It All Doesn't End Badly
Monday, May 04, 1998
by David Gardner ([email protected])
ALEXANDRIA, VA (May 4, 1998) -- The Fool Portfolio got some nice comeback help from 3Dfx and more continued worldbeating by AOL stock today, turning these into a gain of 2.09%. That performance put us on top of the market once again, Monday -- what a spring it's been! -- as the Fool Portfolio built its lead over the S&P 500 into the double-digits.
One of the pleasures of working here at Fool HQ is being on the receiving end of so many e-mails and suggestions from our global Foolish readership. And last week was no exception, following publication of Thursday's Fool recap on bad journalism ("Will It All End Badly?"). The mail was so good, in fact, that it will dominate today's writeup. To refresh your memory, my writeup reflected on what had happened to the market over the past two years since my brother Tom and I appeared on the cover of Fortune magazine next to the headline "MARKET MANIA... will it all end badly?"
First up today is Baltimore photojournalist Joseph M. Eddins Jr., with whom I traded a couple of enjoyable notes. Mr. Eddins began matter-of-factly, "Yo DG! The mistaken premise for a fool who is scared it will end badly, is not that it will end badly, but that it will end at all. The only people who had it end badly were the ones so wrapped up in their material selves that they chose to eat a Smith and Wesson sandwich in 1929 instead of rucking up and waiting for the inevitable -- change. You want long term? My daughter turned eight yesterday and she picked the first stock for her kiddie IRA; 8 big whopping shares of Coke. I put a little sippy bottle of Coke in a box and wrapped it. She opened it and said, 'What's this?' I said, 'Today it is a tiny bottle of Coke. In two years it will be a pony. In ten years it will be a really beat up Subaru. In 20 years it will be part of a down payment on your house. In 51 1/2 years it will be just about anything you want it to be.' She didn't get it. But she WILL!"
Mr. Eddins, who works for The Washington Times, went on, "My dad didn't start investing until he was in his 50's. I learned his lesson in my late twenties and I will see to it that my girl learns to be Foolish right along with learning long division, the capital of North Dakota, and how to turn a double play. As for the journalism, well... it does sound like someone took the low road with you, but being an insider (right across the River from you) I can tell you most times it's not motive but laziness that causes the kind of stories to which you refer. Lazy readers and lazy writers. The media thinks the American public would rather have Fuzzy Dice instead of a Degas. 'Hey, if they want fuzzy dice? Give 'em fuzzy dice and I'm home by 4:30!'
Some truth there, methinks. Joseph wasn't the only journalist to write in. One woman wrote, "David, as a former journalist and a current serious investor I must applaud your article in the Thursday Evening Report re: 'Will it all end badly?' I missed the Fortune magazine cover from 1996, but I was subscribing to Money magazine when the 'SELL STOCK NOW' cover came out. What a bunch of baloney! (I did not sell my stocks. In fact, I bought more, figuring the Money cover a perfectly good contrary indicator. I did NOT renew my 3-month trial subscription.) Good for you for exposing these frauds. For years, an easy way to be a market "gooroo" was to predict a bear market or steep correction. The bears who started out in the 1970's are just now beginning to come out of mental hibernation and see the economy has changed. The Fed has inflation under control. Technology has improved productivity. The price of oil is down, and despite the dire predictions in the 70's that we were running out of oil, it seems we aren't. Part of the market gains have come to us because of better corporate management. Also, we're finally realizing the 'peace dividend' that there was much discussion about in the late 80's and early 90's but which analysts have forgotten. Unfortunately, people are more likely to see Money or Fortune (along with the National Enquirer and People) on the stand at the grocery checkout, and that's what they trust for advice. I do hate to think of people being misled and missing out on this market."
That mention of Money reminds me to correct an inaccuracy in the writeup, which several Fools brought to my attention. I had said that Money's August '97 cover said "Sell All Your Stocks Now." But it just said "Sell Stock Now," and as Larry M. wrote me, "Further investigation into the article by Michael Sivy suggested (for better or for worse) selling 20% of one's holdings." Although I blew the headline, I still stand by my observation that lurid covers like that don't help out American investors, and selling 20% of one's stock because Money magazine wants to create a cover splash ain't the way toward long-term prosperity. In joining in to point out my error, Peter Rawlings also mentioned, "I distinctly remember that cover because it scared the hell out of me. Fortunately, however, being a procrastinator, I did NOT sell 20% of my stock."
On that same point, John Underriner rightly pointed out that it'd be a good idea for me to have all MY facts straight before mouthing off about those of other people's. I'll make sure I correctly quote that Money cover in future. John added some more about the unaccountable Wise, "who never retract their misstatements or follow up later with the update that would prove them wrong and you right. Those of us who follow the Fool regularly know better (even though some of us still subscribe to Money, Smart Money, and other Wise publications), and place alternative opinions in context -- ignoring them where demonstrably false, learning from them where we can (isn't that the point of all this?)."
