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The Daily Dow SEATTLE, Wa., May 31 -- Greetings from a glorious day in Seattle where the sun in shining, the snow-capped top of Mt Rainer is visible, the Seattle Film Festival is in town, and my favorite coffeeshop has announced plans to start home delivery of espresso drinks. Boy....are we spoiled or what?
Things were not quite as glorious on Wall Street today. The Dow Jones industrial average fell 50.23 to 5643.18, capping a 119.68 loss for the week. Today's drop was mostly caused by a former Federal Reserve governor's warnings of a 50-basis point increase in the Federal funds rate when the Fed meets July 3 -- basically stating he expects the central bank to tighten credit. The 30-year Treasury bond fell and pulled stocks down with it.
As to be expected, the Foolish 4 portfolio followed suit with a drop of 1.18% for the day. No news to report other than Cheyenne Software's press release that they plan to enter the personal computer desktop software market with three new products (backup, antivirus, and uninstall software). Cheyenne stated today that one of their first partners is with Minnesota Mining & Manufacturing (MMM) for extended high-volume product promotions. MMM still dropped $5/8 to close at $68 1/4. The rest of our stocks fell as well, with Dupont (DD) falling $1 3/8, Eastman Kodak (EK) losing $1, and Chevron (CHV) dropping $5/8.
Well, MF Dowman's vacation is almost over and our portfolio is down for the week by 0.41%. Do I think he'll be concerned? Nope. He's spent an inordinate amount of time building a corner of Motley Fool dedicated to the Dow Dividend approach, and frankly, the statistics available there speak for themselves. For those not familiar with this section, check out the returns for the Foolish 4 approach for the past 25 years, of which only three years show a negative return. My calculations indicate an average annual gain of $24.70% per year.
Even more impressive is the fact that $10,000 invested in the Foolish 4 in 1971 was worth $1,510,537 in 1995, a compounded annual growth rate of 22.23%, including dividends and excluding commissions and taxes. Not a bad way to start a retirement investment strategy, eh?
Speaking of retirement, USA Today published a frightening article 5/29 stating that women need to save more money for retirement than men. A lot more. The disparity is startling. For example, they state a 35 year old single man earning $50K needs less than $3K invested for a comfortable retirement. For a 35 year old single woman earning the same (I'd like the stats, frankly, on the average wage for 35 year old single women, which I believe is far below $50K), the number skyrockets to $35K. They base this on the following factors that affect women: fewer working years, more frequent job changes, more part-time employment, less earning potential than men.
Whether you believe these numbers or not, the fact remains that women need much richer retirement accounts than men. Unfortunately, women tend to save less, and be more reluctant to make investment decisions. The investment decisions they do make, tend to be very straight-forward, and accepted "easy" solutions.
I see this all the time. I've seen physicians that are single women turn over $40-50K of their savings to a broker touting a "great" mutual fund. I've sat through through investment seminars where the men are given detailed questionnaires to evaluate their financial needs and the women are instead given a broker's name and number to call for further "help". I've had women friends receive large inheritance lump sums and think of no other option than to call an "investment counselor" for advice. I've personally sat at a restaurant, pouring over the Wall Street Journal, trying to determine the yields for the Dow stocks to come up with my own Foolish 4 only to have some guy toss his business card on my table with the instructions for me to call him and let a "professional" do that for me.
The bottom line is that all investors need to come to the point where they reach a certain comfort level with their investments. To me, that's the main lesson the Motley Fool forum tries to teach. The Foolish 4 foundation of investing exemplifies that lesson and provides an easy to understand, disciplined, practically worry-free cornerstone that has a proven success rate. And that, my friends, is decidedly Foolish.
This Sunday, June 2, from 1-3pm EST, MF Eloqnt and MF Venus will address the USA Today article I mentioned above and conduct a chat entitled "Women and Retirement". Please mark your calendars to join these very remarkable women to discuss financial empowerment for women.
The vacationing MF DowMan returns tomorrow and it's been a true pleasure to guest-host his column. We welcome him back and hope his usually immaculate corner of Fooldom is not in too much disarray.
A good weekend to all!
PS. Next time I volunteer to write, remind me to fill in for someone who didn't formerly teach English. :)
Transmitted: 5/31/96
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