Fool Portfolio Report
Monday, June 9, 1997
by David Gardner (MotleyFool)

ALEXANDRIA, VA, (June 9, 1997) -- The Fool Portfolio rose moderately in value Monday, chalking up a 0.32% gain. Like Friday, our gain was unable to keep up with the S&P 500 and Nasdaq, both of which rose a half percent. The Donald's rise of $1/4 was the measure of defeat for the Foolfolio today.

Hey, the market just keeps rising, doesn't it? Here we go again... another year of double-digit returns. At market close today, the S&P 500 shows a 1997 year-to-date gain of 16.49%. Let's put that right next to overall performance the past couple of years:

S&P 500 1995: 34.11% 1996: 20.26% 1997: 16.49%

There are good times in the stock market and there are bad times. DIGRESSION ALERT: We all know that, even if some financial magazines insist on painting their self-aggrandizing picture of "Internet investors" who are naive greenhorns with no idea that the market ever goes down (who therefore need the magazine and its writers as their "expert" guides, right?). That talk, which used to be standard fare from these magazines as they scrambled to establish some sort of online presence, has now subsided. It's been replaced by talk about how these same investors should now come to the magazine's new online area, and (of course) avoid those of its competitors. It's particularly humorous to see some journalists who led the uninformed reader to believe the Internet was a Wild West "Dodge City" two years ago, now suddenly metamorphose into technophiles who think the Web is "cool" and want you to think so too. Tee-hee.

Anyway, back to the point, there are good times and bad times on the stock market and we who come to Fooldom every day recognize very self-consciously that we're living through a very good time right now. The S&P 500's year-to-date return of 16.49% is excellent, once again well above historical norms. As an interesting point of reference, let's look at the year-to-date returns at this time of year for 1995 and 1996:

S&P 500 as of: 6/9/1995: 15.49% (ended up 34.11%) 6/10/1996: 9.13% (ended up 20.26%) 6/9/1997: 16.49% (ends ???)

In both cases, the year-end figure ended up higher than where it was in mid-June. This sample size of two has zero statistical or historical significance, but it does remind us of one thing: Even though the market may seem to be "high" with an already good return, and even though the market often drops in the summer, it has surprised us in the past again and again by doing even better than we thought. Hey, at this point the S&P 500 is ahead of its performance at similar points in the previous two years. And that, even though it got whomped on during the spring due to (snicker) "irrational exuberance."

(One of our online readers dropped me an e-mail over the weekend quipping that the market's action recently could be described as "irrational fear followed by equally irrational exuberance followed by more irrational fear.")

Over any period we'd prefer that the market go up, but we're perfectly happy for it to drop or go sideways for a while. One of our many baubles in the Foolish bag of tricks is teaching people how to short stocks, making money when the market declines. Regardless, wherever the market moves in the short term we know which way it's going in the long term... the only term a true Fool cares about. Financial mags are forced into making you think about "What's Hot This Month!!!" Foolishness wants you to think about what works over the next 25 years.

The answer is of course "the stock market," which (if I may make a bit of a literary stretch) is "not of an age but for all time." Those were the words the poet Ben Jonson wrote of one of his great contemporaries... you may have heard of the fella: Shakespeare. In fact, it's always a delight to quote the following portion of Jonson's tribute, To the Memory of My Beloved, the Author, Mr. William Shakespeare:

Soul of the age!
The applause, delight, the wonder of our stage!
My Shakespeare, rise; I will not lodge thee by
Chaucer or Spenser, or bid Beaumont lie
A little further, to make thee a room;
Thou art a monument, without a tomb,
And art alive still, while thy book doth live,
And we have wits to read, and praise to give.

It's no surprise to anyone who's spent time in Fooldom that we share Jonson's thoughts about The Bard. Ironically, he may actually be more alive today than ever he was in the Elizabethan age, simply because he's known and loved by far more people.

And it was Shakespeare (among dozens of great Fool lines): "The fool [Ed. note: small "f"] doth think he is wise, but the wise man knows himself to be a Fool." And I firmly believe that were he alive today, Shakespeare would have a great deal of fun with the contradictions and excesses of our contemporary financial world. And you better believe that his unwritten play would have a Fool, mocking and encouraging, dancing and singing, providing the audience a viewpoint whose naked truth is both evident and amusing, before he shuffles off to the wings amid little fanfare.

I wrote of the use of index funds for 401(k) plans in my Friday report. Coming out of that, I received some surprising notes from employees of good companies who are not provided the index fund as an option. Wow! The index fund is where you start, rock-bottom, the stake in the heart of the full-service brokerage industry, and the way to get the stock market's winning long-term return no matter what. Even though we teach people to go beyond, to learn more and to outperform, we'd be quite happy to consider one of our own legacies the wider offering and use of index funds in retirement plans and elsewhere.

It's the "soul of the age"!


-- David Gardner, June 9, 1997

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Stock Change Bid -------------------- AOL + 1/4 57.38 T + 1/2 36.13 ATCT + 5/16 5.94 CHV - 3/8 71.88 DJT + 1/4 10.13 GM + 1/4 56.88 IOM + 3/8 20.50 KLAC + 7/16 48.00 LU + 3/8 65.25 MMM + 1/4 92.75 COMS - 3/8 45.88
Day Month Year History FOOL +0.32% 3.48% 6.15% 183.29% S&P: +0.57% 1.72% 16.49% 88.24% NASDAQ: +0.51% 0.84% 9.37% 96.07% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 20.50 713.49% 8/5/94 355 AmOnline 7.27 57.38 689.20% 8/11/95 125 Chevron 50.28 71.88 42.94% 8/12/96 110 Minn M&M 65.68 92.75 41.22% 10/1/96 42 LucentTech 47.62 65.25 37.03% 8/12/96 280 Gen'l Moto 51.97 56.88 9.43% 8/24/95 130 KLA Tencor 44.71 48.00 7.36% 8/13/96 250 3Com Corp. 46.86 45.88 -2.10% 8/12/96 130 AT&T 39.58 36.13 -8.72% 4/30/97 -1170 *Trump* 8.47 10.13 -19.56% 10/22/96 600 ATC Comm. 22.94 5.94 -74.11% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 20368.13 $17786.26 5/17/95 980 Iomega Cor 2594.53 20090.00 $17495.47 8/12/96 110 Minn M&M 7224.44 10202.50 $2978.06 8/11/95 125 Chevron 6285.61 8984.38 $2698.77 8/12/96 280 Gen'l Moto 14552.49 15925.00 $1372.51 10/1/96 42 LucentTech 1999.88 2740.50 $740.62 8/24/95 130 KLA Tencor 5812.49 6240.00 $427.51 8/13/96 250 3Com Corp. 11714.99 11468.75 -$246.24 8/12/96 130 AT&T 5145.11 4696.25 -$448.86 4/30/97 -1170*Trump* -9908.50 -11846.25 -$1937.75 10/22/96 600 ATC Comm. 13761.50 3562.50-$10199.00 CASH $49211.92 TOTAL $141643.67