Yes, it is. Very elegantly summarized. The Motley Fool is failing if it's not helping you and me think better on our own!
Finally, some notes about the PBS Frontline story in which we appeared more than a year ago (did you see that one, about how the average person is interested in the stock market now, so that means it's headed for a crash?). Karl Vezner wrote, "I don't know whether I could have been as restrained in my comments as you managed to be." That was kind.
A guy named Mark wrote a very thoughtful note to our suggestion box, "First when I heard [Nocera, the narrator] say you had found a way 'GUARANTEED' to make 22% a year, I knew that was taken out of context. I and anyone who is a regular reader know what you stand for and it just can't be summarized in a 30-second TV spot. I started investing in index funds because of your chapter in your first book, realizing that I might want to invest some money directly in stock but mostly that my time is better spent doing other things. The only thing I really liked about the PBS special was that it featured so many 'bears' such as James Grant, and never mentioned that these guys have been wrong for so long that it's old news!"
Canadian Fool Rob Duncan reminds us that the old saw is probably true: EVEN BAD PRESS is still press, and therefore good. Rob wrote from his perch in Winnipeg, "I've just read your article on Frontline's portrayal of the Motley Fool. Prior to viewing the Frontline program, I hadn't heard of The Fool. Since Frontline, I've subscribed to The Fool daily. In fact, I've found it informative, open, and honest. As the Aussies would say: 'Good on ya, mate.' "
Perhaps, in the end, covers like Money's and shows like Frontline do ironically benefit society. I get down on them for failing to educate people, when they could have done that so powerfully and well. But, nope. Fellow Fool Richard Kargher writes, "After over two years subscribing to BOTH Forbes and Fortune, they left me confused and convinced that mutual funds were my only option." However, here's the irony, to borrow one more excellent line from a Motley Fool reader: If these magazines' readers and Frontline viewers really are poorly educated enough to believe what they're seeing, "they probably are much better off in FDIC-insured CDs."
OK, I'll close by thanking Patsy Whaley, who simply wrote, "Please ignore dissenters. My parents invested as you advise and they became very 'comfortable' financially. They passed their advice along to us kids and it sounded much like the Fool School. Keep it up!"
In the spirit of keeping it up, then, I wave my Foolish hankie goodbye to you for today, concomitantly urging you to read today's Fribble on wine, marriage, and investing by yet another great member of the Fool community at large, Patrick White.
-- David Gardner, May 4, 1998
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Day Month Year History FOOL +2.09% 4.29% 26.76% 325.42% S&P: +0.10% 0.93% 15.63% 144.78% NASDAQ: +0.20% 0.47% 19.54% 160.66% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 88.63 2337.14% 5/17/95 1960 Iomega Cor 1.28 7.94 519.92% 10/1/96 84 LucentTech 23.81 72.63 205.04% 9/9/97 290 Amazon.com 38.22 94.75 147.90% 8/12/96 130 AT&T 39.58 62.06 56.81% 2/20/98 215 DuPont 59.83 75.38 25.97% 1/8/98 115 S&P Depos. 95.91 112.31 17.11% 2/20/98 200 Exxon 64.09 74.75 16.63% 2/20/98 270 Int'l Pape 47.69 53.50 12.18% 4/30/97 -1170*Trump* 8.47 8.38 1.11% 1/8/98 425 3Dfx 25.67 24.38 -5.04% 8/24/95 130 KLA-Tencor 44.71 40.13 -10.26% 6/26/97 325 Innovex 27.71 24.75 -10.68% 8/13/96 250 3Com Corp. 46.86 34.75 -25.85% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 62923.75 $60341.88 9/9/97 290 Amazon.com 11084.24 27477.50 $16393.26 5/17/95 1960 Iomega Cor 2509.60 15557.50 $13047.90 10/1/96 84 LucentTech 1999.88 6100.50 $4100.62 2/20/98 215 DuPont 12864.25 16205.63 $3341.38 8/12/96 130 AT&T 5145.11 8068.13 $2923.02 2/20/98 200 Exxon 12818.00 14950.00 $2132.00 1/8/98 115 S&P Depos. 11029.25 12915.94 $1886.69 2/20/98 270 Int'l Pape 12876.75 14445.00 $1568.25 4/30/97 -1170*Trump* -9908.50 -9798.75 $109.75 1/8/98 425 3Dfx 10908.63 10359.38 -$549.25 8/24/95 130 KLA-Tencor 5812.49 5216.25 -$596.24 6/26/97 325 Innovex 9005.62 8043.75 -$961.87 8/13/96 250 3Com Corp. 11715.99 8687.50 -$3028.49 CASH $11558.06 TOTAL $212710.12
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