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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: stsimon who wrote (47051)	3/23/1999 7:24:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Fort Worth Star-Telegram, Texas, Todd Mason Column Todd Mason 03/23/99 KRTBN Knight-Ridder Tribune Business News: Fort Worth Star-Telegram - Texas HERE ARE THREE REASONS WHY THE MOTLEY FOOLS ARE FOOLISH: "I've recently been reading the Motley Fool Web page," writes Ermie Colvard via email. "I'm interested in what you think of it as an investment strategy." I have three problems with the Fools. No. 1, they have only one successful stock portfolio with any history, and it owes most of its run to two stocks, America Online and Amazon , that I wouldn't touch at today's prices. (OK, I refused to touch them at yesterday's prices, too.) No. 2, the Fools have borrowed some tricks from the mutual fund industry to bury their mistakes. Some of their model portfolios have quietly disappeared, while others have been renamed or reworked by new managers. Look for a discussion of these issues at www.investorhome.com/fools.htm. The third problem is one I share with the Fools. Those of us who dispense investment wisdom for a living can complete our mission in exactly 10 words: Buy and hold. Watch your pennies. Spread your money around. Alas, we all stray to some degree because we have Web sites or news columns to fill. The Internet, it seems to me, is particularly ill-suited to advocate the long view because of its voracious appetite for things that happened in the last 60 seconds. As long as I've dragged out my soapbox, allow me a moment of pique with the ubiquitous Suze Orman. I was horrified to see on television recently that she has completed the Oprahfication of financial advice. We don't overspend because we lack discipline, it seems. Rather, we abuse plastic and such because of psychic scars inflicted by parents or peers. Suze Orman's magic bullet is -- surprise! -- Suze Orman. I have visions of folks collecting and discarding financial gurus like so many fad diets. Trust me on this: There are no magic bullets. Only you can furnish the necessary discipline. If you can't, it ain't gonna happen. Here are the 16 words that will guarantee that you finish every month in the black: Put away the credit cards. Pay the bills first. Quit spending when the money is gone. How long has Oprah been on television? Notice any decrease in the number of troubled souls in the world? "With the recent publicity about reaching 10,000 (on the Dow Jones industrial average), I'm curious about how the average is calculated," writes Robert Voelker, via email. "I'm sure there are other 'water cooler analysts' who are also in the dark about this." The Dow Jones raises two arguments for being first on the scene. Launched in 1896, the average became the standard for measuring stock market progress even though a number of indexes do a better job of it. What's more, the Dow is simplicity itself. It began as a dozen stocks, mostly railroads, thought to be representative of the market. The number is 30 today, but the selection method is still arbitrary. The math is only slightly more complicated than adding up the closing prices. The index is price-weighted in financespeak. IBM accounts for the biggest piece of index because its shares are the most expensive. A more accurate index would be weighted by the total stock market value of the individual stocks, or capitalization- weighted. Dow critics argue correctly that a 2 percent jump in hugely popular GE means more to the market than a 2 percent jump in Allied Signal. An accurate index would also branch beyond the large- company stocks dominating the Dow. The Wilshire 5000 index, which does both, demonstrates how arbitrary this business is. If the Wilshire 5000 were cited interchangeably with stock market performance, the 10K party would be long forgotten. The index topped the mark last year. The Wilshire index is setting records again this year, but so far it's up only half as much as the Dow.