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The Daily Dow LEXINGTON, KY. (December 20) -- We've been getting a slew of questions about end-of-year updates for the Foolish Four portfolio and how one goes through the steps, so let's pretend today ended the year. (Our real update for this model comes after the close of business on December 31, but the steps are the same.)
Right now, the model portfolio holds Chevron (1996's PPP), Kodak, 3M, DuPont, and a few shares of Imation, which we got when it spun off from 3M.
First thing we'd do is get the current Foolish Four rankings and compare them to what we own now. Kodak and DuPont are no longer on the list, so we sell them outright. Imation also gets thrown overboard so we'll be back exclusively in Dow stocks for the next year. So, that leaves us with Chevron and 3M. And we'd need to pick up International Paper and General Motors.
Now let's look at how our new portfolio's supposed to look. Right now, the total value is roughly $65,875. To split that into five positions (the PPP stock counts as two positions), each position should be worth roughly $13,175. After selling DuPont, Kodak, and Imation, we'd have $28,235 in cash.
For the next year, here's how the breakdown should look (if we did it today): International Paper ($26,350) General Motors ($13,175) Chevron ($13,175) 3M ($13,175) Since our position in Chevron is worth roughly $25,030 now, we'll have to sell some to bring it back in line since it's no longer the doubled stock. So, let's sell $11,855 of Chevron, leaving that position worth $13,175 and giving us a total of $40,090 in cash.
Our position in 3M is worth $12,610, so it should get another $565 to make it even, which would bring the cash down to $39,525. (This is one of those "close" calls where you need to decide if making this 4%-5% adjustment justifies an extra commission. One possibility is simply to leave the stock alone, save the commission, and add the $565 to one of the new purchases, either International Paper or GM. It's your call.)
Now, with that $39,525 we need to buy International Paper and GM. $26,350 goes to International Paper as the new PPP stock and the remaining $13,175 goes into GM.
So, we had seven trades for the yearly update (an extra one because of Imation). At a deep-discount broker, with commissions ranging from $10 - $20 a trade, that's only $70 to $140 in total trading costs for the year. Hope that helps you calculate your own update. I'll write a complete report, including commission costs, when we do the actual update before January 2. In the meantime, enjoy the weekend and Happy Holidays.
(Don't forget the Thoroughbred Stock Challenge. The sign up period ends with the opening bell on January 2.) Today's Dow Numbers Stock Change Bid ------------------- DD +2 1/2 97.13 CHV --- 65.88 MMM +2 1/2 84.75 EK + 7/8 81.50 IMN - 1/8 30.13
Day Month Year History
FOOL-4 +1.32% 4.15% 31.76% 31.76%
DJIA +0.17% -0.57% 26.72% 26.72%
S&P 500 +0.42% -1.24% 21.58% 21.58%
NASDAQ -0.56% -0.31% 22.47% 22.47%
Rec'd # Security In At Now Change
1/2/96 142 DuPont 69.88 97.13 39.00%
1/2/96 149 3M 63.76 84.75 32.92%
1/2/96 380 Chevron 52.38 65.88 25.78%
1/2/96 148 E. Kodak 67.00 81.50 21.64%
7/16/96 14 Imation 26.16 30.13 15.17%
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 13791.75 $3869.50
1/2/96 149 3M 9500.09 12627.75 $3127.66
1/2/96 148 E. Kodak 9916.00 12062.00 $2146.00
7/16/96 14 Imation 366.21 421.75 $55.54
CASH $1942.85
TOTAL $65878.60
Transmitted: 12/20/96
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