No Bear, No Bull
...and that's no bull-oney

by Jeff Fischer

ALEXANDRIA, VA (Aug. 21, 1998) -- The stock market has been volatile enough to make both bulls and bears correct this year.

Friday stocks traded lower on concerns that the vibrant and world-leading economy of what used to be Russia and is now the country of "Whatever" might indeed be slowing. If the thriving Russian economy does indeed slow, most Americans could lose their jobs because most Americans work for Russian-based conglomerates, such as America Online, or American Home Products (it's little known that these companies are actually based in Moscow).

Sarcasm aside, Russian and Asian economies will and do impact Europe and the United States, and the troubles of both areas will (and have) slowed numerous parts of the U.S. economy as our exports dwindle. In fact, we now hear news of freighters sailing to the U.S. filled with inexpensive Asian merchandise, and then sailing back empty -- no exports. Adding to this, the strong dollar overseas lowers sales and earnings for U.S.-based companies doing business internationally, despite companies' best efforts to hedge against international currencies.

So where does a Fool stand in all of this? Is it time to choose a new side of the playing field? Should we cross from the bull camp (a bull being a person who expects the market to rise), and join the bear camp, pitching a tent with those who expect the market to fall?

Let's examine the question of "bulls" and "bears" itself.

At social gatherings, on planes, trains and in automobiles, and even at Great Aunt Mildred's house, the question is often asked, "So, are you a bull or a bear on the stock market?"

I don't know how you respond, but I often fall into a longer than usual silence that is perceived as stupidity, while I stare emptily (in this example, at Mildred) and search for the right words. In the past, those words have been, "I'm a long-term bull." After saying that, Mildred always stares back at me, thinking, and then slowly begins to nod, until finally she opens her mouth and says... "Yes, but where do you think the stock market will go in the meantime?"

At this point I usually resort to falling into a contrived fit of coughing, clutching my stomach and stumbling from the room, staying away long enough for the topic of conversation to have moved to daffodils and hair styles before I return. This (somewhat) gracefully lets me off the hook. I do this because I've already explained the Fool's long-term philosophy to Mildred numerous times, and statistics show that if people don't "get it" on the sixteenth reciting, they never will. So, in your personal life, don't waste your energy past sixteen explanations regarding anything. Instead, cough yourself into the next room.

The problem still remains, though: How do you answer the universal question, the one asked literally millions of times across this country every single year, the "Are you a bull or a bear?" question.

Well, the next time that I'm asked this question I'll try a new answer that I believe will suffice no matter where I am. Yes, I have a new, accurate, and true answer. I have an answer whether I'm at Great Aunt Mildred's house, or whether I'm sitting next to a strange man in an airplane who is always talking to himself, saying, "This is your Captain, nobody be alarmed, but there's a man in the cockpit." (I've never understood that, nor do I understand the escort that I always receive upon landing). Anyway, no matter where I am this new response should work.

So let's try it.

In fact, let's try this together. Here's the set-up: We're at a cocktail party in Washington, D.C., where the conversation is rarely about politics (we're too close to the source here, so we tire of it), but is frequently about the stock market. We stroll into a small group of people at the party and one man asks, "So, are you a bull or a bear on the market?" The Foolish answer that we now try is, "Neither. I'm an investor."

We receive strange stares in response, so we continue, "We don't pretend to know where the market is going, so we're neither a bull nor a bear. We simply invest in leading companies that have promising futures [including the S&P 500]. This works for us. We're investors. "

Let's consider the reasoning behind this new response.

You can't be a bear or a bull -- even a long-term bull -- without purporting to, on some level, know where the stock market is going. Despite history, however, there is no guarantee that the market will be higher in fifteen years. It's likely, but it's not guaranteed. By calling yourself a long-term bull, though, you're saying that you think the market is going higher, and even though it is a long-term call, it's still just the slightest bit Wise.

I actually have no idea where the market will go, and now I don't pretend to know. I'm an investor. That doesn't mean I'm a bull or a bear. It means that I'm investing in companies that I understand -- companies that have a strong chance of continuing to grow over the decades, no matter what the stock market does. I don't need to be a bull or bear on the market. I don't need to use those Wise terms.

Be an investor. Not a bull or bear.

