The Daily Dow
Wednesday, November 12, 1997
by Robert Sheard

LEXINGTON, KY. (Nov. 12, 1997) -- Let's talk track records. Imagine you're a mutual fund manager for a major stock mutual fund. Your benchmark might be something like the S&P 500 (which over long periods has moved very much in sync with the Dow Jones Industrial Average). Perhaps an even better measure is the one we use in our long-term history for the Dow Dividend Approaches -- an equally weighted basket of all thirty Dow stocks, including dividends.

Now imagine that you have been the manager of that fund since 1961 (finishing your thirty-seventh year next month). If your portfolio had outperformed the market index nearly 76% of the time (in twenty-eight of those thirty-seven years, including year-to-date this year), and your worst annual loss in that period was 18.5% in 1966, how would your bosses feel about your record? In fact, you only suffered seven losing years and only once had successive down years (1969 and 1970). And on top of all that, you managed to compile this record with a low-maintenance, low-research, low-turnover, low-cost strategy.

You'd be in the Mutual Fund Hall of Fame, wouldn't you? And your assets under management would probably make Fidelity Magellan look more like Fidelity Minnow.

That's exactly the record the simple five-stock Beating the Dow strategy has recorded since 1961. And while doing so, it has posted annualized pre-tax gains of 16.2%. Excluding taxes, a $5,000 investment at the beginning of 1961 would be worth approximately $1.3 million today.

Even better, of course, is the record for the four-stock equally weighted Unemotional Value variation, posting annualized gains of 18.11% over the near four-decade stretch. That same $5,000 would now be worth nearly $2.4 million.

What's the key here? Not the sophistication of the strategy. Not the expertise of the investor. Not the Wall Street pedigree of the fund manager.

The only thing that matters for this type of investing career is the discipline to stick with a proven terrific strategy and time for it to work. Just imagine how the results would look if regular savings had been added to the equation instead of a one-time investment. It's beautiful, isn't it? Fool on!

TODAY'S NUMBERS
Stock  Change   Last
--------------------
T    -1  9/16  46.75
GM   -   7/8   63.00
CHV  -2 11/16  82.06
MMM  -1  1/16  95.44

           
                  Day   Month    Year
        FOOL-4   -2.39%  -1.39%  17.87%
        DJIA     -2.08%  -0.55%  14.78%
        S&P 500  -1.93%  -0.95%  22.30%
        NASDAQ   -2.72%  -3.26%  19.42%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  153 Chevron       65.00     82.06    26.25%
   1/2/97  120 3M            83.00     95.44    14.98%
   1/2/97  179 Gen. Motor    55.75     63.00    13.00%
   1/2/97  479 AT&T          41.75     46.75    11.98%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  153 Chevron     9945.00  12555.56  $2610.56
   1/2/97  479 AT&T       19998.25  22393.25  $2395.00
   1/2/97  120 3M          9960.00  11452.50  $1492.50
   1/2/97  179 Gen. Motor  9979.25  11277.00  $1297.75


                             CASH   $1257.01
                            TOTAL  $58935.32