Fool Portfolio Report
Wednesday, April 2, 1997
by David Gardner (MotleyFool)
ALEXANDRIA, VA, April 2, 1997-- Whoooosh!
Ya hear that sound? That was the Fool Portfolio bypassing the Nasdaq for 1997 annual return. For several months now, we've been significantly down to both market averages, off almost 20 percentage points at one point. Insofar as the Fool Portfolio beat the S&P 500 and Nasdaq in 1994, 1995, and 1996, this fact has proven somewhat irksome to us in our fourth year.
Hey, we've always said that we couldn't possibly beat the market every single year without exception, though we still shoot for that. High standards generally lead to high performance, in so many aspects of life. So it is with pleasure and anticipation that we report tonight that we have passed the Nasdaq Composite average, for the first time since January 15th. We'll hope this is only the beginning.
The stock market sank another percent today, with the averages now significantly off their highs set in January and February. The S&P 500 lost 1.25% Wednesday, and is now down 8% from its mid-February all-time high. The Nasdaq fell 1.31%, and lies almost 14% below its highest-ever level (1388.06) reached the 22nd of January.
For the year now, the Foolfolio shows a loss of 6.86%, fractionally ahead of the Nasdaq (down 6.97%), and still behind the S&P 500 (which, despite falling fast, still remains 1.26% ahead for '97). We sit just 8 percentage points behind the S&P right now, which has come back within striking range. That sucker now sits squarely in the sights of our Foolish squirt guns.
What's been propping up The Fool in a wilting market? Our beaten down growth stocks, primarily AMERICA ONLINE (NYSE:AOL) and IOMEGA (NYSE:IOM). These stocks remain well below their highs of last summer; in fact, AOL is still off 37% from its high, while Iomega sits 70% below its top. But Iomega is up several points in the past 30 days, as is America Online. Both have risen through a very poor market. From my point of view, each had been beaten down too far in previous months and is recovering naturally, while more dearly priced stocks (the networkers, for instance) have had some air taken out of them, along with the overall market.
Iomega yesterday announced a new manufacturing agreement with NEC to effectively produce and market Zip drives. NEC becomes Iomega's second such manufacturing partner (Matsushita the first), as IOM continues to gain production help in its quest to create the category-killer consumer disk drive. As part of that strategy, and part of yesterday's announcement, the company also slashed the drive's prices by 50 bucks, from $199 to $149, effective immediately.
While the stock drifted down a quarter yesterday following this announcement, it rose strongly today (up $1/2, being up $1 most of the day before a bad market turndown at the close). Rumored reasons for the rise given in our Iomega folder on AOL are anything from short covering by Bear Stearns (volume today was very heavy at 3 million shares) to Morgan Stanley being next door down from our April Fool's party in New York City last night. Me, I never really know and make no presumption to! But chances are this all comes down more to the previous paragraph than anything else.
I'm pleased to announce that by tomorrow morning we'll be debuting our new Motley Fool message boards on our upgraded Web site. We've put a lot of time into listening for what you like and don't like, and have built the site up organically. The result is something that combines attractiveness and addictiveness.
Those who've used our AOL boards will find some attractive new features on our separate Web boards. For one, we expect you'll probably find them more friendly and useful. That's because the biggest improvement of all may be that we're requiring anyone posting to register first. The registration process is painless and simple, but it enables us to enforce our standards of decency (both in terms of contribution and conduct), which we've been unable to do effectively due to AOL's separate standards and internal environment. The upshot? Those who post unFoolishly will receive warnings, and if emptiness, hype, or rudeness continues they'll be barred from posting. That should greatly enhance the quality of our discussion, in accordance with the huge number of requests we've received on this from you, in the past. Please note that as always, anyone can read our Fool Boards. And now, anyone who registers can post. But the opportunity to post brings with it responsibility. And those not willing to be responsible will no longer be shouting in our pub... they can watch the festivities from an outdoor window.
Let me clarify. By "unFoolishly" I of course refer just to our Fool's Rules on How to Post and How Not to Post. Posting unFoolishly never means "posting stuff that agrees with us" (whatever our opinion is perceived to be). On the contrary, some of the posts I value most are the ones that strongly disagree with whatever my viewpoint or opinion is... that's one of the best ways to learn. So I emphasize that we love contributions from bulls and bears on every stock... we love good information and opinion... we love good manners... ultimately, we love usefulness. We'll be able to create that and maintain it in our Motley Fool message boards on the Web.
I'll be all over those things tomorrow.
--- David Gardner, April 2, 1997
Stock Change Bid -------------------- AOL -1 1/8 44.63 T - 1/2 34.38 ATCT + 1/8 5.94 CHV -1 7/8 67.00 GM - 3/4 54.38 IOM + 1/2 16.50 KLAC - 1/4 35.88 LU -2 1/4 50.25 MMM -1 1/2 84.13 COMS - 5/8 31.50Day Month Year History FOOL -0.51% 0.36% -6.86% 148.57% S&P: -1.25% -0.93% 1.26% 63.64% NASDAQ: -1.31% -1.70% -6.97% 66.76% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 16.50 555.03% 8/5/94 680 AmOnline 7.27 44.63 513.58% 8/11/95 125 Chevron 50.28 67.00 33.24% 8/12/96 110 Minn M&M 65.68 84.13 28.09% 10/1/96 42 LucentTech 47.62 50.25 5.53% 8/12/96 280 Gen'l Moto 51.97 54.38 4.62% 8/12/96 130 AT&T 39.58 34.38 -13.15% 8/24/95 130 KLA Instrm 44.71 35.88 -19.76% 8/13/96 250 3Com Corp. 46.86 31.50 -32.78% 10/22/96 600 ATC Comm. 22.94 5.94 -74.11% Rec'd # Security In At Value Change 8/5/94 680 AmOnline 4945.56 30345.00 $25399.44 5/17/95 2010 Iomega Cor 5063.13 33165.00 $28101.87 8/11/95 125 Chevron 6285.61 8375.00 $2089.39 8/12/96 110 Minn M&M 7224.44 9253.75 $2029.31 8/12/96 280 Gen'l Moto 14552.49 15225.00 $672.51 10/1/96 42 LucentTech 1999.88 2110.50 $110.62 8/12/96 130 AT&T 5145.11 4468.75 -$676.36 8/24/95 130 KLA Instrm 5812.49 4663.75 -$1148.74 8/13/96 250 3Com Corp. 11714.99 7875.00 -$3839.99 10/22/96 600 ATC Comm. 13761.50 3562.50-$10199.00 CASH $5240.09 TOTAL $124284.34