Fool Portfolio Report
Wednesday, May 21, 1997
by David Gardner (MotleyFool)

ALEXANDRIA, VA, (May 21, 1997) -- The Fool Portfolio got waxed by tech stocks today, as a runaway Nasdaq just kept training on past everything. The Nas is now up almost 9 percentage for the lusty month of May, at present the single best month in recent history. In fact, here are the best months for the Nasdaq since we started online back in August of 1994:

May 1997 (in progress): 8.96% April 1996: 8.09% June 1995: 7.96% September 1996: 7.48% July 1995: 7.26%

May has remained a month of underperformance for us, with 28% of our money sitting in cash during a very nice rally. Alas... oy vay. We're nearing another short or two, and a few longs. So we ain't sweatin' it. Just our Foolish luck to be a fish out of at the very time that water hits a new high on the Intergalactic Commodities Options exchange. Sheesh.

My Monday Recap about the ethics of investing in PHILIP MORRIS (NYSE: MO) and other Dow companies occasioned, as expected, a number of interesting and compelling notes from all sorts of different people. A fellow from the EPA, a doctor writing from a meeting of the American Thoracic Society, a professor at Fuller Theological Seminary, and a few other Fools (including our own staff). To that end, we've put together a short, stimulating further consideration of the issue in a special collection called Opinions on the Ethics of Investing. I encourage you to click in and read, as it's a terribly important topic, and the points made by various readers and staff are excellent.

Some may have assumed that I had strong feelings one way or the other, which I don't. The Fool Web site contributor whose note I excerpted on Monday was his opinion; I just thought it was a punchy point for further consideration, and I appreciated the creative thought behind it. If and when Flip Mo comes up for consideration during our Dow switch in August, we'll take all these comments very much to heart before making our own public decision about investing in the company. Fascinating topic. Fascinating time we live in.

AT&T (NYSE: T) wrote an interesting reaction today to a new encroachment attempt on its long-distance business by Ameritech. Ameritech applied to the Federal Communications Commission (FCC) this morning to offer long-distance service in the state of Michigan. Ma Bell didn't like this very much, as one might expect, and dropped its reaction over the news wires, a portion of which I'll quote:

"This is Ameritech's third application to the Federal Communications Commission to provide long-distance service in Michigan, and it still falls far short of what Congress intended in the federal Telecommunications Act of 1996. Ameritech still has not fully met the 14-point checklist, outlined in the Act, for entering the long-distance business. Competition for local phone service is just barely beginning in Michigan.... If Ameritech is allowed to offer long-distance service in Michigan before local competition is a reality, it has absolutely no incentive to open its monopoly to other entrants. And local competition, which is the principal consumer benefit of the Telecom Act, will be delayed or denied."

The Telecom Act, as you'll remember, deregulated lots of telecommunications services, including the local and long-distance markets. What you now have is former regional bells that offered local (monopoly) services starting to dip their fingers in the long-distance companies' pies... and vice-versa. How will it all shake out? I'm thinking we're going to see some consolidation in the next few years, as I have a hard time thinking all these companies (AT&T, Bell Atlantic, MCI, SBC, Sprint, Ameritech, and the list goes on and on) are going to exist as independent, similarly sized clones.

Even as a shareholder who has some of his bucks on the line, I'm amused by AT&T's statement. You have to smile a little bit at seeing a company begin to face competition it never thought it would, and to throw up roadblocks (psychological or real) to the advance of competition. The company may be in a better situation to compete than some of the Bells, insofar as it has faced stiff long-distance competition for a decade, whereas the local Bells have enjoyed monopolies (at least for residential customers) for a decade... they haven't had to compete as much.

As poor a performer as T has been for us, its offspring LUCENT TECHNOLOGIES (NYSE: LU) has been as good. At market close today, we've made nearly the same amount of money on Lucent as we've lost on AT&T. AT&T has cost the Fool $660 since August, while our shares of Lucent have earned $330. So, we can't really blame AT&T for the stumbling Fool Four stocks we have right now.

Today Lucent reported that it's working with U.S. Venture Partners on fingerprint indentification technology. Maybe the stock will rise four-fold tomorrow, like COMPARATOR (Nasdaq: IDID), which also was said to be working on fingerprinting technology when it soared in price. But this is Lucent we're talking about. It's a legit and respected operation and so, luckily, we don't expect any stock manipulation on this news!

3COM (Nasdaq: COMS) continued to rise, running to a bid of $41 1/2 after a $2 5/8 move. The company has won several product awards recently, which goes directly against the bearish argument that 3Com's technology lags the industry. 3Com of course developed ethernet technology, and the company is the second leading networker in the world. 3Com has recently won the Retail Network Innovation Award, the "Editor's Choice" for Network Computing award, and our company also took top honors at the Networld and Interop Conference, winning "Product of the Year Awards." Hardly a company that seems to lag, rather than lead, its industry.

Fool on!

--- David Gardner, May 21, 1997

1) The Philip Morris debate: Right or Wrong?
2) The Daily Trouble -- Former Fool hot stock RIDE INC (Nasdaq: RIDE) has gotten snowed. A merited slaughter, or now a good value?
3) The Daily Double -- GUM TECH (Nasdaq: GUMM). High-tech chewing gum? Worth a double in stock price? Looking at the accounting of it.
4) Wednesday's Evening News: Dell smokes estimates.
5) Daily Dow Report: Retiring Fools.

Stock Change Bid -------------------- AOL - 1/4 49.75 T + 3/8 34.50 ATCT --- 4.00 CHV - 1/4 70.13 DJT + 1/8 9.75 GM - 7/8 56.50 IOM - 3/8 17.13 KLAC -1 5/8 48.88 LU - 3/4 62.63 MMM - 7/8 90.88 COMS +2 5/8 41.50
Day Month Year History FOOL -0.38% 3.90% -0.42% 165.76% S&P: -0.27% 4.75% 13.32% 83.11% NASDAQ: +0.72% 8.96% 6.41% 90.75% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 49.75 584.32% 5/17/95 980 Iomega Cor 2.52 17.13 579.56% 8/11/95 125 Chevron 50.28 70.13 39.46% 8/12/96 110 Minn M&M 65.68 90.88 38.37% 10/1/96 42 LucentTech 47.62 62.63 31.52% 8/24/95 130 KLA Tencor 44.71 48.88 9.31% 8/12/96 280 Gen'l Moto 51.97 56.50 8.71% 8/13/96 250 3Com Corp. 46.86 41.50 -11.44% 8/12/96 130 AT&T 39.58 34.50 -12.83% 4/30/97 -1170 *Trump* 8.47 9.75 -15.13% 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 17661.25 $15079.38 5/17/95 980 Iomega Cor 2594.53 16782.50 $14187.97 8/12/96 110 Minn M&M 7224.44 9996.25 $2771.81 8/11/95 125 Chevron 6285.61 8765.63 $2480.02 8/12/96 280 Gen'l Moto 14552.49 15820.00 $1267.51 10/1/96 42 LucentTech 1999.88 2630.25 $630.37 8/24/95 130 KLA Tencor 5812.49 6353.75 $541.26 8/12/96 130 AT&T 5145.11 4485.00 -$660.11 8/13/96 250 3Com Corp. 11714.99 10375.00 -$1339.99 4/30/97 -1170*Trump* -9908.50 -11407.50 -$1499.00 10/22/96 600 ATC Comm. 13761.50 2400.00-$11361.50 CASH $49020.02 TOTAL $132882.15