Boring Portfolio Report
ANN ARBOR, Mich. (Sept. 3) -- Because the market crashes of 1929 and 1987
both occurred in October, that month has gotten a reputation for being an
especially tough one for stocks. But September can be even tougher: since
1915, the Dow has lost nearly a full percentage point on average in that
month, a far larger average loss than October's.
This first trading day of September 1996 looked like it would be true to
that tradition. An unsettling political situation in Iraq combined with
continuing nervousness about interest rates dropped the DJIA below the
50-point-loss mark in a matter of minutes this morning. The Nasdaq was off
even more than that in percentage terms.
A temporary imposition of trading collars on the NYSE, along with some modestly
reassuring economic statistics and a surge in oil stocks helped propel the
Dow into positive territory later in the day. The index finished up a decent
32 points -- or over half a percentage point in value. The broader market
was less strong, however, with losers outnumbering advancers. The S&P
500 managed a 0.41% gain on the session, while the Nasdaq closed fractionally
higher.
As for the Boring Portfolio, it exhibited continuing broad-based weakness
on generally slow-to-moderate trading volume. The generally bleak Boring
landscape was relieved only by a $1 gain in Cisco and a half-point advance
of the Spiders. Suffice it to say, the Borefolio's visited more enjoyable
spots than the one it's been holed up in (or should I say "holed down in")
this past week or so.
Ah, well. On to the Boring news of the day.
This morning, Cisco reported its latest acquisition du jour. This time it's
privately held Granite Systems Inc., which Cisco will buy for about $220
million in stock. Cisco said it was acquiring Granite, based in Palo Alto,
for its "standards-based multilayer Gigabit Ethernet switching technologies."
Cisco's intent is to incorporate these technologies into products designed
for bandwidth-hungry internet and intranet applications. The stock transaction,
which will be accounted for as a pooling of interests, is expected to be
completed by October.
Borders Group, along with arch-rival Barnes & Noble, was the subject
of a lead story on the front page of the Wall Street Journal today. The story
focused on Borders' grand opening of its "enormous" new superstore in the
World Trade Center -- an event characterized in the story as an aggressive
move into B&N's home turf in the Big Apple.
As I've note here many times, I fell in love with the original Borders in
Ann Arbor because of its emphasis on customer service, as well as what WSJ
describes as its "loose and distinctly counterculture" atmosphere. Now I
learn from the Journal story that Barnes & Noble's CFO, Irene Miller,
thinks "Borders service is intimidating." She continues, "Our people are
less intimidating. They aren't interested in impressing you with their knowledge
of literature."
Well, Irene, as someone who's visited at least a dozen B&N's around the
country, I can assure you that your staff have neither intimidated nor impressed
me with their knowledge of literature. Not even a little bit.
Finally, it's not often that the Borefolio's S&P 500 Depository Receipts
get featured in the Boring recap, but there was an item over the week-end
that's worth mentioning.
In a story entitled "S&P Index Shows Youthful Zip," AP Business Writer
Chet Currier noted that the S&P 500 Index (which the Spiders mirror)
has exhibited impressive growth that belies its "age, size and staid reputation."
"This is not your father's index," says Thomas McManus, of Morgan Stanley,
in the story. "The S&P 500 is less cyclical and more diversified -- both
sectorally and geographically -- than it was a generation ago. In recent
years, "the index has exemplified the classical definition of a growth company,"
with an average total return on 15.7% over the past five years.
Over the past 10 years, according to the story, the S&P 500 Index has
outperformed the average stock fund by a 20 percentage-point margin, returning
237.9% from June 30, 1986 to June 30, 1996. That's due in part to the S&P's
selection criteria: it chooses companies "not because they are the largest
... in terms of market value, sales or profits." Rather, the companies selected
"tend to be the leading companies in leading industries."
So if you were looking for a rationale why I moved a chunk of the Borefolio's
assets into Spiders recently, that's it.
(c) Copyright 1996, The Motley Fool. All rights reserved. This material is
for personal use only. Republication and redissemination, including posting
to news groups, is expressly prohibited without the prior written consent
of The Motley Fool.
Transmitted: 9/3/96
Tuesday, September 3, 1996
BGP - 1/2 ...CSL - 1/4 ...CSCO +1...GNT - 1/2 ...OXHP -1 7/8
...PMSI - 1/2 ...SHAW - 1/2 ...SPY +31/64...TXI ---...
*Scroll down or expand screen for full portfolio accounting
Day Month Year History
BORING -0.95% -0.95% 6.87% 6.87%
S&P 500 +0.41% 0.41% 5.32% 5.32%
NASDAQ +0.07% 0.07% 9.74% 9.74%
Rec'd # Security In At Now Change
4/12/96 100 The Shaw Gr 18.84 31.88 69.17%
2/28/96 200 Borders Gro 22.51 31.88 41.59%
1/29/96 100 Texas Indus 54.50 65.13 19.50%
3/8/96 400 Prime Medic 10.07 11.63 15.46%
2/2/96 200 Green Tree 30.39 34.25 12.71%
7/23/96 100 S&P Deposit 64.15 65.81 2.59%
6/26/96 100 Cisco Syste 53.90 53.63 -0.51%
8/13/96 100 Carlisle Co 52.65 51.25 -2.66%
5/24/96 100 Oxford Heal 48.02 43.63 -9.16%
Rec'd # Security Cost Value Change
2/28/96 200 Borders Gro 4502.49 6375.00 $1872.51
4/12/96 100 The Shaw Gr 1884.16 3187.50 $1303.34
1/29/96 100 Texas Indus 5449.99 6512.50 $1062.51
2/2/96 200 Green Tree 6077.49 6850.00 $772.51
3/8/96 400 Prime Medic 4027.49 4650.00 $622.51
7/23/96 100 S&P Deposit 6414.99 6581.25 $166.26
6/26/96 100 Cisco Syste 5389.99 5362.50 -$27.49
8/13/96 100 Carlisle Co 5264.99 5125.00 -$139.99
5/24/96 100 Oxford Heal 4802.49 4362.50 -$439.99
CASH $4428.44
TOTAL $53434.69