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Greetings, fellow Fools!

I wanted to call attention to our nationally syndicated newspaper feature, in case some of you aren't aware of it.

It has five elements:
-- Ask the Fool: questions and answers on basic investing
-- The Fool School: a lesson on an investing concept
-- My Dumbest/Smartest Investment: a reader's story
-- The Fool Take: a take on a recent stock in the news
-- Name that Company: a contest where you... name that company

At this page: you can check out a list of the 130+ papers that have already signed up for us. If your local paper isn't listed, I encourage you to give the business editor a jingle and ask them to consider carrying it.

Hearing that actual subscribers and readers want to read a certain feature makes a big difference in what they choose to carry. Yes, you'll be doing us a favor by helping spread Foolishness across the land. You'll also be doing a lot of your neighbors a favor, by helping them learn more about investing.

Anyone interested can e-mail me at: and I'll be happy to find the phone number for your local paper. Or just check your phone book.

If the editor asks, we're syndicated by Universal Press Syndicate -- they can sign up for us through UPS.

Thanks, and sorry for the intrusion/interruption. To compensate, I'll offer some content below -- a sample of what you'd read in our weekly feature.




Ask the Fool

Q. I often see S&P futures referred to on CNBC. Can you explain what futures are and why they're important? -- Anthony Huggins, Los Angeles

A. Futures are typically for commodities like lumber, soybeans and orange juice. They represent contracts between two parties to buy or sell a certain amount for a specified price at a set future date. (Fail to pay attention, and you risk having to take delivery of truckloads of pork bellies!)

With S&P 500 futures, each day the party who bet wrong is obligated to pony up cash based on the price of the S&P 500. Futures are bought by some investors to protect themselves against unfavorable price swings or by speculators betting on where the market is going. They can be very risky.

Un-Foolish short-term investors pay a lot of attention to S&P futures, as they can indicate the market's likely moves before trading begins for the day. We don't fret about futures, though, remembering that for most of this century, the S&P 500 has advanced about 11 percent per year, on average.

Q. What's a zero coupon bond? -- O. F., Chicago

A. Bonds are loans. Imagine a regular 5 percent $10,000 bond, where you loan $10,000 to a company or government. You receive interest payments of 5 percent per year until the bond matures, when you get your $10,000 back. (You used to have to send in coupons to get these payments.) With a zero coupon bond, there are no interest payments, but the amount you lend is smaller than the amount you'll receive at maturity. Thus, a zero coupon bond could pay you the equivalent of 5 percent per year by having you pay $6,139 today in order to receive $10,000 in 10 years.


The Fool School

Return on Assets

We've all heard the term "capital intensive" and we all have an idea of what it means. A steel company is capital intensive, requiring a lot of costly equipment in order to generate its earnings. Software companies typically have a much lighter business model. Once the software has been developed, it's simply a matter of copying it onto disks, packaging it, and marketing it.

Investors can measure a company's asset-heaviness by calculating its return on assets (ROA). There are a few steps involved in this, but they're not too tough. (Got your pencil ready?) You'll find all the numbers you need on a company's recent balance sheet and income statement. We'll use Wal-Mart's fiscal 1999 results as an example.

Return on assets is determined by multiplying net profit margin by asset turnover. To get net profit margin, look near the bottom of the income statement for net income and divide that by net sales (also called "revenues") from the top of the statement. Dividing Wal-Mart's net income of $4.43 billion by its net revenue of $139.21 billion (yowza!), we get a net profit margin of 0.0318, or 3.18 percent.

Asset turnover is calculated by dividing net revenue by the average of total assets for the period. (Total assets are listed on the balance sheet.) Since the revenues we're using cover all of fiscal 1999, we'll add the total assets from this earnings report to those from a year ago and we'll divide by two. Dividing Wal-Mart's revenue by its average total assets of $47.33 billion yields an asset turnover of 2.94. In other words, Wal-Mart generates nearly $3 in sales from each dollar of assets. Not bad, especially next to K-Mart's asset turnover of 2.43.

Now that we have a net profit margin of 0.0318 and an asset turnover of 2.94, we multiply them to get a return on assets of 9.4 percent. This shows that Wal-Mart creates 9.4 cents of earnings from each dollar of assets. By comparison, K-Mart's ROA is 3.7 percent.

These are just some of the measures to examine when studying a business. They tell you a lot about how much value the company is creating for shareholders.


My Dumbest Investment

Penny Stocks Are Not From Heaven

I once took some advice from my ex-wife (I know, I know) to buy some stock in Pratt Hotel Corp. where she worked. I bought 500 shares at about $3.50 each. So did my brother. And so did she -- with some money I lent her. The stock was supposed to go to $6 or $7 within a few weeks. After about 10 years, I finally sold it at $0.80 per share. However, there is a good side. I recently sold some rental property, realizing a sizable (at least for me) capital gain. I sold the stock, paid a $50 commission, and used the loss to help offset the gain. If anyone has a capital gain to offset, I have a brother that would love to talk to you. -- Mike Beard, Weatherford, Tex.

The Fool responds: We might have sold off this stock sooner. But it's a great lesson learned. Penny stocks, trading under $5 per share, are typically more likely to zoom to zero dollars per share than $10.

The Fool Take

Well-heeled Stock?

We Fools like to buy what we know, and when we recently looked down at our feet, we saw a surprisingly large number of brown shoes. Many of these bore the Timberland name, so we thought we'd take a closer look at the company.

About three-fourths of Timberland's revenue comes from footwear, with the remaining quarter from apparel. Most of the company's revenues are earned in the United States, but it does generate 28 percent of its sales from international operations.

While athletic shoemakers such as Nike and Reebok have been struggling over the past two years, Timberland has experienced improving results. Earnings in 1998 grew 25 percent to $5.03 per share. This year, analysts polled by First Call expect earnings to grow another 13 percent to $5.66 per share.

Two factors have been primarily responsible for Timberland's strong results. First, the company has benefited from the turn in consumer preferences away from white athletic shoes. Second, the company has limited exposure to emerging markets such as Asia, Russia and Latin America, where demand recently has been weak.

Timberland's key financial ratios are also appealing. During 1998, the company had gross margins of 40 percent and a net margin of 7 percent. Its debt level is quite manageable at 38 percent of equity. Investors might consider stepping into Timberland stock after some further research.


Foolish Trivia

I was started in 1872 in Wisconsin in order to make newsprint from rags. I developed a cotton substitute used as surgical cotton in World War I, and later disposable handkerchiefs and um, other things. More Americans depend on my products than any others for certain needs. Pull them up and hug them; they'll give you a new freedom. Along with things to wipe and absorb, I also make face masks, wrist supports, ice packs, wound dressings, newsprint and a variety of papers. I rake in roughly $13 billion annually. Great Scott! Have you absorbed enough to guess who I am?

Answer: scroll way down...

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