The Daily Dow
Monday, September 22, 1997
by Paul Larson (TMF Parlay)

CHICAGO, IL (Sept. 22, 1997) -- Greetings from the Windy City! Here we are in week two of Robert Sheard's book-writing sabbatical. This week you will find yet another five days full of substitute writers filling in during his absence. I don't think we as a group have done a half-bad job thus far.

If you missed some of last week's updates, I highly recommend that you read Jerry Thomas' (TMF Cheeze) update from last Friday that centered on Vinnie Testaverde. That's right, a Fool Four update about the man who led his Baltimore Ravens to a 36-10 win over the Tennessee Oilers this weekend in the "Let's Move the Team!" Bowl. Check it out.

If that previous link wasn't enough to put a smile on your Foolish face, then go back and read Rick Munarriz's (TMF Edible) quirky update about the conspiracy to snuff out PHILIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> from the Fool Four. I assure you, it's great stuff.

Speaking of Philip Morris, it made a strong puff forward today (up $1 5/16) in its attempt to regain the coveted "double up" spot in the Foolish Four from AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>. For her part, Ma Bell also had a good day today, ringing up a two-point gain after it announced its quarterly dividend of $0.33 per share will be paid Nov. 1 to shareholders of record on Sept. 30. That's one of the beauties of the Fool Four approach -- you actually get dividends. Healthy dividends, for that matter.

One bit of news from AT&T did grab my attention today. The company said regarding its dividend that, "The common shares dividend will go to about 3.5 million shareowners." Think about that for a second... Over 3.5 million people own a part of Ma Bell. That means that between one and two percent of the country's population has a position in AT&T's stock. Interesting factoid or boring statistic? I think it's the former.

Getting back to the horse race between AT&T and Flip Mo, I've been inundated with emails since penning this column last Monday, most asking the same types of questions. They tend to ask, "Since the lowest priced stock is discarded and the second lowest is double weighted, the selection between these two is an important one. These two spots can flip-flop on a daily basis, as recent history as shown. How can one stock be passed over one day as worthless, yet be considered the linchpin of the method the next day?"

I've attempted to answer these emails with my own feeble explanation (remember, we're only substitute Fools this week). However, I did find it of great use to simply go back and read what Robert has written while explaining the difference between the various Dow Dividend approaches. Robert writes of the difference between the lowest and second lowest priced stocks:

"Historically, the cheapest of the group of ten high yielders (what you may see referred to ironically as the Ultimate Profit Prospect, or UPP) has proven to be a weak performer for the group, while the second-cheapest stock (the PPP, or Penultimate Profit Prospect, a phrase coined by Michael O'Higgins) has been the best performer of the group. This isn't a fluke of nature, but rather a principle based on common sense. The lowest-priced stock is often one in real financial trouble, so it drags the historical average down. The next stock in order is rarely in such trouble and its low price gives it the necessary room to rebound impressively."

Sounds good to me. I'm sure Robert will have numerous, more eloquent explanations to these questions when he returns next week. Nevertheless, another question I received (which I *can* answer) was, "What is the threshold for making it in the top ten yielding stocks?"

The last time Robert updated the Current Dow Order before leaving ten days ago, the tenth highest yielding Dow stock was MERCK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> at 1.94%. However, the rankings change continually. As of today's close, the tenth highest yielding stock was INTERNATIONAL PAPER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %> with a yield of 1.88%.

Thanks again for tuning in, and tune back in tomorrow when Debora Tidwell (TMF Debit) will be your captain in this journey of the Fool Four. 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    +1 15/16  45.94
GM   -1 31/32  67.59
CHV  -2  5/32  85.16
MMM  +   1/4   86.94

                  Day   Month    Year
      FOOL-4   +0.47%  10.61%  17.15%
        DJIA     +0.88%   4.78%  23.86%
        S&P 500  +0.56%   6.27%  29.04%
        NASDAQ   +0.76%   6.67%  31.15%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  153 Chevron       65.00     85.16    31.01%
   1/2/97  179 Gen. Motor    55.75     67.59    21.24%
   1/2/97  479 AT&T          41.75     45.94    10.03%
   1/2/97  120 3M            83.00     86.94     4.74%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  153 Chevron     9945.00  13028.91  $3083.91
   1/2/97  179 Gen. Motor  9979.25  12099.28  $2120.03
   1/2/97  479 AT&T       19998.25  22004.06  $2005.81
   1/2/97  120 3M          9960.00  10432.50   $472.50


                             CASH   $1009.44
                            TOTAL  $58574.19