Monday, January 8, 1996
Birth of Online Babies
Fooldom's birth rate continues to rise
by MF Buck

In the earliest days of online Fooldom, Ann Coleman (MF Numbers) tore out the most important pages of O'Higgins's "Beating the Dow." She put all the data into her spreadsheet, zooming in at 400% for the details and backing up to 50% to see the big picture. Then the announcement came. It seemed that something even better than BTD had existed right under everybody's noses all along, a simple improvement on the original that Ann called the BTDX. A new baby had been born right here in Fooldom! Time to celebrate! (If you're not familiar with Beating the Dow, click the Fool's School icon on the main Motley Fool menu, and go to the Dow 30 Area.)

Before and after the birth of BTDX, a lot of other Fools were writing about a whole bunch of variations on the BTD theme and back-testing them to see if they were successful. More babies were born! Toddlers are everywhere now. Who's in charge of the diapers?

Proudly looking through the Fool Family Album, we're thrilled at the growth of our offspring, but frankly, not a bit surprised. 8 out of 10 of the Foolishly-conceived BTD strategies beat both the DOW and the S&P 500 in 1995. Are these kids great or what?! Remember that most pros don't do as well as the market. Shame shame. Maybe they should take a few lessons from our toddlers. Meanwhile ---

--- Goo goo gah gah! Another baby's been born!

Over in DowMan's Investing for Growth (IFG) folder we're gathering 'round the crib, making funny faces, and outdoing ourselves with such profound phrases as "Cootchy cootchy coo." We're calling the new youngster "YPEG33." You'll have to go over to the folder to see a picture of this baby. Better yet, pick the kid up. Hug it. Take a close, Foolish look.

Yep, what the BTDers did for Beating the Dow, the IFGers are doing for Investing for Growth. Only this time it's a little different. Fools had the luxury of reams of data from past decades to improve the BTD system. Even the IFG model that Robert Sheard (MF DowMan) developed is based on data going back 16 years. Unfortunately, the YPEG33 deals with analysts' projections five years out, and we just don't have that data from the past reasonably available to us.

So we're doing what all Foolish parents do. We're using all the Foolish research we can get our hands on. The theories are being put under bright lights coming from all angles so there's nothing in the shadows escaping Foolish critique. And the most important part, we're going to be Foolishly accountable as we watch this baby mature. Starting at the opening bell of 1996, we'll track a brand new IFG model right along side our new baby, the YPEG33.

Will the latest toddler have the same kind of investment know-how as all the others? Heck, we don't even care. If the new model works out well, great. If it doesn't, great. But we think YPEG33 will do just fine. Otherwise, we wouldn't take the final Foolish step to spend valuable time tracking it over longer periods. Regardless of the outcome, we'll all learn as we watch the kid grow.

As in real life, the parents are going to learn a lot more from the baby than the baby learns from the parents.