Boring Portfolio Report
Tuesday, July 23, 1996

by Greg Markus (MF Boring)

ANN ARBOR, MI (July 23) -- Another no-good, very bad, horrible day for the market averages, and not so hot for the Borefolio, either. The blue-chip dropped 44 points, while the S&P 500 Index slid 7 points (-1.09%). Meanwhile, the NASDAQ experienced its seventh-largest single-day point loss (-32.32), which works out to a hair under three percent.

As for the Borefolio, it lost 1.28% in value, including transaction costs associated with this morning's purchase of 100 SPDRs at a price of $63 7/8. Since inception on January 29, 1996, the Borefolio is up only 1.30% (plus dividends and interest from the past quarter, which have not been tallied in yet). That ain't much, but its better than both the S&P 500 and the NASDAQ.

I take some solace in the fact that the Borefolio is managing to keep its head above water in this market turmoil of historic proportions; but I'd that the Boring collection of stocks was beating the averages on the basis of decent gains rather than merely less severe losses. With two stocks holding on to 40%-plus gains after but five months, and two others above 20%, I suppose I shouldn't complain too much, though.

Late yesterday, Microsoft reported consensus-beating quarterly earnings, but in the follow-up teleconference the company warned analysts that it probably wouldn't be able to maintain the past year's 46% revenue growth rate. Innocent that I am, I would have thought no sensible investor could have expected otherwise; but that just shows how wrong I can be. Shares of Microsoft crumpled nearly 8 points. At this rate, MSFT may soon enter the Boring Zone.

Then Fed Chair Allen Greenspan completed his two-part, semi-annual report to Congress, and it turned out that the second verse was same as the first. Apparently, "investors" were expecting something else, although why I cannot imagine.

A late afternoon a rumor that gooroo Elaine Garzarelli had turned bearish on stocks added fuel to the afternoon sell-off.

If that weren't enough for one day, Michigan's Tom Dolan failed to make the finals for the 400-meter freestyle.

Let's talk Borefolio stocks. Borders and TXI actually gained in the midst of all the mess. PMSI, which had been up for much of the day, ended "unch." Shaw Group dropped two-bits, while OXHP gave back a dollar of yesterday's gains.

Green Tree Financial also lost a buck, despite slightly moderating interest rates. A tiny item in this morning's Wall Street Journal mentions that Green Tree is expected to offer $400 million in securities for sale later this week. The securities are backed by manufactured housing loans. Sounds like business is blooming for Green Tree.

The Borefolio's disappointment du jour was Cisco Systems. Cisco slipped $3 1/2 today, a victim of the prevailing panic among tech stocks and, perhaps, the announcement today that IBM had formed a, um, "strategic alliance" with switch-maker Xylan. Presumably, this partnership will help IBM in its efforts to catch-up in the internetworking business -- just one of many areas where IBM failed to capitalize on rapidly changing technology trends.

For its part, all that Cisco did today was announce two new developments. First, the company reported that it had begun volume shipments of Cisco LocalDirector, a network hardware device that enables Web sites to accommodate a larger number of users by distributing network traffic across multiple servers. Second, Cisco announced the availability of a "high-performance, low-latency, standalone Token Ring switch targeted at the workgroup switching environment."

The product, the Catalyst 2600, is "the first switch offered by Cisco to provide customers with low-cost Token Ring switch ports that can be used for ring segment microsegmentation or dedicated, full-duplex attachment of file servers/workstations." The press release says that "this provides customers with increased bandwidth to both servers and end users' workstations with lower latency for time-sensitive applications" and "complements Cisco's current industry-leading switched LAN solutions for Ethernet, ATM internetworking and backbone Token Ring environments."

In other words, "I'll see your switch and raise you a LocalDirector."

My money's on Cisco.