Fool Portfolio Report
Monday, October 20, 1997
by David Gardner (

ALEXANDRIA, VA (October 20, 1997) -- Fresh back from a stirring tour of California, I was pleased to see the market strong today as all three major-market indices -- the S&P 500, the Nasdaq, and the FOOL -- rose a smidgen over one percent.

The FoolPort was pushed along by a $2 1/4 rise of our shares of AT&T (NYSE: T), closing at a new 52-week high. The company finally named a new chairman and CEO to replace Robert Allen (who's now slated to retire in February 1998). The selection is Mike Armstrong, whose concluding four-year tenure at the helm of Hughes Electronics included the launch of, among other things, DirecTV. Yes, this means that one Foolish Four company has just hired away another Foolish Four company's manager. Needless to say, we at Fool HQ are feeling incestuous and dirty tonight. (Hughes Electronics is part of fellow Fool holding General Motors.)

When the Foolish Four approach first put us into AT&T, one thing was clear: The company was in dire need of a management change. As Foolish Four investors have seen in years past, these transitions ("Ring out the old, ring in the new," a.k.a. "T'row da bums out") can prove most beneficial for shareholders. The stocks of large Dow companies can be noticeably weighed down by the market's perception that their management is not only not succeeding but also hard to dislodge. When the "dislodging event" finally occurs, it kicks the stock price. One memorable recent example was the ousting of Jim Robinson from the lead position at American Express, as the company hired now CEO Harvey Golub to succeed him. Ever since, AmEx stock has returned to being the long-term winner it had been in decades past.

We may be witnessing a similar prelude to long-term prosperity today... then again, we may not. (Who knows?) What one can conclude, beyond a shadow of a doubt, is that Wall Street liked this management change, as the shares were bid up to $47 7/16.

Include the LUCENT (NYSE: LU) spinoff (which emerged directly out of our T purchase), and our investment is now up 36.8%. The S&P 500 over that time? Rats. It's up 44.3%. So despite a strong recent performance, this Foolish Four stock has still been an underperformer. But the game doesn't end till February, when we make our Dow switch. If recent momentum continues to carry through, it'll be another market beater.

It's worth mentioning that today was indeed a great day for the Foolish Four approach, which rose 2.57% to cross the 20% return mark. While 1997 has been a market underperformer for the Dow Dividend disciples, the race for outperformance is now closer than it's ever been, as the Foolish Four are less than 6 percentage points back of the pace of the market averages. Stay tuned, and for great daily coverage of this approach, read and bookmark Robert Sheard's Daily Dow writeups.

Two other Fool stocks leapt more than two bucks. CHEVRON (NYSE: CHV) exited the "downstream" oil business in the UK today, selling its wholly owned subsidiary Gulf Oil (Great Britain) to Shell UK. The "upstream" business is locating and drilling for the stuff, I'm told by our own Dale Wettlaufer (Dale helps write our news and is one of Fool HQ's walking business encyclopedias). The "downstream" business is providing gas to the consumer (service stations et al.). Chevron had 450 service stations in the U.K. It has none, now... or rather, as of some unstated point in the fourth quarter, when the deal will be consummated. Chevron rose $2 7/8 to $86 7/8.

AMAZON.COM (Nasdaq: AMZN) announced a deal with Netscape, becoming the exclusive online bookseller on Netscape NetCenter's newly launched "Marketplace" section. Amazon rose $2 3/4, back to $45 7/8. The company's third-quarter earnings announcement is currently slated to come on Thursday.

I want to close today by thanking every one of the more than 1000 people who came to our California booksignings last week. Tom and I had an incredibly enjoyable week from start to finish. We were reminded once again of how many outstanding people tap into Fooldom one or more times every day, and of how much we can all continue to accomplish together by sharing information about stocks and insisting on reformed practices by the financial services industry at large. Much good humor and many warm smiles are our enduring memory of the "Keep the Money in California" tour, and we look forward to our return a few months hence, following the publication of the next two Fool books.

Stay Foolish out there!

-- David Gardner, October 20, 1997

Drip Portfolio -- J&J check sent.
Fool Message Boards -- Speak your mind!
Boring Portfolio -- Bore wins Monday.
Fool Four Portfolio -- 23% annually, historically.
Market News -- All the News, early.
Port Tracker -- Update your portfolio daily.
Daily Double -- Rainfoest Cafe.
Daily Trouble -- What went wrong? Learn from it.
Fribble -- A fun lesson from readers.

Stock Change Bid ---------------- AMZN +2 3/4 45.88 AOL - 1/16 84.94 T +2 1/4 47.44 CHV +2 7/8 86.88 DJT + 1/4 10.13 GM + 3/8 69.88 INVX - 1/4 28.50 IOM + 1/2 26.94 KLAC + 1/4 58.13 LU + 13/16 85.81 MMM - 9/16 93.81 COMS + 1/2 50.25
Day Month Year History FOOL +1.05% 1.41% 27.65% 240.69% S&P: +1.21% 0.88% 29.01% 108.47% NASDAQ: +1.12% -0.01% 30.55% 134.03% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 84.94 1067.87% 5/17/95 980 Iomega Cor 2.52 26.94 968.95% 10/1/96 42 LucentTech 47.62 85.81 80.22% 8/11/95 125 Chevron 50.28 86.88 72.77% 8/12/96 110 Minn M&M 65.68 93.81 42.84% 8/12/96 280 Gen'l Moto 51.97 69.88 34.44% 8/24/95 130 KLA-Tencor 44.71 58.13 30.00% 9/9/97 290 38.22 45.88 20.02% 130 AT&T 39.58 47.44 19.86% 8/13/96 250 3Com Corp. 46.86 50.25 7.23% 6/26/97 325 Innovex 27.71 28.50 2.85% 4/30/97 -1170 *Trump* 8.47 10.13 -19.56% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 30152.81 $27570.94 5/17/95 980 Iomega Cor 2509.60 26398.75 $23889.15 8/12/96 280 Gen'l Moto 14552.49 19565.00 $5012.51 8/11/95 125 Chevron 6285.61 10859.38 $4573.77 8/12/96 110 Minn M&M 7224.44 10319.38 $3094.94 9/9/97 290 11084.24 13303.75 $2219.51 8/24/95 130 KLA-Tencor 5812.49 7556.25 $1743.76 10/1/96 42 LucentTech 1999.88 3604.13 $1604.25 8/12/96 130 AT&T 5145.11 6166.88 $1021.77 6/26/97 325 Innovex 9005.62 9262.50 $256.88 4/30/97 -1170*Trump* -9908.50 -11846.25 -$1937.75 8/13/96 250 3Com Corp. 11714.99 12562.50 $847.51 CASH $32438.81 TOTAL $170343.87