A Tilt-a-Whirl Market
Plus, 3Com rumors NOT published
by Paul Larson ([email protected])
CHICAGO, IL (Sept. 11, 1998) -- While Web browsers across the land were pointed towards reading one of the many versions on the Internet of the now infamous "Starr Report" on President Clinton, the Fool Portfolio had a quiet autumn Friday. The portfolio was relatively flat with merely a 0.67% move forward while the Nasdaq and S&P 500 gained 3.55% and 2.95% respectively. Let's quickly look at how the portfolio and markets fared on this volatile week:
Dow +2.03% Nasdaq +4.80% S&P 500 +3.61% Fool +3.05%Between the Clinton affair, the Russian economic and political struggle, the continued worries about Asia's spreading recession, and the positive comments Greenspan made earlier this week about interest rates, there has been plenty of news to really roil the market, both good and bad. The battle between the bears and the bulls is heating up as can be seen in the market's volatility of late.
Since 8/26/98 (only 12 trading days)
Daily moves... over 1% over 2% Dow 9 6 Nasdaq 11 8 S&P 500 8 6 Fool 10 7Make no mistake, these are volatile times in the stock market. But if you really are a Fool and you have a long-term view, the volatility should not affect your thinking. Even with all these wild moves, the market really -- in the end -- has not moved all that much. Forget calling it a roller coaster, this is more like riding the Tilt-a-Whirl (or as my fiancee calls it, the Tilt-a-Hurl) where the markets are spinning wildly in place. Even with eight of the last dozen trading days moving over 2% for the Nasdaq, the index is only down a little over 7% in this timeframe. Needless to say, if all this volatility were in the same direction the market would be much lower than where it is now.
The Fool Port, while just as volatile, must not have been strapped in since it has lost 18.4% of its value since August 26. Bhlech! Thankfully, the portfolio is still having an exceptionally strong 1998, even following that decline.
Getting back to the Presidential matter, I find it quite interesting that the full report is being posted on the Internet. Just think, it was a mere six years ago when George Bush was in office, that email was only found in abundance in universities, and the Web as we know it did not even exist, nor did The Motley Fool. All this a mere six years ago. Sometimes it's wild to look back and see just how far the online medium has come in such a short amount of time.
I also find it ironic that the "information superhighway" that we all grew so tired of hearing about in the '92 election is now the thing that is being used to distribute this unique set of data that may destroy Clinton's presidency. If today's instantaneous distribution of the report through the Internet isn't a validation that this medium is here to stay, I don't know what is.
In one of the stories I was reading about the Starr report being posted on the Web I came across a factoid of information that I found fascinating. The story said that over 40% of the Internet traffic from the home is handled by America Online (NYSE: AOL). AOL takes care of a significantly smaller portion of the data from the office, but the company's positioning in handling all this traffic is still something to behold. America Online closed the day at $95 1/2 in relatively light trading. Adjusted for splits, AOL was trading below a buck per share six years ago. I wonder where AOL's stock will be on 9/11/04?
Check back and we'll see. I promise!
Before ending, let's quickly spy at two of the stocks in the portfolio that had the largest percentage moves. First, the bad news. Amazon.com (Nasdaq: AMZN) was down almost 12% this week on little news of consequence. Although, on Wednesday, Amazon did unwrap its new classical music site where the company has added 42,000 CD titles to its product offering. Clearly, Amazon is not just a bookseller anymore.
On the positive side of the ledger we find none other than that barking dog 3Com (Nasdaq: COMS) performing quite nicely this week. Why was the stock up over 18% since last Friday? In a word -- rumor.
Yes, the good ole rumor mill has been quite active all week with this stock that's been in the portfolio for over two years now. Several media outlets have been reporting that Trois Coms may be targeted for a potential takeover, with Intel (Nasdaq: INTC) being the name that gets mentioned the most often as the prospective buyer.
Even if the rumors do have some validity (and that's a big if), it won't change our stance on the company. As Fools, we don't partake in "scuttlebutt" investing on rumors and innuendo. Speculating on supposedly "inside" information is one dangerous game that individual investors, in a perfect world, should not be tempted to play. Of course, rumors are always fun and interesting to listen to, but they don't really affect our decisions as to what to buy and what not to buy. The reason we break out our grains of salt whenever the rumor mill starts heating up is there is simply no way to tell what rumors are true and which ones are completely whacked. If you're going to buy the rumor, caveat emptor!
In any case, the portfolio bought 3Com for a reason, and it had nothing to do with takeover speculation. Is the Intel rumor true, or is this a bubble waiting to be popped? Tune in next week!
For more reading, on Friday Cash-King discussed the ongoing Tellabs (Nasdaq: TLAB) drama. Have a wonderful weekend, Fools.
-- Paul Larson
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Day Month Year History Annualized FOOL +0.67% 5.45% 21.39% 307.40% 40.84% S&P: +2.94% 5.38% 3.98% 120.13% 21.21% NASDAQ: +3.54% 9.50% 4.54% 127.95% 22.25% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 95.63 2529.63% 9/9/97 580 Amazon.com 19.11 76.06 298.01% 10/1/96 84 LucentTech 23.81 77.75 226.57% 5/17/95 1960 Iomega Cor 1.28 3.81 197.76% 4/30/97 -1170*Trump* 8.47 4.38 48.34% 8/12/96 130 AT&T 39.58 55.94 41.34% 2/20/98 200 Exxon 64.09 70.56 10.10% 2/20/98 215 DuPont 59.83 56.63 -5.36% 2/20/98 270 Int'l Pape 47.69 41.69 -12.59% 8/13/96 250 3Com Corp. 46.86 28.38 -39.45% 7/2/98 235 Starbucks 55.91 32.06 -42.65% 8/24/95 130 KLA-Tencor 44.71 24.50 -45.20% 1/8/98 425 3Dfx 25.67 10.81 -57.87% 6/26/97 325 Innovex 27.71 11.00 -60.30% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 67893.75 $65311.88 9/9/97 580 Amazon.com 11084.24 44116.25 $33032.01 5/17/95 1960 Iomega Cor 2509.60 7472.50 $4962.90 4/30/97 -1170*Trump* -9908.50 -5118.75 $4789.75 10/1/96 84 LucentTech 1999.88 6531.00 $4531.12 8/12/96 130 AT&T 5145.11 7271.88 $2126.77 2/20/98 200 Exxon 12818.00 14112.50 $1294.50 2/20/98 215 DuPont 12864.25 12174.38 -$689.88 2/20/98 270 Int'l Pape 12876.75 11255.63 -$1621.13 8/24/95 130 KLA-Tencor 5812.49 3185.00 -$2627.49 8/13/96 250 3Com Corp. 11715.99 7093.75 -$4622.24 6/26/97 325 Innovex 9005.62 3575.00 -$5430.62 7/2/98 235 Starbucks 13138.63 7534.69 -$5603.94 1/8/98 425 3Dfx 10908.63 4595.31 -$6313.31 CASH $12005.75 TOTAL $203698.63
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