Fool Portfolio Report
Thursday, July 10, 1997
by Tom Gardner (TomGardner)

ALEXANDRIA, VA, (July 10, 1997) -- The Fool Portfolio fell 0.11%, while the S&P 500 rose 0.69% -- and so our short three-day reign over the markets ends today. Now ten days into the month, and four days short of the birthday of one of my favorite authors, Isaac Bashevis Singer, The Fool Portfolio has risen 6.46%, doubling the S&P 500's July gains of 3.23%.

It's an absolutely brilliant, breezy summer day outside Fool Global Headquarters in Alexandria, VA; our office is buzzing with dozens of Fools writing reports, chatting with advertisers, programming code, drifting over to the pinball machine where Dirty Harry shouts at you, "Meet me at the warehouse!" Yep, Fool Global Headquarters includes a leased pinball machine, as well as pool, ping-pong and foosball tables. Fool HQ also includes a bang-up security system and nineteen-year-old programmers that work all night -- so don't even THINK about it, buddy!

Today's abbreviated portfolio report offers PEGs on our small-cap holdings and YPEGs on our large-cap positions. Simple price-to-earnings-growth valuations are much too simple, but these at least give a ballpark fair price for our stocks based off earnings growth.

Beyond these, Fools need to study the balance sheets, understand alternate pricing methods (in AOL's case, subscriber-based valuations), and involve themselves in a more thorough exploration of these businesses' prospects going forward. One of the problems with PEG- and YPEG-based valuations is that they don't take into effect earnings growth beyond twelve months or so, nor the value of long-term compounded growth, nor the implications of capital-gains taxes, nor the worth of strong management. Holding stocks through short-term overvalue hurts traders but can greatly reward investors.

All of that said, my favorite stocks right now in The Fool Portfolio still happen to be the ones with the most attractive valuations. Innovex and 3Com most interest me. And Iomega, given its industry position, is also notable. 

                           PEG
    Small Caps    Price   Price
    ATC Comm.     $4.80   $5.50
    The Donald   $10.50    n/a
    Innovex      $28.40   $55-$70*


                           YPEG
    Large-Caps    Price    Price
    AOL          $68.70   $50.00
    Iomega       $20.50   $23.50
    KLA-Tencor   $55.00   $53.00
    3Com         $53.50   $73.50


    

    Now what would happen if you bought one of these stocks, after doing diligent
    research, and then blammo, the stock market tumbled 25%? The possibility
    almost always exists that U.S stocks could lose 25% of their value over the
    coming three months. Our response to market-valuation concerns is to focus
    even more intently on the merits and flaws of the businesses we own as well
    as to remind ourselves of the value of long-term compounded growth -- a growth
    preserved for investors.
    

    If the market falls and you're fully-invested in good companies, remember
    that the sun still shines, the river is still waiting to be floated, the
    kids don't love you for your equity holdings, and in the words of one rather
    eloquent Fool (Doubting ThomaS) on the Investor's Roundtable board and in
    our Cash-King folder on the Web:
    

      

      In the end, I doubt that I'll look back on

      my life and remember the good times I

      had monitoring the price of a particular

      stock.
    

    

    I say this summer, drop by Fooldom for your lunchbreak, read through our
    nightly stuff for a half hour in the evening, then spend every waking non-work
    hour as Foolishly as possible (i.e. without concern for the short-term
    performance of your investments). Turn your eyes on the next perch trout,
    the next flyball to leftfield, the next paddled ball on the beach, the next
    packing trip in the Beartooth mountains, the next climbed tree with your
    six-year-old grandson, daughter, niece or nephew. Besides battling the bad-guys
    with Dirty Harry at HQ on rainy days... we'll be doing the same things in
    our free time.
    

    Tom Gardner, Fool
    

    

     FOOLISH FREEBIE
    ALERT: FINAL DAY

    Fool Portfolio Reports!
    

    What could be more exciting than an e-mail from the Fool every weekday evening?
    Well, maybe a trip around the world. Or a raccoon running amok through your
    apartment. But we digress. If you'd like to keep up with the progress of
    the amazing Fool portfolio, subscribe to the nightly reports! Sure, you can
    just grab 'em in our online forum every night, but why not have them delivered
    to your e-mailbox every night? Especially since you can get them FREE for
    the next two weeks! Just send an e-mail to
    [email protected] to sign up! Get in
    gear and send in your request - this offer expires July 10.
    

    

    Fool Message Boards -- What
    are Fools saying? 

    Boring Portfolio
    -- All but one stock in positive ground.

    Fool Four -- 23% annually,
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    Evening News
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TODAY'S
    NUMBERS

    
      

Stock  Change    Bid
----------------
AOL   +  1/4   68.69
T     +  3/16  35.81
ATCT  +  1/16  4.81
CHV   +  1/4   74.63
DJT   +  7/16  10.50
GM    +  7/16  56.25
INVX  -  3/4   28.38
IOM   -  1/8   20.56
KLAC  + 15/16  55.06
LU    +1 5/16  77.38
MMM   +  1/8   102.81
COMS  +  7/8   53.50



      
    
    
                 Day   Month    Year  History
        FOOL     -0.11%   6.46%  12.27% 199.62%
        S&P:     +0.69%   3.23%  23.36%  99.34%
        NASDAQ:  +0.29%   3.39%  15.48% 107.02%


    Rec'd    #  Security     In At       Now    Change
   8/5/94   355 AmOnline       7.27     68.69   844.81%
  5/17/95   980 Iomega Cor     2.52     20.56   715.97%
  10/1/96    42 LucentTech    47.62     77.38    62.50%
  8/12/96   110 Minn M&M      65.68    102.81    56.54%
  8/11/95   125 Chevron       50.28     74.63    48.40%
  8/24/95   130 KLA Tencor    44.71     55.06    23.15%
  8/13/96   250 3Com Corp.    46.86     53.50    14.17%
  8/12/96   280 Gen'l Moto    51.97     56.25     8.23%
  6/26/97   325 Innovex       27.71     28.38     2.40%
  8/12/96   130 AT&T          39.58     35.81    -9.51%
  4/30/97 -1170 *Trump*        8.47     10.50   -23.98%
 10/22/96   600 ATC Comm.     22.94      4.81   -79.02%

    Rec'd    #  Security     In At     Value    Change
   8/5/94   355 AmOnline    2581.87  24384.06 $21802.19
  5/17/95   980 Iomega Cor  2594.53  20151.25 $17556.72
  8/12/96   110 Minn M&M    7224.44  11309.38  $4084.94
  8/11/95   125 Chevron     6285.61   9328.13  $3042.52
  8/13/96   250 3Com Corp. 11714.99  13375.00  $1660.01
  8/24/95   130 KLA Tencor  5812.49   7158.13  $1345.64
  10/1/96    42 LucentTech  1999.88   3249.75  $1249.87
  8/12/96   280 Gen'l Moto 14552.49  15750.00  $1197.51
  6/26/97   325 Innovex     9005.62   9221.88   $216.25
  8/12/96   130 AT&T        5145.11   4655.63  -$489.49
  4/30/97 -1170*Trump*     -9908.50 -12285.00 -$2376.50
 10/22/96   600 ATC Comm.  13761.50   2887.50-$10874.00


                              CASH  $40625.59
                             TOTAL $149811.28