The
Dow Approach
The
Dow Approach
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FOOL GLOBAL WIRE Hoffman Estates, IL (March 19, 1997) -- In the news today, the Department of Labor reported the Consumer Price Index numbers and created another interest rate hike scare. The reaction to the news of the Index rising a moderate 0.3% was, typically, overdone. The worst to get hit were the technology issues on the Nasdaq. How does this affect the Fool 4 portfolio? Typically for this type of investment approach, it didn't hurt much at all. With AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> ending the day down $3/8 at $35, GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> closing down $5/8 at $56 1/8, MINNESOTA MINING & MANUFACTURING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %> down $5/8 at $88 5/8, and CHEVRON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %> closing up $7/8 at $67 3/4, the total Dow 4 ended down 3/4 of a point. This wouldn't constitute a large movement in my book. But why are we looking? Sure, when this type of day happens, the curiosity can be overwhelming. When we have analysts saying that the technology sector has entered its own bear market, we feel the need to take a look --and well we should in order to keep informed. But with this approach to investing, the day-to-day rise and fall of the market doesn't matter much. With the Dow Dividend Approach, our main concern is the long haul. How will these short-term fluctuations affect us in the long run? Time has always proven to be the great healer. This market has been due for a correction, and some of the more overvalued stocks have needed to come down to earth, but stocks with strong financials and steady valuations are rarely affected by these small corrections. When January 2, 1998 comes along, we're not likely to remember March 19, 1997 as a day that made our portfolio plummet. Nor is there likely to be any one day that will stand out. When invested in a time-tested, safe approach such as the Dow Dividend Approach, you can sit back and let the nervousness of the market pass you by. Your only concern would be a major change in the fundamental valuation of a company that is part of the portfolio. Until something like that happens, the chances of market fluctuations hurting you are slim. And even when prices drop a bit, it's made up for in the dividends. Fool proof? Well, as Fools we've proved it, so I guess so. I can say with complete confidence that it is the least likely of my portfolios to give me an ulcer. That in itself makes it my favorite by far. And now, in the name of Foolishness, let me mention the April Fool's Day party we're sponsoring in 8 cities across the United States. Head on over to the folder for this Foolish Party and check out which one is closest to you. Come meet your favorite MFs and Foolish regulars, or just meet us online for a countrywide link to this celebration of our favorite Foolish day. I'll be hosting the one in Chicago, so this is your opportunity to see what a Shrimp looks like close up. Hope to see all you Chicagoans there!
(c) Copyright 1997, 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. |
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