Thursday, August 15, 1996
Mo-Mentos Investing
by MF Edible (Rick Aristotle Munarriz)

Remember that yellow light you ran last week? The one that saved your life? You were driving pretty fast and your instinct told you to yield. Your heart kept your foot on the accelerator and that was a good thing then because that Mack Truck behind you wasn't going to stop either. Welcome to momentum investing, where fundamentals get trampled as stocks get taken for irrational rides, both up and down... turn signals optional. Some folks find wisdom in text books; I find it on car parts. "Objects in mirror are closer than they appear"... what a philosophical zinger. Confucius has nothing over Detroit.

To counter the momentum investors, and to give pause next time one comes across an amber street light, I would like to introduce an investment strategy based around the marketing campaign of the Western Hemisphere's favorite fruit chew candy, Mentos. While the universal ads for the European treat (sans words for simple international translation) may seem as corn starchy and lightweight as the candy itself, there is a lot to learn from those televised spots. After a half hour of thought I am ready to unveil to the Nobel and Pulitzer committees the basis of my economic theory, which I am calling Mo-Mentos Investing.

Cut to a freshly painted white park bench where a man in a dark business suit accidentally takes a seat. Rather than trash the outfit, the man decides to roll around the bench planks until he transforms his clothes into a pinstriped suit. The investment lesson is obvious. Diversity is a good thing. A short and a long position can live in harmony within a portfolio. The spectrum of industrial colors also looks quite becoming on a well-diversified portfolio. While one can make the case that the commercial is also advocating the use of averaging down, not a recognized Foolish practice, it is obviously heavier than most people give the ad credit for.

What about those bouncing kids, crossing the street, when suddenly one gets left behind at an intersection and a car separates him from his friends? As he opens the back door of the car, slides through the back seat and out the other door, there is another equity message being delivered. Some obstacles bring unlikely opportunities and shortcuts. For those who stop at the intersection of what seems to be a bad earnings announcement or a positive development, the whole story is never visible from the surface. Only those who open the door and slide through the plush interior get the full view and stay one block ahead of the traditional pedestrian.

Then we have the popular Mentos advertisement where a hurried businessman parks his car and boxes in a lady on her way out. Quite the quick thinker, she talks a few nearby workers into lifting her car and laying it down in the clear roadside. She exemplifies the very heart of Foolishness. She is not going to put herself at the mercy of a suited professional when she can roll up her sleeves and take care of business herself. No, you won't find her at Pampering Brokers 'R Us, being swayed into investing in sub-par high-load house mutual funds or stocks which the company recently played a hand in underwriting. She can be creative and resourceful and above that she recognizes that you can't get anywhere standing around a boxed-in car. And drive she will, until she hits the yellow light at the intersection. Then she will stop, break out a roll of Mentos, and see the Mack Truck in her rear-view mirror, knowing full well that even the largest of trucks come equipped with quality brakes and sensible drivers.

Transmitted: 8/15/96