Fool Portfolio Report
Wednesday, March 5, 1997
by David Gardner (MotleyFool)

ALEXANDRIA, VA, March 5, 1997-- The market rose strongly following tempered comments by Fed Chairman Greenspan today. Alas, investors failed to see the connections between Greenspan's comments and our shares of ATC Communications, for instance. Or America Online, or Iomega, or a couple others, for that matter. Consequently, the Fool Portfolio was left spinning and bobbing in the market's wake, sinking fractionally in the face of one-percent market gains.

Greenspan gives two reports to Congress a year, each lasting two days. Today was the second day of his first-half report, and Al seemed a bit more hip to stocks in contrast with previous repetitions of the phrase "irrational exuberance," used to describe the American stock market's recent successes.

Bond prices rose in reaction, sending interest rates lower. If there's one truism about stock markets and valuations it's that stocks go up when interest rates go down. That happened today. We've talked about this before, but let's repeat our few brief words on the subject.

Interest-bearing vehicles like money-market funds, T-bills, CDs, etc. (and to a lesser extent, bonds) compete with stocks for our money. The goal of investing is to garner good returns, with greater or lesser amounts of risk-taking based on style and need. Whenever interest rates rise, what happens? Simple: money moves in that direction... rates are higher than before, creating a more attractive investment. Inevitably, some of that inflow flows out of the stock market. The only way the market doesn't get hurt is if there's so much additional new money coming into it (from foreign investors, 401k's, the whole nine yards) that the new money more than replaces the departed money.

That usually doesn't happen. Thus, as interest rates rise, the market usually drops. And when interest rates fall (as they've been doing for years now, falling and staying low), the market rises. Keep your eye on this relationship; it's easy to follow and learn from.

Our two Wednesday stars were none other than the Two Threes, Trois Com and Trois M. 3Com reported a new partnership with Micron Electronics (Nasdaq:MUEI), in which Micron's computers will be made 3Com-ready... our company's networking technologies pre-configured and integrated into the Micron machines.

As a result, coupled with a tech bounceback, COMS gained $1 5/8 to close bidding $35 3/8. That's still off 25% from our August purchase, after the thing had practically doubled. We're holding.

No news to explain the $1 7/8 rise in 3M today... other than, maybe, that the company's just outright awesome. Oh yeah, that and the Dow rose 93 points. 3M has been our top Foolish Four stock this year, now having risen 40% since the August acquisition.

But what am I doing talking about our winners? We lost today. Ah, but there's little to say about our losers because the only significant down move was ATC Communications, off $9/16 to bid $6 7/8. The stock continues to bat around following a recent rise fueled by the hires of two new managers, and a marketing partner. That company, M/C/C, was hired last week to help increase ATC's visibility over the next year. And let the record show that M/C/C didn't mince its words, either. "Together, we're going to make them the Michael Jordan of teleservices companies," stated Mike Crawford (he of the M's and C's), M/C/C's president.

Too early to tell which of great quotation better applies:

Such joy ambition finds.
(Paradise Lost, Milton)
I have no spur
To prick the sides of my intent, but only
Vaulting ambition, which o'erleaps itself,
And falls on the other.
(Macbeth, Shakespeare)

Otherwise today, there was little other news of consequence. America Online dropped $3/8 following a fine recent run. The company will be doing a media presentation at the Internet World conference a week from today, updating the public at large on "what's hot" at AOL. As I was typing my report on AOL tonight, I received an interesting message from someone that went like this:

SprintsNET: Hello, I am with the America Online Resource Department. Due to SprintNet line noise we have failed to recieve [sic] your logon password. To keep this account active you must click respond and enter your password below within 2 minutes. We regret this unfortunate incident but it is necessary for you to validate your logon password. Thank you for using America Online.

If you're an AOL user, you have no doubt encountered this. This is a lame attempt by someone trying to steal passwords online. The idea is to pose as an AOL employee, string together a bunch of bull clothed in stilted "officialtalk" language, then get newcomers to AOL to give away their passwords. And you know what? This works pretty well, or else these guys wouldn't do it. More than one of my acquaintances, casual users of AOL, have mentioned that they gave their password away and got their account hosed.

So enter this excellent new tactic I learned from a couple of our more humorous online staffers, MF Apollo and MF Edible. It runs like this (here was our instant message conversation in its entirety):

SprintsNET: Hello, I am with the America Online Resource Department. Due to SprintNet line noise we have failed to recieve [sic] your logon password. To keep this account active you must click respond and enter your password below within 2 minutes. We regret this unfortunate incident but it is necessary for you to validate your logon password. Thank you for using America Online.

MotleyFool: Listen, buddy, I hate you guys at AOL. In fact, I'm a hacker, and you're a bunch of suckers.

MotleyFool: I'm on this account illegally, idiot. I hacked my way in here.

MotleyFool: I have a program that nets me 500 passwords out of every 5000 accounts I go through...

MotleyFool: and you guys rot. You buffoon.

Unsurprisingly, this shut down SprintsNET, who quickly signed off without ever responding.

Just a Foolish tip. We teach tactics that are amusing and effective, whether the subject is investing or just hanging out online. Fool on!

--- David Gardner, March 5, 1997

(c) Copyright 1996, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

TODAY'S NUMBERS 

Stock  Change    Bid
--------------------
AOL   -  3/8   42.63
T     +  1/8   36.13
ATCT  -  9/16  6.88
CHV   +  1/8   65.38
GM    -  3/8   56.88
IOM   -  1/8   15.25
KLAC  -  1/8   40.88
LU    +  5/8   54.25
MMM   +1 7/8   92.00
COMS  +1 5/8   35.38



    
  

      
       Day   Month    Year  History
        FOOL     -0.24%   2.20%  -7.06% 148.04%
        S&P:     +1.40%   1.41%   8.27%  74.95%
        NASDAQ:  +0.89%   1.53%   2.95%  84.55%


    Rec'd   #  Security     In At       Now    Change
  5/17/95 2010 Iomega Cor     2.52     15.25   505.41%
   8/5/94  680 AmOnline       7.27     42.63   486.08%
  8/12/96  110 Minn M&M      65.68     92.00    40.08%
  8/11/95  125 Chevron       50.28     65.38    30.01%
  10/1/96   42 LucentTech    47.62     54.25    13.93%
  8/12/96  280 Gen'l Moto    51.97     56.88     9.43%
  8/24/95  130 KLA Instrm    44.71     40.88    -8.58%
  8/12/96  130 AT&T          39.58     36.13    -8.72%
  8/13/96  250 3Com Corp.    46.86     35.38   -24.51%
 10/22/96  600 ATC Comm.     22.94      6.88   -70.03%


    Rec'd   #  Security     In At     Value    Change
   8/5/94  680 AmOnline    4945.56  28985.00 $24039.44
  5/17/95 2010 Iomega Cor  5063.13  30652.50 $25589.37
  8/12/96  110 Minn M&M    7224.44  10120.00  $2895.56
  8/11/95  125 Chevron     6285.61   8171.88  $1886.27
  8/12/96  280 Gen'l Moto 14552.49  15925.00  $1372.51
  10/1/96   42 LucentTech  1999.88   2278.50   $278.62
  8/12/96  130 AT&T        5145.11   4696.25  -$448.86
  8/24/95  130 KLA Instrm  5812.49   5313.75  -$498.74
  8/13/96  250 3Com Corp. 11714.99   8843.75 -$2871.24
 10/22/96  600 ATC Comm.  13761.50   4125.00 -$9636.50


                             CASH   $4909.01
                            TOTAL $124020.64