The Daily Dow Approach, 06/09/97: The Daily Dow

The Daily Dow
Monday, June 9, 1997
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (June 9, 1997) -- Despite a little weakness in the bond market today, stocks continued Friday's move into record high territory. The majority of the Dow stocks gained ground today, with technology stocks doing quite well.

INTERNATIONAL BUSINESS MACHINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> launched a new generation of computers, boosting the stock a bit. SEARS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: S)") else Response.Write("(NYSE: S)") end if %> climbed on a Bear Stearns analyst upgrade. (Apparently its recent legal troubles regarding the billing practices used on bankrupt cardholders is being put to rest.) And other big stars like HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>, PROCTER & GAMBLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %> and MERCK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> all posted sweet gains to push the index higher.

While it wasn't an earth-shattering day for the Foolish Four, it was a good day, three-for-four and enough to drag the beleaguered portfolio back above water for 1997. If nothing else, this year's performance shows how inexact the science is. At the beginning of the year, INTERNATIONAL PAPER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %> and AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> were virtually deadlocked for the first and second spots on the list. With a tiny move in either stock the day before we began, we might have chosen International Paper (now up more than 20% on the year) rather than AT&T (the biggest loser year-to-date for the Dow).

But that's the way it works out sometimes. And if you get too anxious trying to finesse the exact order every year (one of my hesitations over double-weighted positions) you have to be especially patient in years when the approach doesn't work perfectly for you. If you have International Paper rather than AT&T for this year, you're probably reasonably pleased with the portfolio [even with GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> stuck in neutral].

The historical returns we quote here were generated over decades, with many great years and some not-so-great years. If you expect the approach to work precisely to those historical averages each year, you'll be disappointed often enough you'll probably abandon the approach. The year's still not half over, and it's still in doubt whether the approach will have a bad year or not. So be patient, go live life and check back in six months.

One final note: BOEING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> split 2-for-1 this morning. Fool on!

(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. ________________________________

1997 Foolish Four Model

Stock  Change   Last
--------------------
T    +   5/8   36.13
GM   +   1/8   57.00
CHV  -   3/8   71.88
MMM  +   1/4   92.75

               Day   Month    Year
        FOOL-4   +0.59%   0.06%   0.49%
        DJIA     +0.57%   2.01%  15.98%
        S&P 500  +0.57%   1.73%  16.50%
        NASDAQ   +0.52%   0.85%   9.38%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  120 3M            83.00     92.75    11.75%
   1/2/97  153 Chevron       65.00     71.88    10.58%
   1/2/97  179 Gen. Motor    55.75     57.00     2.24%
   1/2/97  479 AT&T          41.75     36.13   -13.47%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  120 3M          9960.00  11130.00  $1170.00
   1/2/97  153 Chevron     9945.00  10996.88  $1051.88
   1/2/97  179 Gen. Motor  9979.25  10203.00   $223.75
   1/2/97  479 AT&T       19998.25  17303.88 -$2694.38


                             CASH    $609.53
                            TOTAL  $50243.28