Archive for Sunday, July 30, 2000

Motley Fool

July 30, 2000

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ASK THE FOOL



Historical Quotes

Q: Where can I find the second quarter's percent change in a stock price? I'd like to know the percent change for Hewlett Packard stock (HWP) from the quarter ending March 31, 2000, to the quarter ending June 30. -- Fred Donner, via e-mail

A: What you're looking for are called "historical quotes." An old-fashioned way of finding them would be to visit your local library and look up old newspaper stock listings. With the advent of the Internet, though, historical quotes are just a few clicks away.

Visit a site such as http://financialweb.com/mktHistory.asp and type in the company's ticker symbol. (You can look up tickers at that site.) Then plug in the dates you're looking for and it will show you past stock prices.

Let's use your example. On March 31, HWP closed around $133 per share. On June 30, $125. To calculate the change, divide $133 by $125 and you'll get 1.06, meaning that $133 is 6 percent higher than $125. So the price fell 6 percent.

Q: Are online investors day-traders? -- C.R., Detroit

A: They can be, but most are not. Online investors are simply investors who use the online services of a brokerage to trade stocks. Many will place a buy order over the Web and then hold on for months or years.

WHOOPS! We're mortified. We set a record last week, with two mistakes. Many helpful readers pointed out to us that $35 times 20 million shares yields a market cap of $700 million, not $70 million. Also, when discussing "stop limit" orders, we said: "If XYZ drops to $55 per share or below, the order becomes a limit order to sell 100 shares at $55 or lower." We should have said "sell 100 shares for no less than $55."

THE FOOL SCHOOL



The Game of Budgeting

It can be hard to get excited about budgeting, so think of it like a game or puzzle. That spoonful of sugar will help the medicine go down.

A budget is very much like a company's Statement of Cash Flows. All about tracking and reporting all your sources and uses of income, it answers the questions, "Where's my money coming from?" and "Where's it all going?"

Before you get started, and in order to make the process more suspenseful, first jot down how much you think you're spending on food, entertainment, travel, clothing, charity, investing, etc. Then record how much you want or need to spend on each category.

Next, gather information. Take two or three months and record all your financial inflows and outflows. Save every single receipt. If you don't normally ask for or keep receipts, do so during this period. Also, carry with you a small notebook in which you record cash transactions. If you spend a few dollars for coffee at a local coffee shop each morning, jot down each time you do so. If you do some odd jobs for a few extra dollars now and then, record that too.

After the information-collecting months, sit down with all your records: a big bunch of receipts, your checkbook, your pay stubs, credit card statements that accompanied your bills, and that little notebook in which you recorded cash transactions. Also grab some paper, a pencil and a calculator. Make lists of all the inflows and outflows. Group them into categories and total the amounts. For example, list all your eating out expenses and all your supermarket expenses, and then lump them together into a "Food" category. Calculate what percentage of your income is spent on food.

Finally, step back and see what you've got. You should be looking at a fascinating detailed record of your cash management. Compare your actual expenses with your initial estimates and see how close or far off you were. Assess whether you're saving and investing as much as you want to. See what changes you need to make in your habits in order to meet your goals.

Making budgeting a game can help you win in life.

MY SMARTEST INVESTMENT



Handsome Hardware

I'm a building contractor. I first visited Home Depot in 1994 and found good prices on materials and knowledgeable sales people. In addition, most of the items I needed were in stock. Other discount stores had failed me. I bought a modest 37 shares at $44 each, for a total of $1,628. Due to splits, those 37 shares became 166 shares. They're each worth around $50 a share and worth more than $8,000. Conclusion: Invest in those things you know about and companies that serve you well! -- Jim K., West Bloomfield, Mich.

The Fool Responds: Touche. When people invest in companies and industries they're clueless about, they're taking on extra risk. It's good to stick with what's familiar -- to you and to many people. Familiarity isn't enough, though. Continue your research, examining financial health, competitive position, growth prospects, and so on. You don't need an obscure high-flier to make you rich. A well-known company under your nose can work, too.

FOOLISH TRIVIA



I was founded in 1985 and sport more than 23 million members. I gobbled up CompuServe in 1998 and Netscape in 1999. I'm the world's leading Internet services company, and upon completion of an enormous pending merger, I'll be the world's largest media company. Each day I deliver more than 110 million e-mails and 200 million stock quotes. Some brands under my umbrella include ICQ, MapQuest, Digital City, MovieFone, Spinner.com and Winamp. I operate online services in 14 countries and in seven languages, with more than 4 million non-U.S. members. My goal is to be available to consumers "anywhere" -- through any channel. Who am I?

Last Week's Trivia Answer: I was born in 1902 in Minneapolis. Today there are many enterprises in my mall, such as Dayton's, Marshall Field's, Hudson's and Mervyn's. In 1998 I bought Rivertown Trading Co., which sells through its "Wireless," "Seasons," "Signals" and "Britannia" catalogs. In 1946 I began giving 5 percent of my profits back to the communities I serve. I'm America's third-largest discount retail chain, operating 1,252 stores in 45 states with annual revenues topping $30 billion. I recently changed my name -- to come up with it, think of my unit that generates the most revenue and you'll have hit the bull's-eye. Who am I? (Answer: Target Corp.)

THE FOOL TAKE



Banking on Mellon

Shares of banking and financial services company Mellon Financial are up 25 percent in a tough market this year. The company's roots run strong and deep, too.

Mellon, a holding in the Fool's Drip Portfolio, is a financial services company rather than a traditional bank. In cases like this, the revenue number that's most important is fee revenue, or noninterest revenue. This is earned through investment management fees, trust fees, administration fees and custody fees, all of which are services. High noninterest revenue at a financial services firm usually means a higher return on tangible assets (ROA) than is achieved at your typical bank.

Excluding onetime events, Mellon's recently reported second-quarter fee revenue grew 9 percent over last year, while trust and investment fee revenue rose 12 percent. Fee revenue totaled $773 million. Though 9 percent growth is a little light, fee revenue for the past six months grew 11 percent, so the company is achieving double-digit growth for the year. Earnings per share rose 11 percent this quarter to $0.50.

Many investors shun banking and financial stocks because they're complex and fluctuate in the short term based on interest rates and other market activity. Those willing to do a little exploring may find opportunities others won't tap, though. After all, financial stocks make up more than 14 percent of the S&P 500. To learn more, review Mellon's rich earnings reports at www.mellon.com and also check out our articles on Mellon and banking in the Drip Portfolio archives (www.drip.fool.com).

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