Fool Portfolio Report
Thursday, February 20, 1997
by David Gardner (Motleyfool)

ALEXANDRIA, VA., (Feb. 20, 1997) -- A rolling stone gathers no moss, the saying goes, but actually, rolling stones are all about M.O.S.

And Thursday found us once again feeling fuzzy, and covered in M.O.S.

With the market falling steadily (both the Nasdaq and the S&P 500 lost more than one percentage point), the Fool Portfolio did just a little bit worse once again, continuing to add to its recent legacy of underperformance.

More Of Same.

As we live through another day of 10 of our stocks declining in value on little news, it's hard to say anything that hasn't already been said... that hasn't already been said lots. Think for the long term, and invest accordingly. Buy good companies leading their industries. Use the online medium as a well-honed research tool. Buy what you know. Etc. Etc.

As good as all this advice is, sometimes it just doesn't work over a short-term period, and I'm darned if I can ever explain exactly why. As a helpful analogy, consider our national pastime. Despite years and years of study and hard work, even the best hitters in baseball still reach base less than half the time. More than half the time, perennial hitting stars Frank Thomas and Ken Griffey Jr. and Tony Gwynn saunter back to the dugout, batting helmets in hand. They've struck out. They've grounded out. They've flown out. They're out, out, out and that's the way the game is played.

Fortunately, most investors hit for a higher average than major-league sluggers, but that doesn't mean we won't go strike out from time to time. So while 8 of our 11 stocks currently show profits (we're getting on base the majority of the time), we're presently mired in what feels like an 0-for-23 slump. We're a bit tenser in the batter's box. We're looking at films of ourselves to see if we've changed anything in our swing. We're feeling as if every hop is going the other team's way. It's just one of those months.

For the fun of it, I went back and looked again at our worst run of it ever, the middle two months of last summer. In June and July of 1996, the Fool Portfolio lost 20.40 and 23.59 percent, respectively. Consecutively. Back to back!

Tonight's message is therefore double-edged:

(1) We (and you, when this happens to you) will pull out of it, and sometimes it's always darkest just before The Man turns on the lights. And:

(2) It can get a heck of a lot worse than this. Experienced investors know this, accept it, and continue to take their swings and hustle down to first base. Short-term pain has always been a part of long-term gain.

It's extremely frustrating to see ourselves down 8 percent this year, with the S&P 500 and Nasdaq instead up 8 and 4 percent, respectively. It's been M.O.S., M.O.S., M.O.S. pretty much since the second week of January. But we'll take our cuts and keep moving, because this game is going to be played not over one summer or another, but for years and years. An investor's longevity far outpaces the relatively brief shooting star of a major-league baseball career. The latter goes 15 years if you're lucky; the former a good 45 years more than that. Plus, no guarantee that if you're Ken Griffey, you'll have a son who'll grow up and be able to play the game. Ken Griffey Junior is indeed a rare jewel. But for you and me? We leave our children our own uniforms and a sign-here-on-the-dotted-line contract to play ball when we depart.

A final rumination during tonight's brief report. Hey, anybody noticing the split occurring between the Nasdaq and the S&P 500 this year? It's looking more and more like a big cap year.

When you think of the amount of money moving into no-load index funds these days (as well it should, in so many cases), it's probably not terribly surprising that the big stocks are getting pumped up. After all, the indices comprise huge-name companies and huge-name stocks, so that the massive inflow into index mutual funds makes the big just keep getting bigger.

At some point, this trend will reverse (not permanently at all... open markets move in cycles), but it still doesn't look like anytime soon to this particular Fool.

-- David Gardner, February 20, 1997


Stock Change Bid -------------------- AOL - 3/4 34.63 T - 1/8 39.88 ATCT - 3/8 6.00 CHV -1 5/8 65.63 GM + 1/4 58.00 IOM - 1/4 16.63 KLAC -2 1/2 44.00 LU - 1/2 59.13 MMM -1 1/8 83.25 NCR - 1/4 35.25 COMS - 3/8 40.13
Day Month Year History FOOL -1.57% -9.95% -8.20% 145.00% S&P: -1.19% 2.12% 8.38% 75.13% NASDAQ: -1.33% -2.35% 4.37% 87.09% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 16.63 559.99% 8/5/94 680 AmOnline 7.27 34.63 376.08% 8/11/95 125 Chevron 50.28 65.63 30.51% 8/12/96 110 Minn M&M 65.68 83.25 26.76% 10/1/96 42 LucentTech 47.62 59.13 24.17% 8/12/96 280 Gen'l Moto 51.97 58.00 11.60% 1/2/97 8 NCR 33.63 35.25 4.83% 8/12/96 130 AT&T 39.58 39.88 0.75% 8/24/95 130 KLA Instrm 44.71 44.00 -1.59% 8/13/96 250 3Com Corp. 46.86 40.13 -14.37% 10/22/96 600 ATC Comm. 22.94 6.00 -73.84% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 33416.25 $28353.12 8/5/94 680 AmOnline 4945.56 23545.00 $18599.44 8/12/96 110 Minn M&M 7224.44 9157.50 $1933.06 8/11/95 125 Chevron 6285.61 8203.13 $1917.52 8/12/96 280 Gen'l Moto 14552.49 16240.00 $1687.51 10/1/96 42 LucentTech 1999.88 2483.25 $483.37 8/12/96 130 AT&T 5145.11 5183.75 $38.64 1/2/97 8 NCR 269.00 282.00 $13.00 8/24/95 130 KLA Instrm 5812.49 5720.00 -$92.49 8/13/96 250 3Com Corp. 11714.99 10031.25 -$1683.74 10/22/96 600 ATC Comm. 13761.50 3600.00-$10161.50 CASH $4639.01 TOTAL $122501.14