It's such a silly game anyway. The Wise in the media are constantly claiming to be a "bull, bear, or neutral" -- and hey, whatever! Who cares what they are? They don't own my companies, or if they do, they're not talking about them anyway.

Just think: Are you a bull or a bear on the issue of the sun rising tomorrow? If you answer yes to either, you're wrong on both. The sun doesn't rise, the earth spins. Investing is the same way, and so is life -- it doesn't go up and down, it runs constant. Invest in that fact. Don't invest looking for ups and downs and call yourself a bull or a bear, instead invest in the lifelong "constant" that's best represented by great companies, and call yourself an investor.

Enough wordplay.

For the week, the Fool gained 4% and the S&P, believe it or not, tacked on 1.7%. The Nasdaq was flat. You know, the Russell 2000 (a measure of small-cap stocks) is actually down 18% this year, adding credence to the weak performance of the smaller stocks in the Fool Portfolio and the Boring Portfolio.

On Friday, 3Dfx (Nasdaq: TDFX) and Trump Hotels (NYSE: DJT) touched new lows. We reviewed Trump on Tuesday. The Fool is up 46% on the Trump short, beating the market's return (the S&P being up 35%) during the same time. It's good fun to have a short decline in a strong market, but it doesn't always work that way, of course.

For more reading, if you're behind on the Drip Port, every Friday the week is reviewed in the Touchstone Friday column. There's also Cash-King to read: the portfolio bought shares of Schering-Plough on Friday (snagging a good price?) and wrote about "defending your investment castle."

Have a Foolish weekend!

--Jeff Fischer

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08/21/98 Close

Stock Change Bid ---------------- AMZN + 9/16 129.69 AOL -2 13/16110.13 T - 5/16 56.00 DJT - 3/16 4.56 DD +1 1/16 59.56 XON - 5/16 71.00 INVX - 7/16 13.69 IP - 7/8 41.50 IOM - 1/8 4.81 KLAC - 7/8 28.56 LU -1 5/16 86.94 SBUX -2 1/8 39.63 COMS - 1/2 30.88 TDFX - 1/2 13.00
Day Month Year History Annualized FOOL -1.18% 2.47% 50.71% 405.78% 49.31% S&P: -0.95% -3.52% 11.42% 135.87% 23.64% NASDAQ: -1.95% -4.05% 14.41% 149.47% 25.37% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 110.13 2928.38% 9/9/97 580 19.11 129.69 578.61% 5/17/95 1960 Iomega Cor 1.28 4.81 275.86% 10/1/96 84 LucentTech 23.81 86.94 265.16% 4/30/97 -1170*Trump* 8.47 4.56 46.13% 8/12/96 130 AT&T 39.58 56.00 41.49% 2/20/98 200 Exxon 64.09 71.00 10.78% 2/20/98 215 DuPont 59.83 59.56 -0.45% 2/20/98 270 Int'l Pape 47.69 41.50 -12.98% 7/2/98 235 Starbucks 55.91 39.63 -29.13% 8/13/96 250 3Com Corp. 46.86 30.88 -34.12% 8/24/95 130 KLA-Tencor 44.71 28.56 -36.12% 1/8/98 425 3Dfx 25.67 13.00 -49.35% 6/26/97 325 Innovex 27.71 13.69 -50.60% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 78188.75 $75606.88 9/9/97 580 11084.24 75218.75 $64134.51 5/17/95 1960 Iomega Cor 2509.60 9432.50 $6922.90 10/1/96 84 LucentTech 1999.88 7302.75 $5302.87 4/30/97 -1170*Trump* -9908.50 -5338.13 $4570.38 8/12/96 130 AT&T 5145.11 7280.00 $2134.89 2/20/98 200 Exxon 12818.00 14200.00 $1382.00 2/20/98 215 DuPont 12864.25 12805.94 -$58.31 2/20/98 270 Int'l Pape 12876.75 11205.00 -$1671.75 8/24/95 130 KLA-Tencor 5812.49 3713.13 -$2099.37 7/2/98 235 Starbucks 13138.63 9311.88 -$3826.75 8/13/96 250 3Com Corp. 11715.99 7718.75 -$3997.24 6/26/97 325 Innovex 9005.62 4448.44 -$4557.18 1/8/98 425 3Dfx 10908.63 5525.00 -$5383.63 CASH $11876.47 TOTAL $252889.22

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