Fool Portfolio Report
Wednesday, August 21, 1996
(FOOL GLOBAL WIRE)
**Tonight at 7 pm EDT, you can catch David & Tom on CNN. They'll be appearing on Moneyline with Lou Dobbs. You can't miss 'em -- they'll be there with bells on.**
ALEXANDRIA, VA, August 21, 1996 -- Ah, well, summer, summer, summer, summer.
WHEN WILL IT END?
STOP THE PAIN!!!!!
Summer never is particularly kind to investors, and whether you're looking at The Fool Portfolio, the S&P 500, or the NASDAQ, we're all down... some of us (the guys wearing particolored garments, f'r'instance) more than most.
In a study that I like to quote from time to time, Yale Hirsch has demonstrated that of the 5000-some index points making up the Dow Jones average, the vast majority of them were achieved historically during the periods November through April... Mays through Octobers, on the other hand, are about FLAT historically.
This doesn't always happen, of course; last summer was a fine one. Thus, we don't jump out of the market during those six months... we just ride it and try to beat it as usual. In his book Beating the Dow, Michael O'Higgins essentially agrees. Examining the straight Beating the Dow approach vs. a modified "only-the-good-six-months" approach, O'Higgins finds that switching in and out of the Dow approach over just a six-month period -- and paying short-term taxes -- is not preferable to just using the good ol' BTD approach.
For our own part, we feel just the same way about the Foolish Four.
The Foolish Four? Well, they fared unimpressively Wednesday, as none of the four stocks rose. 3M Corp., which had been our best gainer so far in the group, dropped $1 3/4 on no news. In fact, there wasn't really any news on any of our stocks today.
Medicis led The Fool Portfolio higher, charging ahead $3 3/8. We'll regard that as a bounceback after profit-taking, following the company's announcement of its coming secondary offering. That news, which dropped the stock about 25%, is about the only "bad" news to issue from Phoenix... the company's business, its earnings, and its execution of its business plan -- the things that Fools concentrate upon -- all continue impressively. Today's strong move put us back over the 100% return mark in these shares.
Then again, Iomega continued to sink lower, now down to a bid of $13, off $7/8 today... the primary reason the Fool Port lost to market average Wednesday. We remain almost completely absent any news of any kind from the company. Following its impressive (but not impressive enough) second-quarter earnings report, and its caution about a drab third quarter, IOMG stock has been more than halved. We, along with Louis Navellier and J.P. Morgan, have liked it all the way down, which proves once again that we can be really wrong sometimes in the short term. Maybe our guys at J.P. will step in at some point and issue a STRONG BUY. Huh, guys? Remember our $42 price target? I'm not ragging on them... we had been hoping for more. Maybe I'm just dreaming....
Talk in the Iomega folder has focused recently on potential problems with the reliability of the Jaz drive, since several correspondents have reported a high return rate. We'll have to wait for the close of September (which we're more than halfway toward) to really ferret that out. Anyway, CNBC had some chap on today who was an Iomega bear, and he stated the stock was going to $7. I've consistently used such appearances as contrary indicators; I love it when those guys are on!
America Online sold off a little, in sympathy with yet another fairly disastrous announcement from CompuServe. This time, though, the market didn't treat these two entities like clones, as AMER took a lot less gunpowder than CSRV. As always, check our Evening News for more on this and the other important market action.
Finally, if you haven't yet read Bigfootmm's Fribble, The Good of Money, you're missing one of the best texts to pass through Fooldom in 1996. Written initially as just a series of posts in the Teens & Their Money folder, Michael's short treatise deserves to be read and reread. His contributions to Fooldom, to thousands of people he'll never meet, are among the highlights of this glistening enterprise.
Now it's off to CNN, to get flamed by Lou Dobbs. :)
Fool on!
---David Gardner, August 21, 1996
Transmitted: 8/21/96
Today's Numbers
Day Month Year History FOOL -0.43% -2.36% 19.92% 123.93% S&P 500 -0.09% 3.93% 7.98% 45.09% NASDAQ +0.19% 4.29% 7.10% 56.47% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 13.00 416.08% 8/5/94 680 AmOnline 7.27 30.75 322.80% 1/29/96 375 Medicis Ph 18.57 37.38 101.23% 8/11/95 125 Chevron 50.28 59.25 17.83% 8/12/96 110 Minn M&M 65.68 66.75 1.63% 8/12/96 130 AT&T 54.96 54.13 -1.52% 8/12/96 280 Gen'l Moto 51.97 51.13 -1.63% 8/13/96 250 3Com Corp. 46.86 43.38 -7.44% 8/24/95 130 KLA Instrm 44.71 19.88 -55.55% Rec'd # Security Cost Value Change 5/17/95 2010 Iomega Cor 5063.13 26130.00 $21066.87 8/5/94 680 AmOnline 4945.56 20910.00 $15964.44 1/29/96 375 Medicis Ph 6964.99 14015.63 $7050.64 8/11/95 125 Chevron 6285.61 7406.25 $1120.64 8/12/96 110 Minn M&M 7224.44 7342.50 $118.06 8/12/96 130 AT&T 7144.99 7036.25 -$108.74 8/11/95 280 Gen'l Moto 14552.49 14315.00 -$237.49 8/13/96 250 3Com Corp. 11714.99 10843.75 -$871.24 8/24/95 130 KLA Instrm 5812.49 2583.75 -$3228.74 CASH $1379.61 TOTAL $111962.74 Transmitted: 8/21/96