The Daily Dow
Friday, September 5, 1997
by Robert Sheard

LEXINGTON, KY. (Sept. 5, 1997) -- The beauty of a simple system like the Dow Approach is just that -- it's simplicity. Within minutes you can identify a handful of potential winners without having to give up your day job or agonize over whether or not you're making a bone-headed investment.

But smart people being what smart people are (that is, curious), we tend to want to second-guess such a simple approach for every "special case." "Shouldn't we avoid so-and-so today because of such-and-such?" "Isn't the market too high today?" "Should we skip this stock for that reason, just this time?"

Well, if you're not tired of my golf comparisons yet, you soon will be. The golf swing is just as simple as the Dow Approach. You line up straight, take the club back smoothly, and follow through on the same line. And if all golfers had lobotomies, we'd play a heck of a lot better. The minute your brain gets included in the swing, though, you're dead.

Just imagine all the small things about a golf swing you can "think" about: grip pressure, tempo, flying elbows, breathing, angle of descent, axis of rotation, wrist cock, hand release. It can go on literally forever. In fact, if you think too much, you'll eventually go from the sublime to the ridiculous, worrying about things like how many times you blink on your backswing versus how many times on your downswing.

The best golfers, just like the best investors, do their homework before they step onto the tee box. They're confident in their approaches and when it comes time to execute, they do so almost unconsciously. The minute they start tinkering or second-guessing their routine during a round, they're dead. That's when the amateur golfer starts seeing those mythical figures like snowmen and stick-balloons (eights and nines) on the scorecard and when the pro slams the car trunk after missing the cut.

If you're going to use the Dow Approach, then, because it's worked for decades and decades, my most important advice as a "coach" is to trust it. No, you won't hit every shot perfectly, but you'll spend more time in the fairway than you will in the woods. And a lot of times it's the golfer who avoids big mistakes who wins the match, not the one who hits a single glory shoot after spending the rest of the round dropping the ball out of homeowners' gardens. 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. ________________________________

Stock  Change   Last
--------------------
FOOL-4  -0.21% 10.21%
DJIA    -0.57% 21.31%
S&P 500 -0.19% 25.42%
NASDAQ  +0.69% 26.70%

                   Day   Month    Year
        FOOL-4   -0.21%   4.06%  10.21%
        DJIA     -0.57%   2.62%  21.31%
        S&P 500  -0.19%   3.29%  25.42%
        NASDAQ   +0.69%   3.06%  26.70%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  153 Chevron       65.00     78.38    20.58%
   1/2/97  179 Gen. Motor    55.75     66.25    18.83%
   1/2/97  120 3M            83.00     91.88    10.69%
   1/2/97  479 AT&T          41.75     40.13    -3.89%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  153 Chevron     9945.00  11991.38  $2046.38
   1/2/97  179 Gen. Motor  9979.25  11858.75  $1879.50
   1/2/97  120 3M          9960.00  11025.00  $1065.00
   1/2/97  479 AT&T       19998.25  19219.88  -$778.38


                             CASH   $1009.44
                            TOTAL  $55104.44