<THE FOOL PORTFOLIO>
The Sound of Rules Breaking
Break the rules, go to the principle
by Nico Detourn (TMFNico@aol.com)
SANTA CLARA, CA (December 11, 1998) -- I love the sound of breaking rules. I always have. There's that nice creaking they make when under pressure. (Shhhhh... Listen....) True, this has sometimes worked against me. But that's OK. Over time, it seems to work out.
As regular visitors to this corner know, the Fool Portfolio will shortly be reborn as the Rule Breaker Portfolio. The Rule Breaker Principles, five so far, which will guide the portfolio into the future, can be found in the nearby listbox. Having read them as they were each published, and again just now knowing that I'd be writing one of the last Fool Ports (hmm... sounds like a movie) got me thinking about the difference between rules and principles. Can you really have a "rule breaker principle?" They're kinda the same. But not really.
The practical difference between rules and principles is murky. I think it has something to do with their tone, to differences in how they each resonate with us -- there's the idea of sound, again. Our experiences and decisions will be different depending on whether we are acting from within a principle, or from under a rule.
There are always reasons for rules. Sometimes they're good ones. Not all rules are bad. Or in need of being broken. Rules come in handy. They can be great time-savers -- why bother figuring THAT out again... whatever that happens to be. And if you want to get from here to there, then THIS is how you do it. Rules are convenient. They're easily conveyed. And like traditions, rules are easily handed down.
At the same time, rules limit. That is their role, and why we create rules in the first place. And though the best of them can work reliably for long periods of time, strict adherence to the rules can have us running on automatic. That is when we find ourselves falling into what I've long thought of as the "always been" way of thinking. "It's always been that way." "That's the way its always been done." "People will always..." I imagine this is how people think in TMF Venus' dystopic United States of Should.
Where rules provide us with procedures, principles point us toward goals.
Principles give us an orientation, or an initial direction. Principles are reference points. Well formed and bundled together, they are the compass that lets us know where we are relative to our destination. Guided by principles, flexibility multiplies. And the rules of the road can be broken should the need to break them arise.
Where rules will sometimes bang heads with oncoming change, principles can help us incorporate change. Even better, principles let us fully welcome the appearance of change on the horizon. And even then, remain alert and open to the need to again change already revised perceptions.
The flexibility of principles -- which shouldn't be confused with their compromise -- creates a broad framework inside of which we can more creatively and spontaneously think for ourselves. Rules work to keep us within relatively narrow grooves. That's why I love the sound of breaking rules.
Of course, some rules can't be broken. One of them is the rule of Time. Another is the rule of Deadlines. (Ugh! The two deserve each other!) And seeing as how the stock market closed on time today, and the deadline for this close-to-the-last Fool Port is about to make road kill out me, I'll mention that Amazon.com (Nasdaq: AMZN), a Rule Breaker of unusual exuberance, added just under 10 points to its rap sheet. Was there any news behind this? Not that I can see.
The newest addition to the portfolio, @Home (Nasdaq: ATHM), decided to take a break from its week-long helium binge, giving back a small portion of the 21% it's gained since getting the Foolish nod last week. Starbucks (Nasdaq: SBUX) continued its move towards the break-even point, though it's still short some cups since its July addition to the portfolio. But along with a comparable point (not percentage) gain in Lucent (NYSE: LU), and a nice day's work by America Online (NYSE: AOL), it helped the Fool Port beat the broader market indexes on this Friday. As a rule, that's nice. And as a principle, it's even better!
Without a decent (or even indecent) segue to offer, I would like to invite you to visit The Fool's School. Especially if you are new to investing, or just new to the Fool. There's a lot of good material there that will help you make sense of the investment process. So why not take some time to click around that stuff. Really. And if you're not new to investing, no one's gonna stop you from looking, too.
Have a Foolish weekend, and I'll cya on the boards!
Order your copy of David and Tom Gardner's new book, Rule Breakers, Rule Makers, in advance. This Simon & Schuster beauty doesn't arrive until January, but you can reserve your copy today! The first half of the epic book, on Rule Breakers, elucidates the Fool Port's investment style; the second half, on Rule Makers, further explains Cash-King investing.
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Day Month Year History Annualized FOOL +1.82% 8.15% 123.91% 651.44% 58.98% S&P: +0.12% 0.24% 20.20% 154.46% 23.95% NASDAQ: +0.66% 4.09% 29.23% 181.78% 26.89% Rec'd # Security In At Now Change 8/5/94 1100 AmOnline 1.82 91.69 4944.15% 9/9/97 440 Amazon.com 19.74 223.00 1029.82% 5/17/95 1960 Iomega Cor 1.28 6.88 436.94% 10/1/96 84 LucentTech 23.81 99.00 315.82% 8/12/96 130 AT&T 39.58 70.06 77.02% 4/30/97 -1170*Trump* 8.47 4.19 50.55% 12/4/98 450@Home Corp. 56.08 68.00 21.25% 2/20/98 200 Exxon 64.09 74.63 16.44% 7/2/98 235 Starbucks 55.91 50.19 -10.23% 2/20/98 215 DuPont 59.83 52.19 -12.78% 2/20/98 270 Int'l Pape 47.69 40.88 -14.29% 1/8/98 425 3Dfx 25.67 16.38 -36.20% Rec'd # Security In At Value Change 8/5/94 1100 AmOnline 1999.47 100856.25 $98856.78 9/9/97 440 Amazon.com 8684.60 98120.00 $89435.40 5/17/95 1960 Iomega Cor 2509.60 13475.00 $10965.40 10/1/96 84 LucentTech 1999.88 8316.00 $6316.12 12/4/98 450@Home Corp. 25236.13 30600.00 $5363.87 4/30/97 -1170*Trump* -9908.50 -4899.38 $5009.13 8/12/96 130 AT&T 5145.11 9108.13 $3963.02 2/20/98 200 Exxon 12818.00 14925.00 $2107.00 7/2/98 235 Starbucks 13138.63 11794.06 -$1344.56 2/20/98 215 DuPont 12864.25 11220.31 -$1643.94 2/20/98 270 Int'l Pape 12876.75 11036.25 -$1840.50 1/8/98 425 3Dfx 10908.63 6959.38 -$3949.25 CASH $64208.05 TOTAL $375719.05
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