Fool Portfolio Report
Monday, May 19, 1997
by David Gardner (MotleyFool)
ALEXANDRIA, VA, (May 19, 1997) -- It was a yawner of a day on the market. Another six and a half hours, another 347 million shares change hands in New York, your basic intra-day fluctuations. Typical thing. Little change: S&P 500 rises 0.42%, the Nasdaq cops a 0.04% gain, and the Fool does its May thing (I have not enjoyed this market month very much), underperforming with a 0.05% loss.
And was the news on our stocks today exciting, or what? You need only know that most of the material was press releases from among the 173 award-winning suppliers for General Motors in 1996. (Way to go, Bundy and Montell, whoever you are.)
Just as the news was vanilla, the same goes for the movements of our individual stocks. Oh, sure, KLA TENCOR (NASDAQ:KLAC) lost $1 3/4 of its value, but if KLAC isn't moving at least two bucks on a given day, the traders were on vacation. Perhaps that is it, actually, since today was for many of us on the East Coast the first truly warm day of the year.
The Donald lost $1/4 of his value, Monday, which always props up the Fool Port. If you been enjoying the ongoing saga of The Fool vs. The Donald (and rounds 1 and 2 have been scored in favor of Monsieur Trump), you'll probably want to tap into Paul Larson's weekly updates, as well. Paul is our Industry Fool for gaming stocks, and cranks out a regular weekend report (available Saturdays) covering all the moves and grooves, and busts and lusts, of the gambling (OOPS, excuse me, the GAMING) industry. His most recent update follows up on the amusing exchange of press releases between Trump and Mirage last week. You can read Paul's update on AOL, or if you're a Web reader you can bookmark those either on our Web site or on Yahoo. Paul does a fine job interpreting the industry for those of us who don't wile away the hours pulling the one-armed bandit.
With little of real interest in today's markets, let's turn to a timely discussion of a timeless topic. That is, let's look at "ethical investing" (timely discussion) of our Foolish Dow Dividend Approach (timeless topic). The #2 stock at present in the 2-2-3-4-5 scheme is none other than PHILIP MORRIS (NYSE:MO). You may have heard of the company... all over your favorite law review. Flip Mo (my name for it) is embroiled in a host of legal problems arising from its historically robust tobacco business.
Is Flip Mo a classic Dow Dividend pick? That's a BIG FAT YES. Like Exxon during Exxon Valdez, Union Carbide following Bhopal, and (slightly more mild, but no less profitable) Sears at the height of its overdiworsefication, Philip Morris fits neatly in the mold of the classic Foolish Four pick. You have a huge and unpopular company suffering at the media's hands, along with your basic bunch of institutional investors bailing out. It's ugly. "Who would buy Philip Morris here?" your friend at work asks you, eyeing you with extreme skepticism.
You might, if you're a Fool.
HOWEVER, some people don't like investing in companies whose products or services they object to on ethical or moral grounds. And so various discussions have ensued across Fooldom (on our much-quicker -- now -- AOL boards and our new Web boards) about what the Foolish investor should do instead of buying Flip Mo.
Before I share my own point of view, we must first consider a fantastic post on our Web boards the other day from LuxSit. It simply demands a read from anyone considering this intellectual or moral conundrum. LS reminds us that Philip Morris is in fact not the only Dow company that socially responsible investors might wish to target. And I quote:
It has come to my attention on this board that many folks have a problem investing in Philip Morris. I suppose that the reason is that tobacco is just not politically correct anymore. It used to be sexy, suave, and debonair. Now it's relegated to every stoop of every office in America. And so I would agree that smoking is not for everyone, nor is it really proper or accepted in most public places among non-smokers. [But] I do not think that a person should not invest in MO just because they don't like tobacco.
I would draw the attention of ye fools to the current Foolish Four. Along with MO we have International Paper. Paper production involves a great many chemicals and may be one of the largest contributors to Super Fund Sites in America. The use of chlorine in the papermaking process, a poison in itself responsible for many industrial fatalities, forms dioxins which are often left to run into our waterways. Dioxins are a dangerous carcinogen.
General Motors, the third position, may build wonderful automobiles, however they were slow to respond to safety issues for seat belts and air bags, and lobbied Congress to not make them mandatory. They were against CAFE standards which force automakers to build more efficient automobiles which burn less fuel and protect the air we breath. The automotive industry uses a tremendous amount of steel, the production of which is a cause for acid rain. The tailpipe emissions from GM cars are responsible for countless maladies, including asthma, emphysema, lung cancer, and all sorts of more minor eye, throat, and lung irritation. The burning of leaded fuels in these autos has left neighborhoods adjacent to our highways and byways toxic waste dumps with lead levels way above normal. Automobile accidents are responsible for 50,000 deaths per year and countless more injuries.
