|
|
|
|
|
|
The Daily Dow LEXINGTON, Kentucky (November 19) -- For those of you who are only vaguely familiar with the method behind the madness, the Foolish Four is a variation of the Dow Dividend Approach which focuses on the historical averages of the highest yielding components of the Dow Industrials. Here's a quick summary of how it works.
Out of the 30 Dow stocks, identify the ten with the highest dividend yields. Then sort that list of ten in ascending order based strictly on share price (#1 is the stock with the lowest price, #10 the highest).
Over the last several decades, the cheapest stock (#1) can sometimes be in real financial trouble (not always, but occasionally) and it can do very poorly. To avoid those poor performance years, the Foolish Four skips the cheapest stock altogether and buys the next four on the list (positions 2 through 5).
The best stock of the bunch is often the one in the #2 slot, so to take advantage of that historical average, the Foolish Four buys it with 40% of the total investment, and the other three stocks with 20% in each. In essence, you're buying the #2 stock twice (but only having to pay one commission) and numbers 3, 4, and 5 once.
All that was to give you a refresher course (or a primer if you're new), and also to provide a lead-in for today's good news that Chevron jumped on word of an impending pipeline deal with Russia, Kazakhstan, and Oman. In January when we started this model portfolio, Chevron was in the star position (#2), so when it has a good day like today, the whole Foolish Four model gets an extra jolt -- just the way one hopes it will work.
On to the actual story. The New York Times reported this morning that the three governments and a consortium of large oil companies have reached an agreement to build a $1.5 billion pipeline and will sign the deal in early December. The pipeline will link the giant Tengiz oil fields on the Caspian Sea in Kazakhstan with Russia's Black Sea port of Novorossiisk. Construction of the pipeline is scheduled to begin next year and end in two years.
But there may be a fly in the ointment. A Reuters story today suggested that Russia's state oil pipeline firm Transneft isn't happy with the agreement and is demanding a stronger role in the strategic deal. Apparently the pipeline company isn't happy about being relegated to the role of daily operator and wants an equity stake in the project.
The fact that last week's negotiations were somewhat secretive raises questions about whether the deal's really as complete as the announcement makes it seem. The role of Transneft, for example, has still not been detailed, nor have the details of the corporate and international financing.
While today's announcement was greeted with optimism by Wall Street, it may not be, as they say, "a done deal."
Today's Dow Numbers Stock Change Bid ------------------- DD + 7/8 93.38 CHV +1 5/8 67.50 MMM --- 82.38 EK +1 1/4 84.63 IMN +1 1/4 31.38
Day Month Year History
FOOL-4 +1.45% 4.27% 31.92% 31.92%
DJIA +0.80% 6.11% 25.02% 25.02%
S&P 500 +0.70% 5.23% 20.49% 20.49%
NASDAQ +0.64% 3.37% 20.00% 20.00%
Rec'd # Security In At Now Change
1/2/96 142 DuPont 69.88 93.38 33.63%
1/2/96 149 3M 63.76 82.38 29.20%
1/2/96 380 Chevron 52.38 67.50 28.88%
1/2/96 148 E. Kodak 67.00 84.63 26.31%
7/16/96 14 Imation 26.16 31.38 19.94%
Rec'd # Security In At Value Change
1/2/96 380 Chevron 19902.50 25650.00 $5747.50
1/2/96 142 DuPont 9922.25 13259.25 $3337.00
1/2/96 149 3M 9500.09 12273.88 $2773.79
1/2/96 148 E. Kodak 9916.00 12524.50 $2608.50
7/16/96 14 Imation 366.21 439.25 $73.04
CASH $1810.64
TOTAL $65957.52
Transmitted: 11/19/96
|
|||||
|
|||||||