The Daily Dow
Tuesday, August 12, 1997
by Robert Sheard

LEXINGTON, KY. (August 12, 1997) -- This week marks the fourth of the season's major men's professional golf championships -- the PGA Championship, which is being played at fabled Winged Foot Golf Course in Mamaroneck, New York. Between the typical August heat and humidity and the difficulty of the layout, the PGA is a brutal test of golf.

If you've read my Foolish Four columns for any length of time, you know that I'm probably as smitten by golf as I am by the stock market (perhaps more so, but no one has offered to pay me a full-time salary to slash my 11 handicap around a golf course regularly). There should be no surprise that I'm taken with both; they require many of the same characteristics to be successful: patience, diligence, discipline, integrity, and a fair measure of good fortune.

Patience is perhaps most relevant for investors using the Dow approach. To hold a stock like AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> while it languishes is tough. But patience is called for to allow the market enough time to recognize the value of such a "dog." Patience in golf is crucial as well, yet many amateurs -- and even some professionals -- do themselves in trying to force a glory shot when waiting patiently for the right time to attack is usually a more successful plan. Anyone who's tried to bust a three wood from 250 years out in the rough, over a pond, to a tightly bunkered green knows what I mean about choosing your spots to be aggressive.

Diligence is what's called for when things aren't going well. So what if your Dow portfolio is losing to the market this year? Sticking to a good plan over the long haul is what makes for a successful investor, not switching to the strategy of the month every time you get discouraged at the short-term results. The same is true when working on glitches in your swing. If you can't get rid of a slice or a hook, you don't go buy a new set of clubs and hope. You get on the practice tee with your pro and work out your faulty swing mechanics.

Discipline is required every time you want to second-guess your investment strategy. When EXXON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> showed up as a Dow Approach stock after the Valdez disaster, could you have made yourself buy it? It takes discipline to stick with the approach when your intuition disagrees. The same is true in golf. You're 145 yards from the pin, which is tucked tightly in the front right side, dangerously close to the water. Do you try to hit a hard pitching wedge and fire for the sucker pin placement, hoping to look like a genius, or do you take a smooth 8-iron and hit it to the middle of the green and take your par? Discipline is required to make the smart choice.

Integrity in golf among many weekend players is almost as non-existent as it is among investment gooroos. They take mulligans, they take gimme putts, they improve their lies, they shave strokes off of their real scores. This is no different from the world of financial gooroos who don't report all their trades (only the great ones), don't tell their readers until after the fact what they're buying and selling, and close down their newsletter or fund only to re-open a month later under a different name if their record stinks. The real integrity in golf can be seen in the pros, who call penalties on themselves when necessary, who help other pros even when it may hurt their own chances of winning to do so, who play the ball as it lies, literally and metaphorically.

And finally, both activities require a bit of good luck. That bounce off of a tree back into the fairway will make up for the time you unluckily hit a sprinkler head and bounced into the deep rough. For every time you pick a stock that suffers an "event" that knocks the share price down, you may have another stock bought out by a competitor for a nice premium. Luck happens, and the best you can hope for is that your hard work and personal fortitude will allow you to succeed despite the occasional unlucky breaks and the unfortunate ones.

(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. ________________________________

Stock  Change   Last
--------------------
T    -1  3/16  40.50
GM   -   1/2   60.88
CHV  +   3/4   80.81
MMM  -   9/16  94.50

           Day   Month    Year
        FOOL-4   -1.10%   3.42%   9.54%
        DJIA     -1.26%  -3.18%  23.46%
        S&P 500  -1.12%  -2.91%  25.08%
        NASDAQ   -0.66%  -1.10%  22.09%

    Rec'd   #  Security     In At       Now    Change

   1/2/97  153 Chevron       65.00     80.81    24.33%
   1/2/97  120 3M            83.00     94.50    13.86%
   1/2/97  179 Gen. Motor    55.75     60.88     9.19%
   1/2/97  479 AT&T          41.75     40.50    -2.99%


    Rec'd   #  Security     In At     Value    Change

   1/2/97  153 Chevron     9945.00  12364.31  $2419.31
   1/2/97  120 3M          9960.00  11340.00  $1380.00
   1/2/97  179 Gen. Motor  9979.25  10896.63   $917.38
   1/2/97  479 AT&T       19998.25  19399.50  -$598.75


                             CASH    $767.60
                            TOTAL  $54768.04