And finally Exxon, the people that produce a whole assortment of chemicals and fuels including nuclear fissionable materials. They too are responsible for the lead in neighborhoods and the pollution in the air. The refineries put billions of pounds of pollutants into our air and water; oil spills at refineries and from tankers threaten beaches and wildlife the world over. Remember the Exxon Valdez running aground in pristine Prince William Sound in Alaska? The damage to the ecosystem was tremendous, with loss of life for may animals and loss of livelihood for fishermen and many other native persons who depended on fish for food. Exxon was taken to court, as it resisted taking responsibility for the accident. It was
ultimately forced to pay damages. It's amazing how many rules were broken with respect to the fast response to the spill required by law. Exxon had none of the equipment ready for deployment and after two calm days when they could have cleaned up the majority of the spill a large storm blew in and spoiled countless miles of untouched beaches.
So I hope that you Fools that are feeling smug and politcally correct about not investing in Philip Morris are sleeping well with these other great companies in your portfolio!
Fool On! or fool on! as the case may be,
The writer went on to mention that he was being sarcastic in his last paragraph... genuine fun, not flaming, was the purpose of the note.
In the same spirit of genuine fun -- because you can argue yourself blue in the face about socially responsible investing -- I'll mention a frequent comment of my brother's. Namely, he finds it amusing that some of the same people who won't invest in Flip Mo are eating Kraft cheese as they explain this to him. Kraft is of course a product of the Philip Morris company, which also makes Jell-O, Oscar Mayer, and Post cereals. (I do find these Foolish snapshots on our Web site useful -- the writeups come from Hoover's.) So if you're eating any of these things and flouting MO stock, you have a contradiction on your hands. And as the note excerpted above makes clear, if you own some other Foolish Four picks, the same's probably the case. In fact, I'm not sure there's a company on the Dow that is above ethical reproach, when you focus your lens close enough.
What I've always said is that if you can't beat 'em, join 'em. Philip Morris investors have made tons of money off of the stock, historically, far outperforming any socially responsible mutual fund I've seen. So consider buying the stock yourself -- don't let them get all the profits -- then, if you feel strongly enough about it, donate all or a portion of your profits to fight tobacco. Makes some Foolish sense to me.
--- David Gardner, May 19, 1997
Stock Change Bid -------------------- AOL - 3/4 48.50 T - 1/8 33.38 ATCT + 1/16 4.00 CHV + 3/8 70.63 DJT - 1/4 9.88 GM + 3/8 55.88 IOM - 3/16 17.38 KLAC -1 3/4 47.00 LU + 3/4 61.63 MMM - 1/8 91.38 COMS + 1/2 37.88Day Month Year History FOOL -0.05% 2.54% -1.72% 162.28% S&P: +0.42% 3.98% 12.49% 81.78% NASDAQ: +0.04% 6.38% 3.89% 86.24% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 17.38 589.48% 8/5/94 355 AmOnline 7.27 48.50 567.13% 8/11/95 125 Chevron 50.28 70.63 40.45% 8/12/96 110 Minn M&M 65.68 91.38 39.13% 10/1/96 42 LucentTech 47.62 61.63 29.42% 8/12/96 280 Gen'l Moto 51.97 55.88 7.51% 8/24/95 130 KLA Tencor 44.71 47.00 5.12% 8/12/96 130 AT&T 39.58 33.38 -15.67% 4/30/97 -1170 *Trump* 8.47 9.88 -16.60% 8/13/96 250 3Com Corp. 46.86 37.88 -19.17% 10/22/96 600 ATC Comm. 22.94 4.00 -82.56% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 17217.50 $14635.63 5/17/95 980 Iomega Cor 2594.53 17027.50 $14432.97 8/12/96 110 Minn M&M 7224.44 10051.25 $2826.81 8/11/95 125 Chevron 6285.61 8828.13 $2542.52 8/12/96 280 Gen'l Moto 14552.49 15645.00 $1092.51 10/1/96 42 LucentTech 1999.88 2588.25 $588.37 8/24/95 130 KLA Tencor 5812.49 6110.00 $297.51 8/12/96 130 AT&T 5145.11 4338.75 -$806.36 4/30/97 -1170*Trump* -9908.50 -11553.75 -$1645.25 8/13/96 250 3Com Corp. 11714.99 9468.75 -$2246.24 10/22/96 600 ATC Comm. 13761.50 2400.00-$11361.50 CASH $49020.02 TOTAL $131141.40