Thursday, November 20, 1997


The Daily Dow
by Robert Sheard

LEXINGTON, KY. (Nov. 20, 1997) -- Today's gains for the Foolish Four holdings (remember that these are the four stocks we selected in January and are not the same four one would buy today) continue to open up a gap between the model and the Dow for 1997.

If you haven't been with us for the whole year, though, it wasn't always like this. For much of the year, it looked as if the 1997 Foolish Four portfolio was going to be a big disappointment, not only trailing the market, but actually losing money for much of the year.

Such a pattern, however, while a little exaggerated in terms of degree this year, isn't all that unusual. Buying out-of-favor stocks when very few on Wall Street want them means you're almost guaranteed a slow start to the year. It takes time for the interest to be rekindled in these Dow Dogs. This year, in fact, the interest wasn't there until May or June at the earliest.

Look at these weekly charts for 1997 and you'll see that nothing looked good early in the year and it's only lately that real interest has perked up in AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>. Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %> and General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> both waffled early in the year, popped up in the summer, and have struggled a bit since. Only Chevron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %> has posted steady gains, but it, too, was sluggish at the beginning of the year.

Yet to look at the portfolio today, you would probably call it a fair year. It's beating the Dow, has just passed the Nasdaq Composite, and is gaining ground rapidly on the S&P 500. If the trend of late holds on for a few more weeks, 1997 might actually be remembered quite fondly. How many would have thought that six months ago?

One thing to learn from all this is that watching the progress daily as we do opens us up to a range of emotions that can be dangerous for investors. It's easy to be excited about the long-term histories of these approaches if you simply see annual returns and don't watch the day-by-day gyrations. To stick with the discipline requires a real strong will and perhaps some hobbies other than watching ticker tapes. (I hate to run off my own readers, but checking "the market" every day may not be the healthiest way to achieve good long-term returns.) Fool on!

TODAY'S NUMBERS
Stock  Change   Last
--------------------
T    +1 11/16  54.63
GM   +   3/8   61.56
CHV  +1  3/4   84.06
MMM  +2 11/16  97.00

           
                  Day   Month    Year
        FOOL-4   +2.38%   5.57%  26.19%
        DJIA     +1.32%   5.17%  21.38%
        S&P 500  +1.52%   4.85%  29.46%
        NASDAQ   +1.58%   2.07%  25.99%

    Rec'd   #  Security     In At       Now    Change

   1/2/97  479 AT&T          41.75     54.63    30.84%
   1/2/97  153 Chevron       65.00     84.06    29.33%
   1/2/97  120 3M            83.00     97.00    16.87%
   1/2/97  179 Gen. Motor    55.75     61.56    10.43%


    Rec'd   #  Security     In At     Value    Change

   1/2/97  479 AT&T       19998.25  26165.38  $6167.13
   1/2/97  153 Chevron     9945.00  12861.56  $2916.56
   1/2/97  120 3M          9960.00  11640.00  $1680.00
   1/2/97  179 Gen. Motor  9979.25  11019.69  $1040.44


                             CASH   $1409.35
                            TOTAL  $63095.98