ALEXANDRIA, VA (Sept. 15, 1999) -- Think back just two years and try to remember what has occurred since then. Every day, newspapers have something significant to report. An amazing amount of change occurs in two years. Two years ago it was believed that e-commerce would be limited due to credit card security fears. Two years ago, an Internet-based company going public was big news. Two years ago, Amazon was insanely valued at $800 million (it's above $22 billion now) and eBay was not known by many people. How quickly things change.

Among the most under-reported and under-analyzed transformations has occurred in the beliefs of investors, Wall Street gurus, and journalists. Most of this population rides on the same bandwagon. Mass opinion changes quietly, even deceptively. It goes like this: jump on the bandwagon, whatever it currently is. Stay on. When it changes, jump off and quickly jump on the new bandwagon, and let the old one burn. Don't ever mention it again. Don't hold yourself or your peers accountable. We are one large machine and we move as one mind. Jump. Jump again. Jump once more.

Early on, America Online (NYSE: AOL) and Amazon (Nasdaq: AMZN) were generally scorned by most of investing media and therefore, perhaps, by most of the investing public. Gradually and silently, mass sentiment changed. The harshest criticisms dwindled, bit by bit, and then finally disappeared. Where once stood criticism, steadily grew praise. Many former critics began to point to AOL and Amazon as "Internet benchmarks" of success. Soon, AOL was even called a bluechip.

Fools, that's what we call fence-hopping -- or sliding quietly from one point of view to the other (or one side of the fence to the other). Not even the shuffle of the "pants on fence" can be heard. The fence-hoppers just slurp over the fence like a big snake and hope that no one notices. Then they go about their merry (and deceptive) ways.

Imagine journalists and Wise stock market gurus talking quietly to themselves each time the sea changes. Wait. I believe I hear one now:

"Let's see here. I always said that America Online was a poor service and that it would be killed by Microsoft anyway, but let's see here... I'm just going to slide on over this fence here... umph!... there we go, and now I'm going to say that AOL is an obvious online leader. Great! Now, I wonder what's for dinner."

Amazing, isn't it? No guilt. No feeling of responsibility for what one has said. For the mistakes one may have helped others make. Can there be many of these Wise people around? Wait. Oh no. I think I hear another one. Let's listen....

"Wow. I said publicly for more than two years that Amazon and its investors are whacked in the head. I said that Amazon was just an online book store, that's all, and that margins in the book business are always low and they will be even lower online. I panned that stock all the way from $3 up. Well, I have myself to think about, so I'm just going to slide over this fence here... umph!... there we go. Now I'm going to say that Amazon is the obvious e-commerce visionary and leader. Watch out, retail world! Don't get 'Amazoned!' Yeah. Perfect. That sounds great. I'll use that line tomorrow. 'Amazoned.' Brilliant! Now, I wonder what's for dinner."

As Fools, we don't fault others for not being prescient; nor do we fault them for having an opinion that was proven incorrect. After all, a majority of opinions are proven wrong on some level. (The key is to be correct on the most general level.) We do believe in accountability, however, and in serving the reader before the self. Unfortunately, Wall Street is still the Wild West when it comes to the accountability of gurus, analysts, and journalists. Not many people are keeping close enough track, so most people get away with murder. A Wall Street man can be wildly bearish since 1982 but when the stock market finally falls 25% in one year (let's say in 2000) he will still be publicly rewarded for being bearish at the time. Even though he was just being bearish for the 19th straight year.

The Fool aims to be different. To paraphrase David Gardner's words from a few years ago, our aim in this space has always been to provide education, amusement, and enrichment each day (while holding ourselves accountable), believing that over the long term the Fool portfolios could demonstrate that average private investors (that's all we are) can invest their own money successfully and:

  • don't need to fob around Wall Street looking for tips or advice.
  • don't need to pay fees to mutual fund managers.
  • don't need "guidance" from the CEOs of companies they invest in.
  • don't need access to Wall Street's vaunted (and exclusive) research.
  • don't need to trade regularly or often at all.
  • don't need to invest in anything but common stocks.
  • don't need their noses glued to CNBC or Bloomberg screens to follow "the action."

    Further, Tom and David created this portfolio with these self-imposed disciplines:

  • We announce all our buy and sell decisions before making them.
  • We invest our own real money (no "model" portfolios here).
  • We explain all our reasoning and keep updating our opinions.
  • We occasionally short companies in the broad light of day.
  • We aim at truth and excellence above all.

    Along with all of this, we are fence-hoppers only if we explain why and we hold ourselves accountable. We hopped the Trump Hotels (NYSE: DJT) fence last week as we closed a 30-month short because we are no longer on the side of the fence that believes the company can or will go bankrupt. Instead, we believe the men running the company when they say to us that they are going to refinance debt. We jumped one fence. We didn't jump the fence that would have us buy the stock, however, we simply didn't want to be short Trump anymore given our change in knowledge and the Trump Promise (tm) that we were given. (Please see last week's columns linked below regarding Trump if you don't understand that.)

    Currently in the marketplace, many journalists and gurus are hopping from the "AOL is the greatest" fence to the "AOL will be doomed by free ISPs" fence. We haven't hopped. I recognize the significant threat that AOL's primary revenue stream faces if subscriber revenues dwindle. I also see, however, the company signing multimillion dollar deals almost weekly, including today's $30 million deal with CareInsite. CareInsite will pay AOL $30 million for eyeballs on AOL's site. That's one deal of hundreds being done at AOL -- almost all of them one-way transactions. The money is flowing to AOL, not from.

    Back to the ISP issue, though: I'm going to say I'm on the fence here. I certainly see the threat it presents, but I see all of AOL's strong points, too, and I'm still not certain free ISPs will be sustainable. I jotted something down in a notebook the other night, a random thought that went like this: "Where the online world is going, free ISPs won't be worth the price." What it means is this: The online experience is going to become much more dynamic, demand much more bandwidth, and offer so much utility that free ISPs will probably not be worth their free status because the experience will be weak-sauce. Your online experience will be marginalized.

    However, this is only my supposition. A Fool can't know everything and I am essentially on the fence on the issue of free ISPs. They're both good and bad. They pose a threat to AOL, but in another sense they don't. Or, AOL shouldn't allow them to post a threat. AOL should argue that its content and its service is worth the price. That is its position of power.

    Meanwhile, I don't know exactly where David, Paul, Rick, Barbara, or other Fools stand on the free ISP issue and the impact on AOL at the moment (although Rick shared good thoughts here Monday). I do know where many Fools stand on the AOL message board, however, and I know that when we hop a fence, you'll know about it. I don't plan to hop any AOL fences anytime soon. Uncertainty comes with Rule Breaker investments and as David wrote yesterday, a sense of ownership goes far to combat that uncertainty. I am fairly certain that AOL is a growing business with enough promise to create long-term value beyond its value today. That's the assumption that an investor seizes upon.

    Fool on!