Fool Portfolio Report
Wednesday, October 8, 1997
by David Gardner (DavidG@fool.com)
ALEXANDRIA, VA (Oct. 8, 1997) -- Ahhhhhhh. Sweet day for the Fool Portfolio. Coming off an ugly Tuesday, in which we saw the Fool drop 0.66% while the S&P 500 rose in excess of 1%, the tables turned lickety-split on Wednesday. Riding multipoint gains in America Online, Iomega, and KLA-Tencor, the Fool Port surged back 2.35% vs. a slumping S&P 500 (down 0.94%). The Nasdaq managed a slight gain (up 0.26%).
IOMEGA (NYSE: IOM) lost $2 1/4 yesterday on no news in particular. On PBS's "Nightly Business Report" last night, the broadcast apparently attributed this drop to price cuts by lame-duck competitor Syquest. This is rather like explaining that the Roman Empire fell due to price cuts by the (then extinct) Hittites. Of course, we appreciate the TV show providing some explanation -- anything at all -- as most of the rest of us were scratching our heads.
Anyway, whatever the reason, it apparently vanished into thin air today. On 6.2 million shares, Iomega shot back $2 3/16, effectively wiping out yesterday's drop. (OK, OK, it's still down a sixteenth on expected price cuts by the Hittites. )
What is the Foolish long-term investor to conclude? Simple: Don't read much into short-term price moves, and do NOT get involved in options trading and other forms of Wall Street shenanigans. It's not a game that you'll often win, and even if you did, you're forcing yourself to pay attention to the market far more than is healthy for a human lifetime. Who KNOWS why the stock got whacked yesterday? Who KNOWS why it came rocketing back today? And of course, who KNOWS where it'll go tomorrow. What most of us who bought this stock are focused on is whether the company's fortunes will continue to look strong over the next few years. What we see is a dynamically growing storage technology industry with one major consumer-oriented player, and that's our guy.
We buy, and we hold.
AMERICA ONLINE (NYSE:AOL) hit an all-time high today, closing at an even $83 (up $3 3/8). What the heck? Let's celebrate. (Hundreds of champagne corks simultaneously pop skyward.)
OK, celebration of this now eleven-bagger aside, AOL will receive a payment of $32 million over the next 5 years from Preview Travel, the partner that will dominate AOL's redesigned Travel Channel. This is yet another example of a company paying a large sum of money to be an exclusive provider of services on AOL (other recent examples include Tel-Save Holdings, Amazon.com, CUC International, etc.). It's stories like these which will continue to improve the company's margins, business, and competitive position.
OK, let's switch gears for a moment. We've received a great response to our California tour next week, where Tom and I will travel down the coast from San Francisco to Los Angeles to San Diego, with stops in between. If this is the first you've heard of it, click this link to see where we'll be and come join us. At each Barnes & Noble stop, you can expect part gab, part Q&A, part meet other Fools, part booksigning. If you have a friend who may be new to investing, or already interested in Foolishness, bring him or her (or them!) along! And if you'd like a Foolish book signed as a holiday gift, this may be your best shot.
We've received numerous e-mails from Fools in other places besides California, saying, "Hey, come visit me!" Well, we shall. Our upcoming book tour in January will take us to many non-California cities, as well.
Foolish Four fans may be interested in the latest from Fool UK. Namely, our colleagues over in Britain have just initiated the first-ever Beating the Footsie portfolio. The "Footsie," for those who are unfamiliar with it, is the British equivalent of the Dow Jones industrial average. Beating the Footsie is essentially our Foolish Four theory applied to British stocks, with the to-be-expected excellent long-term backtested returns. You can check out the Beating the Footsie feature here (AOL users can favorite-place it by clicking the heart, for quick future entries), and hit the button for "Current Rankings" to see the present Foolish picks among the Footsie 30. One of them, interestingly enough, is General Electric PLC. (Giggle.)
All of this info and a lot more (including superb message boards) can be found at AOL's keyword FOOL UK.
Speaking of message boards, we've had many requests in the past to create a page letting you know what are our most popular discussion folders in Fooldom. After hearing certain requests enough times, we go out and fulfill them! (We may be Fools, but we're not idiots....) Another great page to save with a Favorite Places heart (on AOL) or to bookmark (on the Web) is the Fool's Top 10.
