<THE RULE BREAKER PORTFOLIO>
A Foolish Valentine
...No news is no news
by Barbara Eisner Bayer ([email protected])
HILLSBORO BEACH, FL (Feb. 12, 1999) -- Where was Cupid's arrow on this Friday before the most romantic day of the year? Certainly not pointed at Mr. Market. No diamonds for honeys of day traders this year -- they'll have to settle for Cupid zirconium.
On this historic day, Americans were treated to a profound moment of national reconciliation as our President was acquitted of any high crimes and misdemeanors in relation to his tattered -- and recently very public -- love life. President Clinton even carved a philosophical path that hopefully will guide his remaining years in office. "I believe that any person who asks for forgiveness has to be prepared to give it."
Love, romance, forgiveness, acceptance� all ingredients to a successful relationship, whether it's with yourself, a person, or a stock. Because love is like investing in so many ways.
It's hard NOT to fall in love with a company whose stock is performing well and whose products you love. The trick with stocks, as with love, is to make sure you're not falling in love for superficial reasons. Don't be swayed because the company looks hot in a mini-skirt, or because traders are jumping around to get a date that night. It's essential that the underlying essence of the investment, whether it be in a person or a company, is as fundamentally sound as its appearance. To paraphrase a golden oldie: "If you want to be wealthy for the rest of your life, don't take a momentum stock for your wife." And, in order to enjoy the benefits the future brings, it's imperative not to bail out because of volatile market sentiment that has no bearing on a company's foundation.
This week, having a relationship with the market was as comfy as being in the crossfire between Ike and Tina, Sid and Nancy, or Bill Gates and the Justice Department. Nasdaq investors experienced two of the five worst point drops ever, as well as one of the highest ever point gains. Boys and girls� can you say roller coaster? But we Fools don't let volatility bother us� we hold firm to our positions as long as they continue to grow and change and earn.
Sure an occasional hot number is tempting, but it isn't Foolish to indulge in short-term flings -- just foolish, as the President learned during the past 13 months.
Today shares of recent IPO Prodigy Communications (Nasdaq: PRGY) soared $7 5/16 to $35 7/16 on its second day of trading as investors flocked to scoop up the new girl in town, while our wife -- old, reliable America Online (NYSE: AOL) -- sank $6 3/16 to $158 1/2 on no news. We'll stay long, however, in sickness and in health. No competitive chippy will cause us to jump ship for that short-term rush. Prodigy has been around for more than a decade and has 671,000 subscribers. At last count, AOL had 16,000,000 subscribers and is still growing. Often, bigger is better.
Investors who've stayed true to AT&T (NYSE: T) -- down $2 5/16 to $85 7/8 -- during its reorganization heard today that Chairman and Chief Executive C. Michael Armstrong has decided to take a hands-on approach and will directly participate in running the pending Tele-Communications Inc. (Nasdaq: TCOMA) takeover. Armstrong's aggressive management style was worth waiting for, as AT&T suffered through its changes only to come out smelling like the rose that hopefully will come into your life on Sunday. Committed AT&T investors didn't jump ship when the company was suffering. They knew that the heart of the company was intact, and that growing pains are an essential fundamental of an organization worthy of their love and investment. Those who stood by their stock have been rewarded, with more hearts and roses to look forward to for many Valentine's Days to come.
Like a relationship, in order for a company to grow, it usually experiences some turbulence. Stuff happens, making difficult choices necessary in order to enrich the business' future. How management deals with crises and learns from them is what enables the meaningful expansion of a company; ditto for relationships. And by sticking by your loved one in times of change, you reap the benefits the future brings.
Foolish Four holding International Paper (NYSE: IP) was the only Rule Breaker in bloom today, up $1 5/16 to $42 11/16.
If you're looking to find stocks that make your tummy tingle, visit our Stocks Fools Love feature, where lovesick Fools share the secrets that make their knees weak, their hearts race, and their wallets greener. Or share your own story about a stock you love and you could win flowers from 1-800-FLOWERS or a new Fool T-shirt. Which are both much better than any zirconium -- Cupid or cubic.
Happy Valentine's Day!!!
Venus
What's happening with Harry? Click here to find out.
Stock Change Bid ---------------- AMZN -5 3/8 104.50 AMGN -4 1/2 120.25 AOL -6 1/4 158.00 T -2 9/16 85.81 ATHM -8 11/16 101.19 DJT - 3/16 4.56 DD --- 54.00 XON -1 69.44 IP +1 5/16 42.69 IOM - 1/8 6.50 LU -4 3/4 96.38 SBUX -1 23/32 48.03 TDFX --- 11.38 |
Day Month Year History Annualized
R-BREAKER -3.80% -9.18% 1.88% 922.55% 67.20%
S&P: -1.91% -3.87% 0.39% 181.91% 25.75%
NASDAQ: -3.48% -7.34% 5.89% 222.40% 29.54%
Note: Yearly, historical and annualized returns for the
S&P include dividends
Rec'd # Security In At Now Change
8/5/94 1100 AmOnline 1.82 158.00 8592.30%
9/9/97 1320 Amazon.com 6.58 104.50 1488.33%
5/17/95 1960 Iomega Cor 1.28 6.50 407.65%
10/1/96 84 LucentTech 23.81 96.38 304.80%
8/12/96 130 AT&T 39.58 85.81 116.82%
12/4/98 450 @Home Corp 56.08 101.19 80.43%
4/30/97 -1170*Trump* 8.47 4.56 46.13%
12/16/98 290 Amgen 85.75 120.25 40.23%
2/20/98 200 Exxon 64.09 69.44 8.34%
2/20/98 215 DuPont 59.83 54.00 -9.75%
2/20/98 270 Int'l Pape 47.69 42.69 -10.49%
7/2/98 235 Starbucks 55.91 48.03 -14.09%
1/8/98 425 3Dfx 25.67 11.38 -55.68%
Rec'd # Security In At Value Change
8/5/94 1100 AmOnline 1999.47 173800.00 $171800.53
9/9/97 1320 Amazon.com 8684.60 137940.00 $129255.40
12/4/98 450 @Home Corp 25236.13 45534.38 $20298.25
5/17/95 1960 Iomega Cor 2509.60 12740.00 $10230.40
12/16/98 290 Amgen 24867.50 34872.50 $10005.00
10/1/96 84 LucentTech 1999.88 8095.50 $6095.62
8/12/96 130 AT&T 5145.11 11155.63 $6010.52
4/30/97 -1170*Trump* -9908.50 -5338.13 $4570.38
2/20/98 200 Exxon 12818.00 13887.50 $1069.50
2/20/98 215 DuPont 12864.25 11610.00 -$1254.25
2/20/98 270 Int'l Pape 12876.75 11525.63 -$1351.13
7/2/98 235 Starbucks 13138.63 11287.34 -$1851.28
1/8/98 425 3Dfx 10908.63 4834.38 -$6074.25
CASH $39332.55
TOTAL $511277.27
Note: The Rule Breaker Portfolio was launched on August 5, 1994, with $50,000. Additional cash is never added, all transactions are shared and explained publicly before being made, and returns are compared daily to the S&P 500 (including dividends). For a history of all transactions, please click here.
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