The Daily Dow FOOL GLOBAL WIRE by Robert Sheard LEXINGTON, KY. (Apr. 2, 1997) -- Getting ready to update your Dow portfolio? Let's go through the process together with a sample portfolio, just to make sure you keep a few issues clear. The ideal with this approach is to re-balance your portfolio at the beginning of each new year so that all your positions are weighted evenly. This spreads the risk evenly among all the stocks since no one really knows which of the group will perform the best or worst in any given year. (If you're using the Foolish Four approach, with a doubled #2 stock, just think of it as two positions in the same stock.) So, in theory, the process you'd follow is as follows: 1) Sell any of your stocks that are no longer on the current rankings list. 2) Using your current total portfolio value, calculate how much each position should be worth to start the new year. 3) Adjust any positions you're carrying over into the new year to equal the value from the previous step. 4) Purchase the new stocks to the group. Let's look at some numbers. After your year is up, suppose you have $5,200 in Chevron, $4,900 in 3M, $6,000 in General Electric, and $5,500 in Texaco. The new list of stocks to buy, let's say, includes Chevron, 3M, Eastman Kodak, and AT&T. So, step one is to sell your General Electric and Texaco, giving you $11,500 in cash. (I'm skipping trading costs and whatever cash on hand you might have for the sake of simplicity, but include those factors in your totals, too.) Step two is to calculate the new position value. With $11,500 in cash and $10,100 in the stocks you're carrying over, your portfolio is worth $21,600. Each of the four positions, then, for next year should be worth $5,400. Step three is to adjust the two positions you're carrying over. That means buying $200 more of Chevron and $500 more of 3M to bring them up to $5,400 each. That reduces your cash to $10,800, exactly two positions' worth. The final step is to buy $5,400 each of the new stocks, Eastman Kodak and AT&T. Voila! A couple of important disclaimers. I pulled these examples out of thin air, so don't assume they match up with any current or recent rankings; they don't necessarily. Also, depending on how much you pay for each trade, you might find the adjustments called for in Step three to be pointless. There's no sense buying or selling just a handful of shares if it means your commission costs get too large as a percentage of your portfolio. (Our guideline for maximum trading costs is 2.5% of your portfolio per year. You should be able to bring it much lower than that with deep-discount commissions.) After those four steps, you're ready to work on your short game for the next year again. Enjoy! (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. ________________________________

The Current BTD 10 AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:T)") else Response.Write("(NYSE:T)") end if %> Intl. Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IP)") else Response.Write("(NYSE:IP)") end if %> General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GM)") else Response.Write("(NYSE:GM)") end if %> Chevron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CHV)") else Response.Write("(NYSE:CHV)") end if %> Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:EK)") else Response.Write("(NYSE:EK)") end if %> Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MMM)") else Response.Write("(NYSE:MMM)") end if %> J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:JPM)") else Response.Write("(NYSE:JPM)") end if %> DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write(":NYSE" & CHR(34) & ">(NYSE:DD)") else Response.Write("" & CHR(34) & " onClick=" & Chr(34) & "openWindow('http://quote.fool.com/uberdata.asp?symbols=DD', 'quotebox', 640, 460); return false;" & CHR(34) & ">(NYSE:DD)") end if %> Exxon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:XON)") else Response.Write("(NYSE:XON)") end if %> Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MO)") else Response.Write("(NYSE:MO)") end if %> NOTE: FOOLISH FOUR STOCKS ARE LISTED IN DARK RED. Updated Daily

Today's Dow Numbers Stock Change Last -------------------- T - 5/8 34.25 GM - 3/4 54.38 CHV -1 3/4 67.13 MMM -1 5/8 84.00 Day Month Year FOOL-4 -1.87% -1.95% -6.16% DJIA -1.42% -1.01% 1.07% S&P 500 -1.25% -0.93% 1.26% NASDAQ -1.31% -1.69% -6.97% Rec'd # Security In At Now Change 1/2/97 153 Chevron 65.00 67.13 3.27% 1/2/97 120 3M 83.00 84.00 1.20% 1/2/97 179 Gen. Motor 55.75 54.38 -2.47% 1/2/97 479 AT&T 41.75 34.25 -17.96% Rec'd # Security In At Value Change 1/2/97 153 Chevron 9945.00 10270.13 $325.13 1/2/97 120 3M 9960.00 10080.00 $120.00 1/2/97 179 Gen. Motor 9979.25 9733.13 -$246.13 1/2/97 479 AT&T 19998.25 16405.75 -$3592.50 CASH $431.29 TOTAL $46920.29

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