By the way, it goes without saying that if you have any questions about how to use these features or navigate Fooldom in any way, don't hesitate to drop me an e-mail personally, at DavidG@fool.com. I or another Fool will be happy to help you promptly.
The Fool Portfolio announces a new trade tonight... our coming sale of ATC Communications. Yep, that's right, we're now kissing the proverbial goodbye to the worst-performing investment we've ever made.
It was not until last week that the company finally reported its first loss. We had been holding out hopes that the company might continue to maintain profitability, as it had all the way through its downturn. We thought that if the company could continue to maintain $100 million of profitable sales, it might be able to re-jigger its business while finally attracting Wall Street's notice. But nay, dear reader... the company's sales have been declining, and as of last week are now unprofitable. We played this card about as wrong as anyone possibly could have: buying ATCT at the tippy-top, we held all the way down (no, we don't do stop losses -- would've kicked us out of most of our winners, if we did).
And now we may possibly be selling at the bottom! (To repeat the mantra from earlier... WHO KNOWS?)
The one thing we do know is that this company just does not have the pedigree or performance that we expect out of a Fool Portfolio holding. It may be, in fact, among the Hittites. Let's hope not! Either way, we're not going to stick around to find out -- we'll be selling at some point in the next five days for all the reasons mentioned in the sell report. Stay Foolish.
-- David Gardner, October 8, 1997
Drip Portfolio --
Healthcare decision finalized.
Fool Message Boards -- Speak your mind!
Boring Portfolio -- Boring holds Cisco, Oracle.
Fool Four Portfolio -- 23% annually, historically.
Market News -- All the News, early.
Port Tracker -- Update your portfolio daily.
Daily Double -- Good business?
Daily Trouble -- Cut in half! A good deal?
Fribble -- A fun lesson from readers.
Stock Change Bid ---------------- AMZN - 3/4 47.88 AOL +3 3/8 83.00 T +1 1/16 46.50 ATCT - 1/16 3.88 CHV -1 1/8 87.56 DJT - 3/16 10.00 GM - 1/8 68.31 INVX +1 1/16 30.06 IOM +2 3/16 25.13 KLAC +2 9/16 70.06 LU -1 3/4 87.06 MMM - 7/8 98.00 COMS + 11/16 55.69Day Month Year History FOOL +2.35% 2.57% 29.11% 244.58% S&P: -0.94% 2.80% 31.47% 112.44% NASDAQ: +0.26% 3.33% 34.91% 141.85% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 83.00 1041.23% 5/17/95 980 Iomega Cor 2.52 25.13 897.02% 10/1/96 42 LucentTech 47.62 87.06 82.84% 8/11/95 125 Chevron 50.28 87.56 74.13% 8/24/95 130 KLA-Tencor 44.71 70.06 56.70% 8/12/96 110 Minn M&M 65.68 98.00 49.22% 8/12/96 280 Gen'l Moto 51.97 68.31 31.44% 9/9/97 290 Amazon.com 38.22 47.88 25.26% 8/13/96 250 3Com Corp. 46.86 55.69 18.84% 8/12/96 130 AT&T 39.58 46.50 17.49% 6/26/97 325 Innovex 27.71 30.06 8.49% 4/30/97 -1170 *Trump* 8.47 10.00 -18.08% 10/22/96 600 ATC Comm. 22.94 3.88 -83.11% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 29465.00 $26883.13 5/17/95 980 Iomega Cor 2509.60 24622.50 $22112.90 8/11/95 125 Chevron 6285.61 10945.31 $4659.70 8/12/96 280 Gen'l Moto 14552.49 19127.50 $4575.01 8/12/96 110 Minn M&M 7224.44 10780.00 $3555.56 8/24/95 130 KLA-Tencor 5812.49 9108.13 $3295.64 9/9/97 290 Amazon.com 11084.24 13883.75 $2799.51 8/13/96 250 3Com Corp. 11714.99 13921.88 $2206.89 10/1/96 42 LucentTech 1999.88 3656.63 $1656.75 8/12/96 130 AT&T 5145.11 6045.00 $899.89 6/26/97 325 Innovex 9005.62 9770.31 $764.69 4/30/97 -1170*Trump* -9908.50 -11700.00 -$1791.50 10/22/96 600 ATC Comm. 13761.50 2325.00-$11436.50 CASH $30338.06 TOTAL $172289.06