Thursday, March 26, 1998

If Everyone Did It
By Wetoot ([email protected])

As I was reading through the chapter in TMF Investment Guide describing the Foolish Four, I could not help but think, this is great! But, what happens now that it is out in the open and "everyone starts doing it"? As we all know, when everyone does the same thing, then it becomes average, and therefore not what a Fool would like to do.

I was encouraged to see the next chapter devoted to this very subject, and while the arguments were sound, I still felt like mediocrity awaited those who dove into the Foolish Four.

Just when I was about to give up on the idea, I asked myself, is it even possible that everyone will do the same thing, and even if they did, would it result in mediocrity?

Let's address the first question by looking into the Dueling Fools archives. There is a lot of consensus there (just kidding). Obviously, it is not possible that everyone will agree on anything (especially on the same date), let alone something that involves their personal savings.

Now, let us pretend for a moment that everyone does start embracing the Foolish Four. Everyone starts selling their mutual funds and billions begin pouring into the Foolish Four. The tidal wave builds, and pretty soon trillions of dollars are pouring into just four stocks. Since we were smart enough to be there ahead of the crowd, we are all becoming millionaires and billionaires as everyone tries to get a piece of the action. People even sell their Microsoft, Intel and Dell, and pretty soon we are all richer than Bill Gates! If this is mediocrity, then let me have it.

Alas, as much as we want to be richer than Bill Gates, odds are against that happening in a single lifetime. So you see, even if everyone did jump in, Fools come out ahead. And when only Fools jump in, the Foolish Four will outperform. Guess where I am going to put some of my money?

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