The Daily Dow Approach, 10/13/97: The Daily Dow

The Daily Dow
Monday, October 13, 1997
by Robert Sheard

LEXINGTON, KY. (Oct. 13, 1997) -- Taking advantage of a three-day weekend, no doubt, Columbus sailed off for new adventures a little more than 500 years ago. If the history books have the story right, his adventures may more appropriately be thought of as misadventures, but nevertheless, for good or ill, Columbus continues to represent America's spirit of exploration and global enterprise.

On this Columbus Day holiday, then, it makes sense to talk about global enterprise as it applies to our Dow stocks. Are we being too insular and xenophobic in limiting ourselves to the thirty U.S. stocks in the Dow? Don't we have to balance these holdings with an equal number of foreign stocks to be globally diversified? Well -- maybe not.

Of the thirty current Dow stocks, more than one third of them derive the majority of their sales outside of the U.S. EXXON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> records 79% of its sales outside the U.S., and COCA-COLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> generates 68% of its sales outside of North America. Other companies in this globally oriented third of the Dow are CATERPILLAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %>, HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>, INTERNATIONAL BUSINESS MACHINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>, JOHNSON & JOHNSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %>, MCDONALD'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %>, 3M <% 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 %>, PHILIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %>, and PROCTER & GAMBLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %>.

And another eight companies generate at least one-third of their sales outside the U.S. That's nineteen of the thirty companies with a healthy exposure to global markets.

Many money managers will tell you that having global exposure gives one balance against the risk that the U.S. market will go into a decline, effectively offsetting that risk by investing overseas. And this is indeed the case, but one doesn't necessarily have to buy foreign stocks to get foreign exposure. For the Dow investor who doesn't have the time or experience to research foreign stocks, who doesn't necessarily understand the differences in reporting standards around the globe, and who doesn't understand how currency fluctuations will affect foreign and domestic markets, investing in the Dow behemoths still affords a measure of exposure around the globe.

This is not to say that you can't do extremely well investing in foreign stocks, even in foreign versions of Beating the Dow. But it's not absolutely necessary to take on the added burden of researching and investing in foreign stocks to acquire some international exposure. The Dow thirty are fairly global in scope. So even with the Dow stocks, may all your seas be calm and your compass point true!

In Dow earnings news, TRAVELERS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> and J.P. Morgan posted quarterly earnings today. On strong performances in its life insurance and SmithBarney divisions, Travelers posted earnings of $1.12 per share, beating Wall Street's consensus estimates by eleven cents a share. J.P. Morgan missed estimates by a few pennies, posting $1.96 a share, but because of an increase in market share in the quarter, the stock was still rewarded nicely today. The Dow earnings season has begun well.

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    -   1/4   45.56
GM   +1  7/16  71.44
CHV  -   5/16  85.50
MMM  +   9/16  96.44

           Day   Month    Year
                  Day   Month    Year
        FOOL-4   +0.26%   4.05%  20.87%
        DJIA     +0.34%   1.60%  25.18%
        S&P 500  +0.12%   2.20%  30.69%
        NASDAQ   +0.18%   3.35%  34.94%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  153 Chevron       65.00     85.50    31.54%
   1/2/97  179 Gen. Motor    55.75     71.44    28.14%
   1/2/97  120 3M            83.00     96.44    16.19%
   1/2/97  479 AT&T          41.75     45.56     9.13%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  153 Chevron     9945.00  13081.50  $3136.50
   1/2/97  179 Gen. Motor  9979.25  12787.31  $2808.06
   1/2/97  479 AT&T       19998.25  21824.44  $1826.19
   1/2/97  120 3M          9960.00  11572.50  $1612.50


                             CASH   $1167.51
                            TOTAL  $60433.26