Friday, July 5, 1996
Just Because You're Older Doesn't Mean You're Wiser

or

Foolishness by the Books
by MF Runkle

Some time ago, while slogging through the messages in the Iomega folder, one message caught my eye. It wasn't the usual "Iomega is Great!" or "Iomega is a Penny Stock" junk. I forget what the whole message was about, but buried in it was the snide remark, "wait in the library behind Aunt Fanny while she checks out her DRiPs". I don't like snide remarks in general, but this one needed some research. Anyway, we Fools like to hold people accountable.

I'm not sure what the author felt is so bad about DRiPs; I'm signed up in a few myself. They let you invest in high-quality stocks without paying commissions. Not only that, you can invest small amounts each month, and you get the advantage of dollar-cost averaging. Maybe it wasn't the DRiPS, but the library which the writer of the message was looking down on?

I decided it was time to check out a couple libraries. First I went to my local library, and then on to downtown Pittsburgh, where I went to the Carnegie Library. A library is kind of like a three-dimensional World Wide Web, where you are actually inside the web (a very real virtual reality). The three dimensionality makes it a profoundly interesting experience. Instead of hypertext allowing you to drift from subject to subject, you actually walk around and look at books, magazines, and other resources. If you need to search for something in particular, they have a card file, which is kind of like the Web Crawler. It uses 3X5 cards, but if you find this difficult, they do have a computer to do your search for you. Thank God! The cards confuse me.

I found some interesting stuff. I looked up Coca Cola's balance sheet in Standard and Poor's 1922 edition. I know -- who cares? But it was interesting. I looked for books on how to invest in Penny Stocks, but couldn't find anything. I did find a book on Stock Index Option Futures investing. Just thinking about what those are gives me a headache. I put that one back.

I read Barron's, WSJ, and a book about how to fire people. (I put that one back too!) Well, I had to get to work on my research. Where was Aunt Fanny? Aha! I saw a woman that looked like she could be Aunt Fanny. Early 60's (which some consider old), reading Value Line. Well, that must be the author's target; there must be something wrong with Value Line! The library has copies of Hulbert's Financial Digest, which tracks financial newsletters' performance, so I checked out Value Line there.

Oh, Value Line is #1 for 15-year returns. For a shorter period, they haven't been as outstanding, but that's because their more recent recommendations have included a hefty percentage in cash, which lessened returns somewhat. I got Aunt Fanny to let me look in Value Line, and it's pretty interesting. Price history for each company, along with earnings for several years, and also future projections. It gives the companies' balance sheets, and a commentary on past and future business prospects. Seems to be a Foolish way to look up companies to me.

Oh! While I was at it, I figured I may as well look up the newsletter published by a guy who wrote the book I learned Technical Analysis from. His 15-year (annualized) return is 0.3% (average). Well, that's better than what you'd get if you stuffed your money in a mattress. How am I at Technical Analysis? I don't think we're talking about that right now.

So, the snide remark must have been about Aunt Fanny herself. Let's see, she is looking up information on companies in a place where extensive information is free. She is investing in the same companies without paying commissions. Oh, and of course her dollar-cost averaging is allowing her to take advantage of market dips to buy more shares. Not only that, she is investing a little at a time, which although might be all she can afford, assures her of a more comfortable retirement in the future.

So much for snide remarks. Aunt Fanny probably doesn't read the Iomega board anyway. All I learned is that it's true, "there is no Fool like an old Fool."

Transmitted: 7/5/96