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The Daily Dow LEXINGTON, Kentucky (December 27) -- Questions about year-end updates continue to pour into our area, so let me go over some of the major issues of concern these days. First, the Foolish Four portfolio is simply a paper model. It's not a real-money portfolio like the Fool Portfolio (run by David and Tom Gardner) and the Boring Portfolio (run by Greg Markus, MF Boring). So we use the closest information we can get to approximate the real transactions without actually setting up a real portfolio. The model portfolio's update cycle is tied directly to the calendar. We open it with the first trading day of the year and close it with the last. The 1997 model, then, will include whatever stocks are current in the rankings on January 1 (a market holiday). There's no way, of course, to predict precisely which stocks will be on the list until the market closes on December 31. Now this doesn't imply that you should wait and update your portfolio the same day we change the model. You can choose any day you like to start and update your portfolio, and to make that easier, we include the current top ten Beating the Dow order each evening here in the Dow Area. The big question these days concerns International Paper and AT&T. Right now, IP is in the #1 slot on the BTD list. That means of the ten highest-yielding Dow stocks, it has the lowest share price. AT&T, however, is roughly $2 or $3 a share more expensive, but will be spinning off NCR next week, which will reduce T's share price a few dollars per share. If you're using the Foolish Four approach, this is a dilemma for some of you since the approach automatically skips the #1 stock in favor of the next four. The Unemotional Value approach, however, doesn't skip the #1 stock automatically, so in this particular situation, there's no dilemma if you're using the UV approach; you include both AT&T and IP. But for those of you buying the Foolish Four right now, the rankings could change daily over the next few sessions. All you can do, then, is to make your decisions based on the current rankings when you buy, and then hold your peace afterwards, even if the rankings change the very next day. Remember that this is not a pure science. Using the Dow Approach is simply a way of playing the long-term odds, and there's no way to know which of two options in any given year will perform the best. So if you're buying the Foolish Four today, you would skip International Paper and double up on AT&T. Come the close on Monday or Tuesday, that may not still be true. After the NCR spin-off (scheduled for Tuesday), we may get a clearer picture for AT&T, but don't hold your breath. The stock's been very active of late and might continue bouncing around for a bit. Hang in there and go with what you know at the time; you can't do anything else. (Don't forget the Thoroughbred Stock Challenge. Entries will be taken up until the opening bell next Thursday, January 2.) Today's Dow Numbers Stock Change Bid ------------------- DD +1 1/4 97.00 CHV + 1/2 66.00 MMM + 1/2 85.25 EK +1 81.88 IMN + 1/8 30.25
Day Month Year History
FOOL-4 -0.05% 4.35% 32.02% 32.02%
DJIA +0.22% 0.60% 28.21% 28.21%
S&P 500 +0.13% -0.20% 22.87% 22.87%
NASDAQ -0.25% -0.10% 22.74% 22.74%
Rec'd # Security In At Now Change
1/2/96 142 DuPont 69.88 95.88 37.21%
1/2/96 149 3M 63.76 85.50 34.10%
1/2/96 380 Chevron 52.38 66.00 26.01%
1/2/96 148 E. Kodak 67.00 82.50 23.13%
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 25080.00 $5177.50
1/2/96 142 DuPont 9922.25 13614.25 $3692.00
1/2/96 149 3M 9500.09 12739.50 $3239.41
1/2/96 148 E. Kodak 9916.00 12210.00 $2294.00
7/16/96 14 Imation 366.21 421.75 $55.54
CASH $1942.85
TOTAL $66008.35
Transmitted: 12/27/96
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