<THE RULE BREAKER PORTFOLIO>
No News. Instead, Thoughts.
by Jeff Fischer (TMFJeff)
ALEXANDRIA, VA (May 20, 1999) -- Down over 4% today. No news. Instead, thoughts.
- Business consolidation online is much easier than consolidation off-line. For the most part, it's much less physical. You merely tweak programming code or redirect a URL. Consolidation of online industries -- books, music, pharmacies -- will continue to occur at record speed.
- A rush for capital is afoot. Dozens of Internet-related startups are going public every month, most with little revenue and large losses. A majority of these companies will not see long-term success. However, everyone is trying. It's not often that a new medium emerges -- a medium that challenges every past business model in existence. Right now, not a single sizable company on the planet isn't threatened somehow by the Internet.
- Not even Good Year (NYSE: GT).
- The smartest online business models are not possessed by the eToys (Nasdaq: ETYS) or even the Amazons (Nasdaq: AMZN) of the world. They are the horizontal models held by eBay (Nasdaq: EBAY) and Priceline (Nasdaq: PCLN).
- Silly Quote of the Day: "I'd rather own eToys than Amazon.com. No adult wants to go to a toy store, so they're going to use eToys. As far as I'm concerned, eToys is a keeper," said Vinny Slavin at Cantor Fitzgerald.
- Either that, or adults are going to use Amazon for toys.
- Amazon can logically add toys to its business. Can "eToys" logically add books, music, videos, or anything other than toys to its product line?
- In the future, much of Amazon's revenue will be derived from electronic transactions (electronic music and videos, etc.), rather than from shipping durable products.
- The stock market will decline for long periods again sometime.
- The previous statement will not matter much in the long run.
- When you walk about large cities (namely Paris and Chicago), you at first think that more and more people are going insane and talking to themselves. As strangers stroll by mumbling, you realize that they're conversing on tiny cell phones. This is especially true in Paris. The cell phones are smaller.
- America Online (NYSE: AOL) works very well in Paris -- even more reliably than it does in Chicago. Less traffic.
- AOL is valued at $140 billion. It has many more potential revenue sources than does AT&T (NYSE: T). AT&T is valued at $215 billion. Six months ago, I would have bet anything that AOL would have a higher market value than AT&T in 5 years. I still think that this could occur, but AT&T's aggressive move into high-speed cable could prevent it from happening in two ways: increased value at AT&T, less potential value at AOL.
- Microsoft is valued at $395 billion. AOL, again, is at $140 billion. Will AOL ever surpass Microsoft? Fools don't believe in market predictions, but if I absolutely had to bet on these companies' valuations, yes or no -- will AOL ever be larger -- I'd bet, yes.
- Direct flames to the message board.
- Please hold your flames for 20 years before posting.
- Word is that the CEO of @Home (Nasdaq: ATHM), Tom Jermoluk, will hand the CEO reins to the current Excite (Nasdaq: XCIT) President, George Bell, after the May 28 merger of the two companies. Tom will remain in the chairman's job, the rumor goes.
- Trump Hotels (NYSE: DJT) rose 11% on word that the company is considering an investment of $40 million in more than one Venezuela hotel project. We'd usually suggest that the company use the money to pay down its 13% debt instead. However, as short sellers: go nuts, Trump Hotels. Put it all on red.
- In the past, the only thing "always open" was the outdoors. The Internet has joined it: always open.
- Is there enough outdoor adventure in your life?
- We're interviewing Jason Wong, Internet Marketing Specialist at 3dfx (Nasdaq: TDFX). Please see this post and then share your questions for Jason soon. The interview will be shared in this column.
- Does one single investment account for much of your portfolio's total value? If so, if it's an outstanding stock that has grown to dominate your portfolio, that is Foolish and fine. Ask Warren Buffett. Chaos is the order of the world. Trying to keep your portfolio in order -- or balanced, with each position always equally weighted -- is to fight a losing battle against a natural order that is only chaotically arrived at.
- Your single most valuable asset is your health. Prove me wrong -- come on, hit me.
- The weekly Harry Jones column runs on Thursday. Today the topic is small-cap index funds. They should beat the S&P 500 in the long run. Visit Harry Jones.
- Drip Port covers Campbell Soup (NYSE: CPB) today and explains how we're long-term investors by not buying it. Also, our portfolio's goal. See Drip Port.
- Investing is a process. Do it Foolishly.
Day Month Year History Annualized R-BREAKER -4.12% -11.71% 43.36% 1338.92% 74.52% S&P: -0.40% 0.27% 9.23% 205.63% 26.28% NASDAQ: -1.36% -0.02% 15.94% 253.00% 30.13% Rec'd # Security In At Now Change 8/5/94 2200 AmOnline 0.91 129.25 14121.27% 9/9/97 1320 Amazon.com 6.58 130.81 1888.26% 5/17/95 1960 Iomega Cor 1.28 4.94 285.62% 12/4/98 450 @Home Corp 56.08 136.75 143.85% 2/26/99 300 eBay 100.53 186.63 85.65% 12/16/98 580 Amgen 42.88 63.44 47.96% 7/2/98 470 Starbucks 27.95 36.25 29.67% 4/30/97 -1170*Trump* 8.47 6.19 26.94% 2/23/99 300 Caterpilla 46.96 58.94 25.49% 2/23/99 290 Goodyear T 48.72 59.38 21.88% 2/23/99 180 Chevron 79.17 93.50 18.10% 2/20/98 260 DuPont 58.84 69.06 17.37% 1/8/98 425 3Dfx 25.67 21.25 -17.21% Rec'd # Security In At Value Change 8/5/94 2200 AmOnline 1999.47 284350.00 $282350.53 9/9/97 1320 Amazon.com 8684.60 172672.50 $163987.90 12/4/98 450 @Home Corp 25236.13 61537.50 $36301.37 2/26/99 300 eBay 30158.00 55987.50 $25829.50 12/16/98 580 Amgen 24867.50 36793.75 $11926.25 5/17/95 1960 Iomega Cor 2509.60 9677.50 $7167.90 7/2/98 470 Starbucks 13138.63 17037.50 $3898.88 2/23/99 300 Caterpilla 14089.25 17681.25 $3592.00 2/23/99 290 Goodyear T 14127.38 17218.75 $3091.38 4/30/97 -1170*Trump* -9908.50 -7239.38 $2669.13 2/20/98 260 DuPont 15299.43 17956.25 $2656.82 2/23/99 180 Chevron 14250.50 16830.00 $2579.50 1/8/98 425 3Dfx 10908.63 9031.25 -$1877.38 CASH $9924.87 TOTAL $719459.25Note: 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 in the yearly, historic and annualized returns). For a history of all transactions, please click here.
</THE RULE BREAKER PORTFOLIO>