my report on the fallacy of "unsafe credit-card transactions over the Internet":

I was pleased to read your comment about the unecessary concern that many people have about using their credit card online. I have heard many people talk about the potential problem of credit card fraud and read many articles about this perceived problem. In the past two years, I have used my credit card dozens of times over the Internet without a problem and in fact I never gave it a second thought. Five years ago a cashier at a store in New York lifted my credit card number from the receipt portion of the sales slip and made about $4,000 worth of purchases prior to my receiving a new statement. As you are well aware, all it takes is one phone call to the card company and the charges go away. Why people still bring this issue up amazes me.

However, [email protected] warned:

While you are right on the money when you say that credit card fraud is the credit card companies' problem, the same is not true of the "debit cards" many banks are now offering and almost forcing on customers. With these cards that carry the same Visa and Mastercard logos you can lose up to the amount in your account. Pretty scary stuff. Just a clarification you might want to make your readers aware of...

The man speaks the truth, which I verified with Dayana Yochim, the head of our Fool's School. That said, it remains the case that no credit-card company has yet seen Internet fraud on any meaningful level... despite the dire warnings so often sounded.

Thanks, Fools. We always appreciate corrections in all forms, and we take joy in acknowledging and printing them.

Speaking of "corrections," may that ever-whirling wheel turn the other way for the rest of the month. We're now down for September. Alack!

-- David Gardner, September 17, 1997

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TODAY'S NUMBERS
Stock  Change    Bid
----------------
AMZN  +  3/8   40.63
AOL   -1 7/16  72.94
T     -1 3/16  43.69
ATCT  -  1/16  4.75
CHV   -  7/16  86.63
DJT   ---      11.38
GM    -  9/16  68.38
INVX  - 13/16  31.13
IOM   -  3/16  26.69
KLAC  - 13/16  71.63
LU    +1 1/4   78.88
MMM   +  3/4   89.13
COMS  -1 5/8   46.44



      
    
    
                   Day   Month    Year  History
        FOOL     -0.99%   4.48%  21.94% 225.43%
        S&P:     -0.28%   4.84%  27.31% 105.72%
        NASDAQ:  -0.13%   4.99%  29.08% 131.40%


    Rec'd    #  Security     In At       Now    Change
  5/17/95   980 Iomega Cor     2.52     26.69   959.03%
   8/5/94   355 AmOnline       7.27     72.94   902.87%
  8/11/95   125 Chevron       50.28     86.63    72.27%
  10/1/96    42 LucentTech    47.62     78.88    65.65%
  8/24/95   130 KLA-Tencor    44.71     71.63    60.19%
  8/12/96   110 Minn M&M      65.68     89.13    35.70%
  8/12/96   280 Gen'l Moto    51.97     68.38    31.56%
  6/26/97   325 Innovex       27.71     31.13    12.33%
  8/12/96   130 AT&T          39.58     43.69    10.38%
   9/9/97   290 Amazon.com    38.22     40.63     6.29%
  8/13/96   250 3Com Corp.    46.86     46.44    -0.90%
  4/30/97 -1170 *Trump*        8.47     11.38   -34.32%
 10/22/96   600 ATC Comm.     22.94      4.75   -79.29%

    Rec'd    #  Security     In At     Value    Change
  5/17/95   980 Iomega Cor  2594.53  26153.75 $23559.22
   8/5/94   355 AmOnline    2581.87  25892.81 $23310.94
  8/12/96   280 Gen'l Moto 14552.49  19145.00  $4592.51
  8/11/95   125 Chevron     6285.61  10828.13  $4542.52
  8/24/95   130 KLA-Tencor  5812.49   9311.25  $3498.76
  8/12/96   110 Minn M&M    7224.44   9803.75  $2579.31
  10/1/96    42 LucentTech  1999.88   3312.75  $1312.87
  6/26/97   325 Innovex     9005.62  10115.63  $1110.01
   9/9/97   290 Amazon.com 11084.24  11781.25   $697.01
  8/12/96   130 AT&T        5145.11   5679.38   $534.27
  8/13/96   250 3Com Corp. 11714.99  11609.38  -$105.62
  4/30/97 -1170*Trump*     -9908.50 -13308.75 -$3400.25
 10/22/96   600 ATC Comm.  13761.50   2850.00-$10911.50

                              CASH  $29541.35
                             TOTAL $162715.66