FOOL FEATURESLet the weekend begin! Our popular weekend magazine, Fool's Gold, is back again, with a Sector Snapshot on manufactured homes, Industry Updates, an interview with Nasdaq President Al Berkeley, and a collection on Rainforest Cafe. On August 14th, Mr. Berkeley will be featured in an auditorium event -- read what he has to say and then come join him for a discussion. This Sunday we'll be hosting a Rainforest Cafe auditorium event live from the Cafe's opening in DisneyWorld, with the company's President, COO, and VP of Development. We've also got lots of Chats lined up for the weekend -- click on the "Chat" button at the bottom of the main Fool screen for the schedule.
MF Merlin's Economic News today discusses the July Employment Situation report, the June news releases on factory orders and personal income and expenditures, the University of Michigan's update on its July consumer sentiment index number, and the CIBCR leading inflation index for July. Also of interest is our "Teens & Their Money" folder, featuring Guest Fool Bigfootmm this month, who writes about "The Good of Money." The Teen folder sports a Foolish model portfolio and talk about investing geared to young people. In tonight's Fool on the Hill, MF Templar concludes his six-part "Buy and Hold Apocalypse" series. Enjoy!
CREE RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CREE)") else Response.Write("(NASDAQ: CREE)") end if %>
(402) 222-9904
Surgical instrument and supply company US SURGICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USS)") else Response.Write("(NYSE: USS)") end if %> made an unsolicited $18-cash-per-share bid for CIRCON CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CCON)") else Response.Write("(NASDAQ: CCON)") end if %>, sending Circon shares skyrocketing $7 1/8 to $19 1/4. Circon is the country's largest manufacturer of laparoscopic scopes, video systems, and endoscopic suction irrigation devices. A combined company could compete better with Johnson & Johnson. U.S. Surgical noted that, "Circon will provide a major platform for U.S. Surgical to expand its presence in the areas of urology and gynecology," and added that U.S. Surgical could expand Circon's international sales.
SYSTEMSOFT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SYSF)") else Response.Write("(NASDAQ: SYSF)") end if %> unveiled two new products for Windows NT today, boosting shares $6 3/4 to $25 1/2. CardWizard is a plug-and-play product for PC cards, while PowerProfiler extends NT-based notebook computers' battery life. CardWizard already has several licensing agreements in place and both products expect to be shipping around the time of the Fall Comdex show.
PLANNING SCIENCES INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PLNSY)") else Response.Write("(NASDAQ: PLNSY)") end if %> shares soared $4 1/4 to $17 1/4 today, after the company met estimates of $0.05 per share for its second quarter, up considerably from $0.03 in the year-ago quarter. Chairman and Chief Executive Officer Paul Rolph noted that, "We are very pleased to be reporting a 109% increase in second-quarter earnings," adding that, "This improvement, and our 42% revenue gain, reflect continuing global demand for our Gentia software." Planning Sciences came public three months ago and the decision software developer established a new South African subsidiary earlier this week.
QUICK TAKES: LERNOUT & HAUSPIE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LHSPF)") else Response.Write("(NASDAQ: LHSPF)") end if %> continued to blast forward, up $4 3/4 to $25 this morning, following Wednesday's news that Microsoft will be using its text-to-speech technology in future applications... CHECKPOINT SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CHKPF)") else Response.Write("(NASDAQ: CHKPF)") end if %> blew away estimates today, reporting $0.10 per share for its second quarter, compared with estimates of $0.06, and surging $4 1/8 to $22 3/8 as a result. Revenues increased 373% over the year-ago quarter... Diagnostic test kit developer CENTOCOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CNTO)") else Response.Write("(NASDAQ: CNTO)") end if %> reported losing two cents less than analysts had expected for its second quarter, and was rewarded with a $4 to $30 1/8 jump in price. CS First Boston added the company to its "Focus" list, and kept its "strong buy" recommendation.
