Today the Rule Breaker was helped by a gain in America Online (NYSE: AOL) -- finally!

Although AOL's stock has done more for this port than any other stock, it certainly hasn't helped this year. AOL has fallen about 25% since the Time Warner announcement.

For The Motley Fool Research wing, I'm writing the initial report on AOL and Time Warner, analyzing (in understandable terms) what the merger means and estimating how the combined company will perform. Rather than this research work taking away from the online content here, when I'm finished with the report, I'll have much more knowledge and ideas to share here in this column (it's really a win-win). So far, I've written about AOL Time Warner at least three times here (in the archives now), but by writing an in-depth research report, I'm learning much more than I otherwise would, and I'm developing more complete thoughts on what the merger will mean. I'll be finished with that report in another week. Afterwards, it will be relatively easy for me to write about the merger here and on the boards, so, hey, it's a win-win-win.

eBay (Nasdaq: EBAY) helped the portfolio today, too. The company is expected to launch its eBay Japan site in the next two weeks, and today eBay announced a technology partnership with NEC in Japan. In my opinion, one of the most interesting developments at eBay is its "eBay Pro" site in Germany, where businesses can sell products to one another. Two weeks ago, a company sold pieces of its recycling plant on eBay Pro. (What? You missed that?? I bought a great plastics recycling chute, over 800 meters long.) I'm hoping that eBay Pro does well enough in Germany to make eBay move into business-to-business commerce in North America, too -- and sooner rather than later. Why? Because the potential market is immense and commissions could be as well. Also, the longer that eBay waits, the more advantage that other companies such as VerticalNet (Nasdaq: VERT) may gain.

Even so, there's much to be said for a well-reasoned approach to expansion. The Motley Fool is taking such an approach itself. If something is truly good, it can grow at a more natural pace (as opposed to being too rushed) and still win in the long term by providing a better service. Two days ago, Tom Gardner announced the launch of Motley Fool Germany. Check out Tom's letter of introduction, linked there, and pay Fool Germany a visit, especially if you speak German. (If you don't, skip over to babelfish to "translate" yourself. Babelfish translates "Fool on!" into "Dummkopf an!" in German.)

The Foolish Four

A week from today we'll announce our annual Foolish Four stock switch, meaning that we'll trade out of Caterpillar (NYSE: CAT), Goodyear (NYSE: GT), DuPont (NYSE: DD), and Chevron (NYSE: CHV). Only something is different this time. This time, after we sell our Fool Four stocks, we won't trade back into four new ones. We're removing the Foolish Four holdings from the Rule Breaker Port for several reasons, none of which have anything to do with the Foolish Four investing method itself.

Many Fools on this portfolio's discussion boards have wondered why we keep the Foolish Four stocks in the Rule Breaker Port. A quick history is in order.

When this portfolio launched, it was the only port on The Motley Fool, and because the Foolish Four is an underpinning investment strategy at the Fool, it made great sense to showcase the Foolish Four stocks in the only portfolio on the site. Now, however, we have eight real-money portfolios and -- as of 14 months ago -- we have an entire real-money portfolio that is devoted to only the Foolish Four. The Foolish Four Portfolio offers a daily column focused solely on the Foolish Four strategy, so there is no need to duplicate it here in the Rule Breaker.

Secondly, holding the Foolish Four in the Rule Breaker Port has caused a great deal of confusion that we hear about, and probably much more confusion that we never hear. Witness, today we received an e-mail (as just one example) that said: "First time looker at the Rule Breaker portfolio. I looked at your current holdings and see CAT, CHV, DD, GT and I think 'What? Why do they own those?'"

Questions like this get answered by Fool customer service, thankfully, and we could explain our Foolish Four holdings more clearly in the portfolio's daily numbers; however, the best, and most logical, solution is to use only the Rule Breaker strategy in the Rule Breaker Port, and the Foolish Four strategy in the Foolish Four Port.

That brings us to a final reason why we won't buy the Foolish Four anew: We want a full stable of Rule Breaker stocks in the Rule Breaker Portfolio. Previously, we held the Foolish Four stocks as a foundation, like a bedrock, but -- not surprisingly -- our best Rule Breaking stocks have appreciated so much more quickly than the Foolish Four that this "bedrock" has become a pebble. In the process, the Foolish Four stocks have become largely irrelevant, numerically, to this portfolio's return. And because we hope that we can find many more great Rule Breakers over the next five, ten, and fifteen years, we suspect that this "gap" would become even more pronounced.

Again, this change in no way reflects an opinion of the Foolish Four strategy. The Dow heavyweights that represent the Foolish Four could outperform any stock that we own over the next 10 years. That could happen! Even if that were to happen, however, we're making a change next week that makes the most sense to us -- we're making a change to focus on just Rule Breakers in the Rule Breaker Port. We have more companies to consider buying, and, as you may know, we always need to free up funds when we want to buy something new, and selling the Foolish Four will help a good deal.

We'll announce our Foolish Four sale one week from today, and we'll probably make the sells next Friday, Feb. 25. That will be one year, plus one day, after our purchase of the stocks. You typically sell the Foolish Four one year plus at least one day after you bought them, simply in order to benefit from the long-term tax rate (although we lost money on the holdings this year anyway).

To discuss this change or anything else Rule Breaker-esque, please visit the Rule Breaker Strategies board.

Fool on!

P.S. Speaking of taxes, the Fool has the answers to your tax questions!