The Unstanchable Amazon!.com!
Monday, March 09, 1998
by David Gardner (DavidG@fool.com)

ALEXANDRIA, VA (March 9, 1998) -- The Fool Port maintained its superb recent karma, rising 1% today in the face of a down market. The S&P 500 lost 0.32% of its value, while the Nasdaq was weighed down by huge technology issues falling, like Dell down $6, Microsoft down $3, etc. Overall tally: Nasdaq down 1.62%.

The conventional wisdom about today's market moves is that it featured a "sector shift," as money moved out of computer hardware and chip companies and into Internet companies. So reported Reuters earlier today. Sector shifts are accomplished not by small private investors like you and me, but by funds, pensions, institutions, etc. that decide to move huge blimploads of dollars out of one industry and into another. And in this case, Fool that I am, I will nevertheless agree that the conventional wisdom is correct today. The Fool Port was buoyed by a $7 rise in Amazon, and another $2 rise for AOL, our two "Internet" stocks. Another Internet star today was Yahoo!, which rose seven bucks as well.

In fact, Amazon is so good these days I'm going to officially petition management to do the trendy thing and add some exclamation points to the company name. So here is my open suggestion:

Amazon!.com!

You heard it here first, Fools.

Back to more of today's correct conventional wisdom: The thinking is that last week brought earnings warnings from a number of hardware companies like Intel and Compaq (down $2+ today), and so money is instead moving to the pure-growth biz that is The Net, today. Whether this is right or wrong (regarding the Internet, or hardware companies, or both), history will tell; all we note today is that money clearly moved that way, explaining all these volatile moves. Because we have substantial holdings in Internet companies, the Fool Portfolio today rose to just 1.5% (150 "basis points") behind the S&P, and 3% (300 basis points) behind the Nasdaq, for 1998. That's the closest we've been in weeks.

All these "great stock-market performance" stories make some sense to me. After all, according to a recent report by The New York Times, America is getting smarter about its investing. That's my own viewpoint, but here was the Times's evidence: The value of equities held by U.S. households exceeds the value of their real estate holdings. (Is this true of you?) This indicates to me that America is getting smarter for three reasons: (a) stocks will outperform and have outperformed real estate, especially in low-inflation environments, (b) equities offer far superior liquidity (how easily something can be converted to cash) compared to real estate, and (c) mortgages keep one's net worth lower as you're forced to pay off interest early, at a much faster rate than you accumulate ownership.

Any one of these would be enough to convince me that America's getting smarter. But put all three together (I mean, geez, better historical performance AND better liquidity is too good a deal to pass up), and you can see why America rightly likes its stocks. This appears to be creating a "spillover" situation that is smartening up other countries which, truth be told, follow the American stock market's lead more than any other. Alistair, an Aussie Fool and regular contributor to our Australia folder on the Web, recently passed me an article about how Australia is one of many countries exhibiting a similar trend, though it and most others are still well behind in terms of ratio of equity-to-real-estate ownership. Obviously, great recent performance is contributing to the global popularity of stocks, but when you factor in the spread of financial education, the convenience and power of gathering information using the Internet, and the "automatic investing" going on through retirement plans, something much deeper and more abiding is at play here.

We're just happy that The Motley Fool can both benefit from, and contribute to, this historic development. And we're grateful (we never say this enough) to each of you, gracing Fooldom every day with your insights (via our message boards) and your support of our business. I like to think Fool stock woulda been up $7 today as well, if we'd gone public.

Nah!

Next month will bring with it a spate of March quarter earnings releases, none of which I'm looking forward to more than 3Dfx's (Nasdaq: TDFX). If you want to read one of the Internet's most intelligent and compelling conversations, featuring a bunch of knowledgeable investors and computer users working together to develop predicted Q1 financial statements for a small-cap growth company, click here. Indeed, the 3Dfx folder on the Web has been our single most popular stock discussion over the past month, with 863 posts as of this writing. Did you know you can find out this information any time yourself? One of my favorite features of our Web boards is the Top 25 section, which shows the most active conversations for today, yesterday, the past 7 days, and the past 30 days. Take advantage of this superb resource!

Finally tonight, I hope you'll play along in our Stock Madness game, the easy-to-play investing game from Fool Labs that parallels the NCAA hoops tournament (note: you need NOT be a sports fan to play). No entry free -- it's totally free -- and you have a chance to win a set of Prince golf irons. AND additionally, there's now a 99.5% chance that tomorrow we'll be announcing an even sweeter additional prize. Only hint I'm giving for now: Think cash, and think four figures. Again, it's free to enter but YOU GOTTA PLAY TO WIN.

And on that tired old saw, I shall close. I hope tomorrow is another equally tired old investment day for the dear old Port. Stay Foolish!

-- David Gardner, March 9, 1998

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TODAY'S NUMBERS

Stock Change Bid ---------------- AMZN +7 83.38 AOL +2 1/16 123.56 T + 1/4 61.25 DD + 3/8 63.69 DJT - 5/16 9.94 XON - 1/8 62.50 INVX - 5/8 21.00 IP +1 3/16 50.06 IOM - 5/16 8.50 KLAC - 3/4 38.63 LU - 1/2 107.38 COMS - 11/16 34.94 TDFX -1 3/8 24.25 SPY - 3/8 105.56
Day Month Year History FOOL +1.01% 0.98% 6.98% 259.04% S&P: -0.32% 0.28% 8.44% 129.56% NASDAQ: -1.62% -2.56% 9.86% 139.55% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 123.56 1598.95% 5/17/95 1960 Iomega Cor 1.28 8.50 563.85% 10/1/96 42 LucentTech 47.62 107.38 125.50% 9/9/97 290 Amazon.com 38.22 83.38 118.14% 8/12/96 130 AT&T 39.58 61.25 54.76% 1/8/98 115 S&P Depos. 95.91 105.56 10.07% 2/20/98 215 DuPont 59.83 63.69 6.44% 2/20/98 270 Int'l Pape 47.69 50.06 4.97% 2/20/98 200 Exxon 64.09 62.50 -2.48% 1/8/98 425 3Dfx 25.67 24.25 -5.52% 8/24/95 130 KLA-Tencor 44.71 38.63 -13.61% 4/30/97 -1170*Trump* 8.47 9.94 -17.34% 6/26/97 325 Innovex 27.71 21.00 -24.21% 8/13/96 250 3Com Corp. 46.86 34.94 -25.45% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 43864.69 $41282.82 5/17/95 1960 Iomega Cor 2509.60 16660.00 $14150.40 9/9/97 290 Amazon.com 11084.24 24178.75 $13094.51 8/12/96 130 AT&T 5145.11 7962.50 $2817.39 10/1/96 42 LucentTech 1999.88 4509.75 $2509.87 1/8/98 115 S&P Depos. 11029.25 12139.69 $1110.44 2/20/98 215 DuPont 12864.25 13692.81 $828.56 2/20/98 270 Int'l Pape 12876.75 13516.88 $640.13 2/20/98 200 Exxon 12818.00 12500.00 -$318.00 1/8/98 425 3Dfx 10908.63 10306.25 -$602.38 8/24/95 130 KLA-Tencor 5812.49 5021.25 -$791.24 4/30/97 -1170*Trump* -9908.50 -11626.88 -$1718.38 6/26/97 325 Innovex 9005.62 6825.00 -$2180.62 8/13/96 250 3Com Corp. 11715.99 8734.38 -$2981.62 CASH $11233.54 TOTAL $179518.60