<THE RULE BREAKER PORTFOLIO>
Rule Breaker Holdings Unchanged
Amazon, AOL, @Home, eBay continue to grow
by Jeff Fischer (TMFJeff)
ALEXANDRIA, VA (May 24, 1999) -- I mean the following words in the best possible way.
If your emotions rise and fall with daily stock prices, you're not Foolish.
If you check stock quotes several times a day, you're not Foolish.
I don't care if you enjoy checking quotes, a Fool has to ask: "Is there a better way to spend my time than checking quotes?" The answer should be a resounding yes. In a world this large and a day this short, there are much better things to do than regularly check stock quotes. In fact, you shouldn't even think about stocks. Not even sometimes.
Fools think about companies. They don't think about stocks.
Stocks are pieces of paper, the value of which fluctuate daily for reasons often unrelated to the underlying companies. A company's fundamentals almost never change on a daily basis. Thank goodness. Because you must think about and follow your companies. There is no reason to think about, let alone follow, the stocks behind your companies each day. If a company makes money in the long term, an investor will be rewarded in the long term.
So what is there to do as an investor on a daily basis? Oftentimes, little. That's the Foolishness behind it. Continue to do the things that build your knowledge and make you a more confident and able investor, help other Fools on the message boards, and keep abreast of your companies.
No, this isn't written because it was a down day. I haven't mentioned the portfolio's daily performance regularly for some time. It is written because today I received more than a few instant messages from people asking me what I thought of the stock market now, the declining prices, and whatnot, and I think nothing of it.
I'm not an investor in the stock market. I'm an investor in individual companies that will forge their own fates regardless of the performance of the overall stock market. It is a common misperception that as the stock market goes, so goes every stock. Not true. Many stocks rose throughout the Great Depression, and many stocks will rise throughout the next economic and stock market downswing.
If you focus on the strongest companies -- companies that should grow in the next five, ten, and twenty years -- you are likely to buy stocks that will do well over time whatever the stock market indices do.
Some investors wrote to ask, "Is the bubble finally bursting?"
David Gardner addressed that most Foolishly in the past. When a bubble bursts, nothing remains. There is no bubble here, and there especially is not an "Internet bubble" that stands to burst. There is a new medium, a new technology, that enables businesses to address a worldwide market from one location. That does change rules. The convenience of the medium changes rules, too. Representing the fast-growing opportunities are volatile stock prices -- prices that swing down and up in an attempt to judge potential.
But there is no bubble, just as the stock market won't "all end badly." It will never end. It will always fluctuate.
That's why daily price movements are a trite concern. When you study price movements daily, you're assuming that the close of the market day holds significance. It doesn't. It merely represents where stocks will first open tomorrow. Fluctuation is a constant in stocks. And remember, we're not even interested in stocks. We're interested in businesses.
Our businesses continue to grow.
Meanwhile, just because the earth has rotated once doesn't mean that you should concern yourself with how stock prices changed during the one rotation. Life is remembered by large events, years, and even decades as time goes on; rarely by days which are mainly a blur of insignificance that only when combined create significance. A day -- small as it is -- is only made complete when you achieve a feeling of worthwhile accomplishment. I've never reached that feeling by watching stock prices fluctuate, even on tremendously strong market days.
The soapbox continues. In Drip Port we ask, "Are you Foolish?" If you know that you are Foolish because you only make your own decisions -- as most of us do -- then check out the Fool's special feature on giving stock to a graduate. It's that time of year. Congratulations to all recent graduates! As you move forward, think in terms of years and years... and years.
Fool on!
05/24/99
Close
Stock Change Bid ------------------ AMGN -1 1/16 60.19 AMZN -11 1/16 117.50 AOL -6 9/16 119.44 ATHM -14 9/16 115.44 CAT - 7/16 59.19 CHV -1 9/16 91.88 DD + 15/16 69.19 DJT - 1/2 5.81 EBAY -7 11/16 183.25 GT - 3/8 58.75 IOM - 1/8 4.94 SBUX -2 1/16 34.50 TDFX -1 3/8 19.13 |
Day Month Year History Annualized
R-BREAKER -5.67% -18.25% 32.74% 1232.32% 71.52%
S&P: -1.78% -2.14% 6.62% 198.61% 25.60%
NASDAQ: -2.66% -3.51% 11.90% 240.70% 29.10%
Rec'd # Security In At Now Change
8/5/94 2200 AmOnline 0.91 119.44 13041.61%
9/9/97 1320 Amazon.com 6.58 117.50 1685.92%
5/17/95 1960 Iomega Cor 1.28 4.94 285.62%
12/4/98 450 @Home Corp 56.08 115.44 105.84%
2/26/99 300 eBay 100.53 183.25 82.29%
12/16/98 580 Amgen 42.88 60.19 40.38%
4/30/97 -1170*Trump* 8.47 5.81 31.37%
2/23/99 300 Caterpilla 46.96 59.19 26.03%
7/2/98 470 Starbucks 27.95 34.50 23.41%
2/23/99 290 Goodyear T 48.72 58.75 20.60%
2/20/98 260 DuPont 58.84 69.19 17.58%
2/23/99 180 Chevron 79.17 91.88 16.05%
1/8/98 425 3Dfx 25.67 19.13 -25.49%
Rec'd # Security In At Value Change
8/5/94 2200 AmOnline 1999.47 262762.50 $260763.03
9/9/97 1320 Amazon.com 8684.60 155100.00 $146415.40
12/4/98 450 @Home Corp 25236.13 51946.88 $26710.75
2/26/99 300 eBay 30158.00 54975.00 $24817.00
12/16/98 580 Amgen 24867.50 34908.75 $10041.25
5/17/95 1960 Iomega Cor 2509.60 9677.50 $7167.90
2/23/99 300 Caterpilla 14089.25 17756.25 $3667.00
4/30/97 -1170*Trump* -9908.50 -6800.63 $3107.88
7/2/98 470 Starbucks 13138.63 16215.00 $3076.38
2/23/99 290 Goodyear T 14127.38 17037.50 $2910.13
2/20/98 260 DuPont 15299.43 17988.75 $2689.32
2/23/99 180 Chevron 14250.50 16537.50 $2287.00
1/8/98 425 3Dfx 10908.63 8128.13 -$2780.50
CASH $9924.87
TOTAL $666158.00
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 in the yearly, historic and annualized returns). For a history of all transactions, please click here.
</THE RULE BREAKER PORTFOLIO>
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