MORE QUICK TAKES: Momentum-stocks had a fine day today. SECURITY DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDTI)") else Response.Write("(NASDAQ: SDTI)") end if %> popped $6 1/2 to $67 3/4, SHIVA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SHVA)") else Response.Write("(NASDAQ: SHVA)") end if %> surged $6 to $60 1/2 and PAIRGAIN TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PAIR)") else Response.Write("(NASDAQ: PAIR)") end if %> flew ahead $6 7/8 to $65 3/4... COMSTOCK RESOURCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CMRE)") else Response.Write("(NASDAQ: CMRE)") end if %> rose $1 1/8 to $11 today after reporting earnings of $0.45 per share compared to all of a penny a year ago, ahead of consensus estimates... Electronic product manufacturer SCI SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SCIS)") else Response.Write("(NASDAQ: SCIS)") end if %> whomped estimates, posting $0.81 per share for its fourth quarter when only $0.60 was expected and rising $6 1/4 to $44 1/8... MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> advanced $3 5/16 to $22 9/16 on news of a tiny new multi-function chip it unveiled today... NETWORK APPLIANCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NTAP)") else Response.Write("(NASDAQ: NTAP)") end if %> shares surged $4 1/2 to $26 1/4 as both Lehman Brothers and Alex. Brown upgraded the firm from "buy" to "strong buy"... REXENE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RXN)") else Response.Write("(NYSE: RXN)") end if %> popped up $1 1/2 to $13 3/4 as the Huntsman chemical company raised its unsolicited bid for the firm.
A goat! A goat! My kingdom for a goat! Oh -- here's one. PATTERSON DENTAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PDCO)") else Response.Write("(NASDAQ: PDCO)") end if %> warned today that its upcoming earnings will disappoint analysts, and underwent the financial equivalent of a root canal, dropping $7 1/8 to $22 3/4 as a result. Blamed was a slowdown in equipment sales, although disposable supply sales remain strong. Shareholders might be seeking some Novocain now.
Also bleating, warning of disappointing earnings, was automation software and hardware developer ADEPT TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ADTK)") else Response.Write("(NASDAQ: ADTK)") end if %>, which slipped $3 to $6. The company sees limited earnings growth in the near future, due to competitive, organizational, product development, and marketing issues. It added that although the core businesses of robotics and intelligent automation products are widely used, the industry is nevertheless experiencing slowing growth.
IVAX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: IVX)") else Response.Write("(AMEX: IVX)") end if %> had a bad day. Shares of the pharmaceutical, diagnostic test, personal-care product and specialty chemical concern dropped $1 5/8 to $13 1/4 after a series of not-too-rosy announcements today. For one, Ivax underwhelmed the Street, posting a loss of $0.13 per share when a gain of $0.05 was expected, and blaming inventory credits and price drops. The company also found itself in default on its revolving credit line and was slapped with a pending shareholder class action suit.
Client/server software developer SS&C TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SSNC)") else Response.Write("(NASDAQ: SSNC)") end if %> met estimates of $0.01 per share for its second quarter, but was bludgeoned down $2 3/4 to $9 1/4 anyway. The company earned twice as much in the year-ago quarter. Chief Executive Officer (CEO) William C. Stone waxed bullish in his comments about the firm's prospects, and pointed to three new products which have begun shipping.
QUICK CUTS: STRATTEC SECURITY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STRT)") else Response.Write("(NASDAQ: STRT)") end if %> reported earnings of $0.28 for its fourth quarter, when fully twice as much had been expected. And surprise, surprise -- the stock was punished, with a $2 7/8 to $15 drop. Sales for the quarter were up 35% from the year-ago quarter... HEILIG MEYERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMY)") else Response.Write("(NYSE: HMY)") end if %> dropped $2 1/4 to $17 7/8 today on flat same-store sales... A secondary offering priced below the current value of the shares is definitely not the way to boost share price in the short term. FRONTIER OIL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: FXEN)") else Response.Write("(NASDAQ: FXEN)") end if %> learned this when it dropped $1 to $5 3/4 after pricing a three million share secondary at $5 3/4... VACATION BREAK USA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VBRK)") else Response.Write("(NASDAQ: VBRK)") end if %> reported second quarter earnings of $0.56, fully 14 cents below estimates, and took a $1 1/2 to $11 trip South... It was bad enough that home-improvement product company AMRE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMM)") else Response.Write("(NYSE: AMM)") end if %> lost $0.11 per share in its last second quarter. But this year it lost $0.63 and sank $1 3/8 to $17 1/2... All was not well at WELLCARE MANAGEMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WELL)") else Response.Write("(NASDAQ: WELL)") end if %> today, when investors found out that the SEC has ordered a formal investigation into the company and shares fell $1 to $8 3/8.
