Lessons Learned
Wenesday, April 8, 1998
by David Forrest (davidf@fool.com)

Alexandria, VA (April 8, 1998) -- It's been a full week since we tried to pull the wool over your eyes with our April Fool's gag. Many folks laughed along with us and some were Fooled. Regardless of which camp you fell in last week, I think there are some valuable lessons to be learned from the whole thing. I know I learned some.

-- Perhaps the most important lesson is that we should always do our own homework. Among those who were Fooled by the gag, I'd bet that more than 90% of them didn't read the entire collection and the 13 "New" Steps. Each step became increasingly outlandish and more absurd. I'm doubtful anyone would have read all 13 steps and still believed us. Even more, some folks didn't check our math, or even question it. After all, 91% of mutual funds beating the market is a pretty astounding number (probably impossible) if true, which it isn't.

-- Second, there were some Fools who were genuinely upset with us. As an employee of the Fool, that made me realize that we have to be careful with the assumptions we make about people's investing knowledge. Many folks are coming here and are just learning the ropes. For anyone that we frightened or upset, that wasn't our intent, and we apologize. We'll do our best to serve you well in the future.

-- The other incredibly important message we were sending is that the Fool was created to educate while it pokes fun, turns things upside down, and smashes paradigms. Perhaps reader Mike Dorsey of New York put it best when he wrote:

I think this exercise underscores the soundness of the Fool's approach to investment education. The irreverence and humor in your style may seem to some people gratuitous, or a clever branding device, but it's much more. Humor and irony are good ways to get people to look at things from different perspectives, to shake themselves out of a narrow point of view, to apply their creative intellect. That's how you learn, not by uncritically piling up every clod of "information" you come upon, but by developing a view of things which you can use in critically evaluating what is true or false, useful or not useful, meaningful or meaningless.

To close out the April Fool's gag, I have to tell you that before we let the cat out of the bag last week, we got a LOT of letters from "investment professionals" who slammed us. I don't want to pick on all brokers and money managers because we have some great contributors in the forum, but these folks said, "HA! You finally got what you deserved!"

Basically, a bunch of the pros out there bought the whole thing, hook, line, and sinker, without ever questioning the facts. Now, I can understand that some of the beginners out there might have been Fooled and may not have known what to think. But doesn't it frighten you that brokers and money managers would be duped too? Aren't they supposed to know that mutual funds underperform? Isn't that common knowledge? I guess we still have work to do, huh?

Today was a strong day for the Fool Portfolio, climbing 1.09%. This actually puts us ahead of the S&P 500 for 1998. The S&P 500 zigged lower, while the Nasdaq zagged higher. Many of the technology stocks in the portfolio were the beneficiaries of this strength in the Nasdaq. America Online (NYSE: AOL), Amazon.com (Nasdaq: AMZN), and Lucent (NYSE: LU) all rose more than one dollar, while the Dow heavies hit the skids. Exxon (NYSE: XON) and DuPont (NYSE: DD) both gave back more than one dollar.

3Com Corp. (Nasdaq: COMS) was up as well today. The company had several press releases regarding a deal with CNET's Snap! Online and a settled dispute with Microsoft over the use of the name "Palm PCs." Microsoft agreed to not use the "Palm PC" name, but will instead use the name "Palm-sized PC." I wonder how much money was wasted fighting about that one? Speaking of 3Com, tonight's Dueling Fools is all about 3Com. When you're done reading here, head on over and voice your choice for the best argument.

Iomega Corp. (NYSE: IOM) was quiet today after placing a want ad in the Wall Street Journal yesterday seeking a new CEO to replace Kim Edwards. Here at the Fool, we're running a contest this week for the best CEO job application. All you have to do is click on over to our contest page, and then enter by telling us how you'd turn Iomega around. The winner will receive a $2000 brokerage account from Web Street Securities. Good luck!

A note of possible interest -- former Fool Portfolio stock ATC Communications (Nasdaq: ATCT) today agreed to merge with private company IQI Inc. in a $150 million dollar deal. ATC was up 70% on the news, closing the day at $3 1/4.

Have a great night,


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Stock Change Bid ---------------- AMZN +3 1/4 88.50 AOL +1 3/8 71.88 T + 3/16 65.63 DD -1 1/4 71.06 DJT + 1/16 8.25 XON -1 3/4 66.13 INVX + 3/8 25.06 IP - 3/16 48.00 IOM + 1/8 6.63 KLAC + 3/16 37.06 LU +1 11/16 68.00 COMS + 1/2 32.69 TDFX + 11/16 26.00 SPY - 11/16 110.25
Day Month Year History FOOL +1.09% 1.84% 14.32% 283.67% S&P: -0.71% -0.01% 13.52% 140.33% NASDAQ: +0.46% -1.56% 15.07% 150.91% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 71.88 1876.52% 5/17/95 1960 Iomega Cor 1.28 6.63 417.41% 10/1/96 84 LucentTech 23.81 68.00 185.62% 9/9/97 290 Amazon.com 38.22 88.50 131.54% 8/12/96 130 AT&T 39.58 65.63 65.81% 2/20/98 215 DuPont 59.83 71.06 18.77% 1/8/98 115 S&P Depos. 95.91 110.25 14.96% 2/20/98 200 Exxon 64.09 66.13 3.18% 4/30/97 -1170*Trump* 8.47 8.25 2.58% 1/8/98 425 3Dfx 25.67 26.00 1.30% 2/20/98 270 Int'l Pape 47.69 48.00 0.65% 6/26/97 325 Innovex 27.71 25.06 -9.55% 8/24/95 130 KLA-Tencor 44.71 37.06 -17.11% 8/13/96 250 3Com Corp. 46.86 32.69 -30.25% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 51031.25 $48449.38 9/9/97 290 Amazon.com 11084.24 25665.00 $14580.76 5/17/95 1960 Iomega Cor 2509.60 12985.00 $10475.40 10/1/96 84 LucentTech 1999.88 5712.00 $3712.12 8/12/96 130 AT&T 5145.11 8531.25 $3386.14 2/20/98 215 DuPont 12864.25 15278.44 $2414.19 1/8/98 115 S&P Depos. 11029.25 12678.75 $1649.50 2/20/98 200 Exxon 12818.00 13225.00 $407.00 4/30/97 -1170*Trump* -9908.50 -9652.50 $256.00 1/8/98 425 3Dfx 10908.63 11050.00 $141.38 2/20/98 270 Int'l Pape 12876.75 12960.00 $83.25 6/26/97 325 Innovex 9005.62 8145.31 -$860.31 8/24/95 130 KLA-Tencor 5812.49 4818.13 -$994.37 8/13/96 250 3Com Corp. 11715.99 8171.88 -$3544.12 CASH $11233.54 TOTAL $191833.04

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