The Dow Approach - Tuesday, October 08, 1996

This Feature

Related Items

BTD 10
As Of 10/08/96

#1
ATT
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:T)") else Response.Write("(NYSE:T)") end if %>

#2
International Paper
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IP)") else Response.Write("(NYSE:IP)") end if %>

#3
General Motors
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GM)") else Response.Write("(NYSE:GM)") end if %>

#4
Chevron Corp
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CHV)") else Response.Write("(NYSE:CHV)") end if %>

#5
Minnesota Mining & Mfg
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MMM)") else Response.Write("(NYSE:MMM)") end if %>

#6
J.P. Morgan
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:JPM)") else Response.Write("(NYSE:JPM)") end if %>

#7
Exxon
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:XON)") else Response.Write("(NYSE:XON)") end if %>

#8
Philip Morris
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MO)") else Response.Write("(NYSE:MO)") end if %>

#9
Du Pont de Nemours & Co.
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:DD)") else Response.Write("(NYSE:DD)") end if %>

#10
Texaco
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TX)") else Response.Write("(NYSE:TX)") end if %>

***NOTE: FOOLISH FOUR STOCKS ARE ITALICISED

The Daily Dow
Tuesday, October 8, 1996
by Robert Sheard (MF DowMan)

LEXINGTON, KY. (October 8): For a second day, the Dow Jones Industrial Average hovered right around the 6000 level before slipping in the afternoon to close beneath the much-watched (and for all intents and purposes, completely meaningless) magic even number.

Without any crucial economic data to roil the markets, most of the action is focusing on analyst upgrades/downgrades and the beginning of this season's earnings reports. Also expected later today is the monthly semiconductor book-to-bill ratio. So with nothing exceptional to go by for the moment, the market could wander around like this for a little while. But don't ask a Fool where it's going next. If she's honest, she'll tell you she has no idea. It's not something we lose sleep over trying to predict.

The Foolish Four portfolio, however, bucked today's slightly downward movement and posted a sweet gain. Chevron, DuPont and Kodak were all strong today and 3M and its offspring, Imation, managed to stay flat. So on a down day, the Foolish Four holdings scored a nice victory.

If the year were to end today, it would have to be considered a success for the portfolio. The compound annual growth rate (CAGR) for the Foolish Four since 1971 has been just slightly over 22% a year. As of today, the 1996 iteration of this model is sitting on a gain of 24% (accounting for dividends and deep-discount commissions).

Look ahead 20 years and see where that growth rate could take you. Let's say your retirement account has $25,000 today and the Dow Approach compounds at 22% a year for the next two decades. When you get ready to shop for that retirement condo, you'll be sitting on a nest-egg of some $1.3 million. You may not be retiring next to Bill Gates with that portfolio, but without adding another penny, and without having to work more than 30 minutes a year at your retirement portfolio, you'd sure be able to afford quite a few golf balls.

You have to love something this easy and this effective. Everything in my nature says to be suspicious of anything "too good to be true." But with the Dow approach, I think we've found a legitimate exception to the rule. It simply keeps working. If you're disciplined and patient with this approach, it'll take care of you in good and bad markets. Keep focusing on the long-term horizon and start planning those golden years. How Foolish!

Transmitted: 10/8/96

Today's Dow Numbers

THE FOOLISH FOUR MODEL (10/8/96) Day Week Quarter Year History Fool-4 1.01% 0.41% 3.04% 24.03% 24.03% DJIA -0.22% -0.44% 1.44% 16.60% 16.60% S&P 500 -0.39% -0.12% 1.94% 13.75% 13.75% NASDAQ -0.86% -0.59% 1.08% 17.87% 17.87% Bought # Stock In At Now Change 1/2/96 142 DuPont 69.88 93.88 34.35% 1/2/96 380 Chevron 52.38 66.00 26.01% 1/2/96 148 E. Kodak 67.00 76.25 13.81% 1/2/96 149 3M 63.76 70.13 9.98% 7/16/96 14 Imation 26.16 24.88 -4.90% Bought # Stock Cost Value Change 1/2/96 142 DuPont $9,922.25 $13,330.25 $3,408.00 1/2/96 380 Chevron $19,902.50 $25,080.00 $5,177.50 1/2/96 148 E. Kodak $9,916.00 $11,285.00 $1,369.00 1/2/96 149 3M $9,500.09 $10,448.63 $948.53 7/16/96 14 Imation $366.21 $348.25 $(17.96) CASH $1,524.50 TOTAL $62,016.63 Transmitted: 10/8/96

<% 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