The Daily Dow
Tuesday, April 30, 1996
by Robert Sheard

LEXINGTON, Ky. (Apr. 30): From the "go figure" department, DuPont was downgraded from Buy to Hold today by C J Lawrence, and yet it was the only one of the Fool Four to go up in a flat market. That's why we buy these hulking giants for a year instead of trying to figure out what the market will do over any short period.

In other DuPont news, the company's Norwegian energy unit, Norske Conoco announced that it has entered into several agreements with Norsk Hydro ASA and Italy's Agip to buy and sell different shares in oilfield licences in the North Sea.

One of the most frequently asked questions about the Dow Approach is what should one do with dividends, leave them in cash or have them reinvested automatically? My take on this issue is having them reinvested can cause more problems than the potential gains are worth. If you only hold a stock for one year, the reinvested dividends become short-term holdings. So between short-term gains on relatively small amounts, you have the added hassles of setting up and canceling reinvestment plans every year and dealing with fractional shares.

So what are your choices rather than leaving dividends sit? If you have more than $1000 in your brokerage cash account, it's likely that you're getting money market rates on the balance, so it's working at least at a moderate rate. Another option is to use the dividends in investment purchases in other parts of your folder.

If you're completely a Dow investor, though, you might want to consider running semi-annual or quarterly Dow portfolios simultaneously (each with a different annual rollover date). That way you can take any dividends lying idle and any new cash you want to add to your portfolio and put it to work more often than once a year.

If you go this route, though, make sure your commissions stay under our rough annual target of 2.5% of capital. Let your costs help you decide how many portfolios you can reasonably maintain. Fool on!

Transmitted: 4/30/96

THE FOOLISH FOUR (4/30/96)  

          Day   Week   Quarter  Year  History
Fool-4  -0.38%  0.65%   2.42%  10.47%  10.47%
DJIA    -0.08%  0.02%  -0.32%   8.83%   8.83%
S&P 500  0.00%  0.11%   1.34%   6.21%   6.21%
NASDAQ   0.20%  0.31%   8.10%  13.16%  13.16%


Rec'd    #   Security  In At   Now   Change

1/2/96  142  DuPont    69.88  80.25  14.85%
1/2/96  148  E. Kodak  67.00  76.50  14.18%
1/2/96  380  Chevron   52.38  58.00  10.74%
1/2/96  149  3M        66.38  65.75  -0.94%

Rec'd    #   Security       Cost       Value     Change

1/2/96  142  DuPont      $9,922.25  $11,395.50  $1,473.25      
1/2/96  148  E. Kodak    $9,916.00  $11,322.00  $1,406.00      
1/2/96  380  Chevron    $19,902.50  $22,040.00  $2,137.50      
1/2/96  149  3M          $9,889.88   $9,796.75    $(93.13)    

      CASH        $682.44       
      TOTAL    $55,236.69         



Transmitted: 4/30/96

      
      

      
      

        

<% end if end function %>   home  | news  | specials  | strategies  | personal finance  | school  | help  

<% if request.querystring("source") = "yhoolnk" then referer = Request.ServerVariables("HTTP_REFERER") if referer = "" then referer = "http://finance.yahoo.com/" response.write " << Back to Yahoo! " end if %> <% function YahooWelcome if gsCookieUsername = "" and request.querystring("source") = "yhoolnk" then %>

Welcome, Fool!

Be a Fool and get free, unlimited access to our site. What we offer:  • Take a tour  • Daily News  • Talk Stocks

© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us