Thursday, December 04, 1997


The Daily Dow
by Robert Sheard

LEXINGTON, KY. (Dec. 4, 1997) -- Oh thou beauteous clown, how do I love thee? Let me compound the ways.

It's been a while since I've let the Compounding Clown dance. So someone crank up the Victrola and let's watch the clown grace the dance floor.

One of the best reasons to use the Dow Dividend Approaches (besides the obvious points that they're insanely easy to do and they've smoked the market indices for decades) is that given time enough, the Clown will take you where you want to go.

How about some numbers?

Since 1961, the four-stock Unemotional Value variation has returned an annualized 18.11%. That's approaching four decades of history now, including major bear markets, the crash of 1987, and just about every gradation of market cycle you can expect to encounter. (During the same period, the Dow 30 have returned 11.76% a year.)

What kind of magic would our favorite jester have performed over those 36 years? Let's assume you had invested an inheritance of $15,000 in 1961 in a tax-deferred plan of some type. (The plan isn't important today; the magic of time is.)

Once a year you climb out of bed, spend a half hour with the Wall Street Journal (no AOL back in 1961), adjust your portfolio and go back to sleep.

At the end of 1996, you've decided enough of this bustle; it's time to retire. Care to guess what you'd have socked away? Just a measly $6 million, that's all. Even accounting for inflation, that's not a bad stash for someone who hasn't even saved a penny for 36 years and spent only 30 minutes a year managing his portfolio.

Just think how well you could have done if you had worked a little bit and saved something each year. There's been much gnashing of teeth recently because Michael O'Higgins has decried the usefulness of the Dow Approach. But with this kind of history, extending decades and decades, just let the Clown dance. All it takes is a little effort, a little money, and a lot of time and patience.

Dance, I say, dance! Fool on!

TODAY'S NUMBERS
Stock  Change   Last
--------------------
T    +1        58.00
GM   +   1/2   61.50
CHV  -  15/16  77.63
MMM  +   5/8   96.94

           
                  Day   Month    Year
        FOOL-4   +0.79%   1.06%  27.42%
        DJIA     +0.23%   2.90%  24.84%
        S&P 500  -0.38%   1.85%  31.37%
        NASDAQ   -0.11%   0.80%  24.97%

    Rec'd   #  Security     In At       Now    Change

   1/2/97  479 AT&T          41.75     58.00    38.92%
   1/2/97  153 Chevron       65.00     77.63    19.42%
   1/2/97  120 3M            83.00     96.94    16.79%
   1/2/97  179 Gen. Motor    55.75     61.50    10.31%


    Rec'd   #  Security     In At     Value    Change

   1/2/97  479 AT&T       19998.25  27782.00  $7783.75
   1/2/97  153 Chevron     9945.00  11876.63  $1931.63
   1/2/97  120 3M          9960.00  11632.50  $1672.50
   1/2/97  179 Gen. Motor  9979.25  11008.50  $1029.25


                             CASH   $1409.35
                            TOTAL  $63708.98