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The Daily Dow LEXINGTON, KY. (December 19) -- If Federal Reserve Chairman Alan Greenspan was worried about the now famous "irrational exuberance" of the American stock markets, what must he think after today's powerful move? It's not often the staid blue-chip Dow Industrials soar two percent in a single session.
But just as I would caution against too much gnashing of teeth when the Dow drops 100 points, I'd suggest that we don't put too much emphasis on today's sweet gain. Who knows? Is it a Santa Claus rally? The unwinding of this week's triple-witching options expiration? Some program-trading mistake (hey, it happens)? Does it really matter?
If you're a long-term investor, it really doesn't. You're going to be fully invested again tomorrow, and on Monday, and for years beyond that. So let's enjoy it, sure, but let's not make too much of it.
On the other hand, if you want to crack open the egg-nog, get stinko-paralytico, and compound a 2% daily return for a year, what the heck? It's pure fantasy anyway after the third round from the spiked punch bowl.
Let's see, with approximately 250 trading days per year, a 2% daily return would compound at an annual rate of <trumpets please> ... 14,027%. Now that's what I call investing!
Okay, back to reality. A 2% gain is actually a little more than we hope for each month with the Dow Dividend Approach. At that rate, we'd have an annual return of nearly 27%, a few points higher than what we've seen the approach record over the last several decades. In other words, today was a very good month! Fool on.
(Want some fun? Check out the Thoroughbred Stock Challenge.) Today's Dow Numbers Stock Change Bid ------------------- DD +1 5/8 94.63 CHV +1 3/4 65.88 MMM +1 1/8 82.25 EK +1 80.63 IMN +1 30.25
Day Month Year History
FOOL-4 +1.92% 2.80% 30.05% 30.05%
DJIA +2.00% -0.74% 26.51% 26.51%
S&P 500 +1.94% -1.65% 21.08% 21.08%
NASDAQ +0.82% 0.25% 23.16% 23.16%
Rec'd # Security In At Now Change
1/2/96 142 DuPont 69.88 94.63 35.42%
1/2/96 149 3M 63.76 82.25 29.00%
1/2/96 380 Chevron 52.38 65.88 25.78%
1/2/96 148 E. Kodak 67.00 80.63 20.34%
7/16/96 14 Imation 26.16 30.25 15.64%
Rec'd # Security In At Value Change
1/2/96 380 Chevron 19902.50 25032.50 $5130.00
1/2/96 142 DuPont 9922.25 13436.75 $3514.50
1/2/96 149 3M 9500.09 12255.25 $2755.16
1/2/96 148 E. Kodak 9916.00 11932.50 $2016.50
7/16/96 14 Imation 366.21 423.50 $57.29
CASH $1942.85
TOTAL $65023.35
Transmitted: 12/19/96
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