Fool Portfolio Report
Thursday, May 8, 1997
by Tom Gardner (TomGardner)


ALEXANDRIA, VA, (May 8, 1997) -- Like the little train that could, The Fool Portfolio chugged deeper into the land of profitability today, rising 0.30% on the day. For 1997, our holdings are now up 0.32%. But while that sounds all good, and while the presentation might work as a mutual fund advertisement during an NBA Hoops game, the whole context of numerical reality doesn't ring out with the driving spirit of Tchaikovsky's 1812 Overture.

Why?

For starters, The Fool Portfolio's gain of 0.30% today was effectively lapped by the competition. The S&P 500 pounded ahead 0.57%. And the Nasdaq rose 0.60%. So while we did make money on this day, we didn't outrun the index fund -- the mutual funds which simply buy the entire market and charge minimal administrative fees.

Furthermore, The Fool Portfolio -- while profitable for the year -- is also trailing both indices. The Nasdaq is now up 3.08% for 1997, and the S&P 500 has gained 10.74%. It bears repeating for the umpteenth time that small-cap stocks have not kept up with their larger brethren this year. It almost seems as if all of our market's gains have come under the umbrellas of Microsoft (up 41% in 1997), Intel (up 21%), General Electric (up 17%), and Coca Cola (up 23% since December 31, 1996).

Wherever the growth has come from, not enough of it has come the way of our Fool holdings. Make no mistake, we really don't much care about performance over a 6-12 month period. Even a 12-24 month period, really. But we're obviously not happy with the performance of our stocks in '97. Thankfully, investing makes up just a small slice of the experiences that life brings. Even so, over the long run, it's a rewarding one.

AMERICA ONLINE (NSYE: AOL) today closed flat at $50 1/4, but pitched out a press release announcing the formation of an ABC Sports area to be located in America Online's Sports Channel. Content partnership announcements have flowed out of America Online's fax machine over the past two years like sweet sap from a Vermont maple. So why mention this one?

Well, following a discussion with my father over a year ago, I've kept my eyes open for any adjacencies between Disney and America Online. Last spring, Big Pops went on record predicting that the 21st century would bring an interesting battle between Disney (as it raced into technology) and Microsoft (as it raced into family entertainment). It made sense.

So I began taking half-steps back from the online world and casually assessing the spate of new partnerships. NBC, owned by General Electric, has been walking arm-in-arm with Microsoft. They've built MSNBC together, and TV viewers have been treated to story flows gliding through The Today Show, CNBC, MSNBC, and MSN Online all in a single day.

And in the left corner, weighing in with a capitalization of $55 billion is Disney. With its television franchises (ABC and ESPN), with its entertainment parks, its movie studios, its publishing houses, its sports teams... Disney is lacking one thing: an integrated, bustling, full-blown interactive service.

Enter America Online?

America Online certainly hasn't been partnering with CBS. They haven't latched onto Viacom. They aren't snuggling up to Time Warner. And I think the belief that AOL would assimilate into a large Telco overrates the importance of access and underrates the value of the online experience. And I think it misestimates America Online's competitive position. For example, I can't imagine America Online being bought up by GTE, after its purchase of BBN.

Now the possibility exists that America Online will run its own show for decades to come, with Bob Pittman and Steve Case manning the digital wheel. But something about the partnerships between America Online and Disney/ABC seem cozier than the average bear hug. And something about what my Dad said -- about Gates heading into storytelling and Eisner driving towards programming code -- has me imagining PCs and enchanted castles.

And you know that when pure and base speculation like that flows into a Fool Portfolio report, there wasn't much news on the day. There wasn't.

Fool on,

Tom Gardner

Daily Double -- best for figuring out why a stock doubles.
Evening News -- Why the Dow Approach works
Bust the Tipsters -- learn about investing -- but have fun doing so.


TODAY'S NUMBERS
Stock Change Bid -------------------- AOL --- 50.25 T - 1/8 32.50 ATCT + 1/8 4.44 CHV +1 70.63 DJT + 1/8 10.00 GM - 3/4 56.75 IOM --- 18.88 KLAC + 3/4 49.38 LU + 1/8 62.00 MMM +1 3/8 91.13 COMS +1 1/4 38.25
Day Month Year History FOOL +0.30% 4.67% 0.32% 167.74% S&P: +0.57% 2.36% 10.74% 78.94% NASDAQ: +0.60% 5.56% 3.08% 84.79% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 18.88 649.01% 8/5/94 355 AmOnline 7.27 50.25 591.20% 8/11/95 125 Chevron 50.28 70.63 40.45% 8/12/96 110 Minn M&M 65.68 91.13 38.75% 10/1/96 42 LucentTech 47.62 62.00 30.21% 8/24/95 130 KLA Tencor 44.71 49.38 10.43% 8/12/96 280 Gen'l Moto 51.97 56.75 9.19% 8/12/96 130 AT&T 39.58 32.50 -17.88% 4/30/97 -1170 *Trump* 8.47 10.00 -18.08% 8/13/96 250 3Com Corp. 46.86 38.25 -18.37% 10/22/96 600 ATC Comm. 22.94 4.44 -80.65% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 17838.75 $15256.88 5/17/95 980 Iomega Cor 2594.53 18497.50 $15902.97 8/12/96 110 Minn M&M 7224.44 10023.75 $2799.31 8/11/95 125 Chevron 6285.61 8828.13 $2542.52 8/12/96 280 Gen'l Moto 14552.49 15890.00 $1337.51 8/24/95 130 KLA Tencor 5812.49 6418.75 $606.26 10/1/96 42 LucentTech 1999.88 2604.00 $604.12 8/12/96 130 AT&T 5145.11 4225.00 -$920.11 4/30/97 -1170*Trump* -9908.50 -11700.00 -$1791.50 8/13/96 250 3Com Corp. 11714.99 9562.50 -$2152.49 10/22/96 600 ATC Comm. 13761.50 2662.50-$11099.00 CASH $49020.02 TOTAL $133870.90