An Investment Perspective
by Randy Befumo (MF
Templar)
FOOL ON THE
HILL
Buy & Hold Apocalypse
Episode Six: Market Timing is Bunk
Longtime skeptical readers will be wondering why I am focusing so much on how to measure market returns in making my case for why the "buy-and-hold approach" is far from dead. In my Technophrenia series, I wrote an article called "A Market of Stocks," arguing that the very concept of a "stock market" was an historical anachronism created by the tighter linkage between companies when the U.S. economy was less complex. One of the main reasons why people want to measure the performance of the "market" outside of its component stocks is to enable some form of market timing, a practice that has convincingly been debunked by most academic work in recent years.
Market timing is bunk? Yep. Consider, for instance, the returns on small company stocks between 1925 and 1992. If you had been invested in small company stocks over this period, your average annual return would have been 12.1%. If you sat out the single best month during that 67 year period, you would have only made 11.2% a year. If you missed out on the best five months, well, forget it... you would have only notched gains of 8.5%. Finally, if you had missed the best ten months -- something all sorts of market timers managed to do in 1995 -- you would have only retained 6.3% annual gains, almost half of what you could have made had you been fully invested. This data and other data like it has proved again and again the wisdom of buying and holding stocks.
Certainly people can trot out responses to this that look at the value of missing the worst days or the worst months. There is only one slight catch there -- you have to know when to take your money out. Anyone can guarantee that their money is in the market during its best days in order to nail the 10.5% average annual return in large company stocks and the 12.1% average annual returns in small company stocks. All they have to do is not try to time the market. To miss the worst days and not miss the best days you have to have perfect timing. And given that the returns for the best single day or month often occur right after those of the worst single day or month, perfect timing is really important. Two of the largest single-day gains occurred in 1987, right after the precipitous October 19th drop.
The case for owning quality stocks purchased at a discount to their value as a continuing enterprise is made by simply looking at the returns for the Dow Dividend Approach -- a wonderful proxy for the classic "buy and hold" stock, a foundation of Foolish investing and a mindlessly simple approach to duplicate. Even during terrible market conditions over the past thirty-five years, stocks that meet this criteria have at the very least performed at break-even levels over five-year long periods. The long-term evidence overwhelmingly suggests that looking for true value stocks when the economy gets dicey is not a bad way to fly -- look at the returns for Dow Dividend Approach between 1973 and 1974. Long-term total returns for the Dow Dividend Approach over periods of ten years or longer have been simply incredible.
The latest drop in the "market" has caused many to tear at their hair and question the continued validity of owning stocks for long periods of time, hypothesizing that what we are seeing is a "buy and hold" apocalypse. The "buy and hold approach no longer works," they cry. However, no one ever said that you can buy just anything at any price and hold it. The emphasis of the "buy and hold" methodology has always focused on established companies which currently dominate the financial landscape, the kind of stock that routinely appears on the Dow Jones Industrial Average or the S&P 500 Average.
Short-term speculation, investing on margin, investing fresh money into a loser so that it grows to absolutely dominate your portfolio returns -- this is not the "buy and hold" approach. Certainly there will be weeks, months and even years where your investment returns are negative. If you have not appropriately girded your portfolio for market drops with "buy and hold" stocks, the falls can be quite precipitous. No one disputes the long-term returns of stocks and no one can dispute the fact that the longer your investment time horizon, the more likely you are to have higher total returns over any other option, with fifteen- to twenty-year horizons virtually guaranteeing this. Concerns that there has been a "buy and hold" apocalypse exist independent of the truth.
Randy Befumo (MF Templar),
a Fool
Fool On the Hill
Selena Maranjian (MF Selena),
a Fool
Heroes & Goats & Editing
Iomega in Fooldom Today!
Do you wish you could scour our voluminous Iomega message folders each day, but for some ridiculous reason, find that you just don't have the time? Or do you actually take the time to read every Iomega post, but find yourself somehow surrounded by people urging you to get a life? Rejoice! The Motley Fool has heard the cry of those feeling overwhelmed by the folder, and has begun offering a daily digest of it. Sporting the best posts from the last 24 hours, "IOMG in Fooldom Today" can be e-mailed to you five times a week. And the price? At the moment, it's quite reasonable -- it's free. If you'd like to sign up, simply send an e-mail to [email protected] from the address where you'd like to receive the reports. Make sure you type "subscribe" in the *body* of the message. (MFiomg is an automated account, not a person.)