The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Mar. 6, 1997)

Being spoiled as we have been over the last several years by better-than-average years for stocks, a lot of investors are licking wounds in recent weeks and wondering if this is the end of the contest. But think of your investing career as a prize fight.

I'm a big sports fan (although for some reason, not much of a boxing fan), but boxing provides a good analogy for an investing career. Much of a boxer's success comes as the result of training. Sure there are some gifted athletes, but without the training and experience, they'd just be more unfulfilled promise.

Investing's the same way. There are undoubtedly some financial geniuses about, but anyone with adequate training and diligence can succeed as an investor.

But the boxing analogy really comes into play if you look at an individual fight as a metaphor for an investing career. Each round of a 12- or 15-round fight might represent 3 years' worth of investing rather than three minutes of action.

Over the course of any fight, though, every boxer, even ones in top condition (not like some of the recent embarrassments we've seen), is going to get hit from time to time. And it's not unusual for a boxer who ultimately wins the fight to have been hurt along the way for a minute or two, even a round or two here and there.

Long-term investors, and I mean those who are looking forward to 20, 30, 40 years of investing in stocks, have to look at their profits and losses in the same way. When the going is great and your opponent is covering up on the ropes, you keep pounding away, racking up point after point (or percentage point after percentage point).

But when the opponent regains control, you do your best not to get hurt while you catch your second, third or fourth wind. That may well be what's happening now in the market. Most investors have been scoring points right and left in recent years, dancing a little and showboating for the fans along the way.

Now that the market has picked itself up off of the canvas and is getting a few jabs through our defenses, it's not time to throw in the towel and run home. At this time more than any other in the bout, the discipline and training and experience serves the fighter the most. You weather the barrages by being smart and sticking to what you know works for you.

So, if you're feeling the leather a bit in your face right now, think of the overall fight. The boxer who wins will be the one who's the most disciplined, who takes opportunities when they present themselves, and who protects himself when things go against him. (That doesn't mean market-timing, though. You have to fight all 15 rounds; you can't sit out the ones when you're tired.) The boxer who flails wildly, hoping to land the big knockout punch, is more likely than not to find himself being carted out of the ring on a stretcher.

Be the long-term champion, not the star-struck wannabe. But to get there requires more discipline and patience and work than the average fighter is willing to put in training. And you have to take a lot of jabs along the way. How you handle the tough rounds is probably more important than how well you dance and strut when your opponent's getting a standing eight count. (Hey, somebody turn off the Rocky sound-track already!)

Monthly Growth Screens
     (Jan. 3 to present)
   9.06%  Relative Strength  
   8.85%  YPEG Potential  
   8.34%  Low Price/Sales  
   6.76%  S&P 500 Index  
  -3.68%  Investing for Growth  
 -11.85%  EPS Plus RS  
 -15.63%  Unemotional Growth  
 -17.58%  Formula 90  

Annual Value Screens
     (Jan. 1 to present)
   8.36%  Dogs of the Dow  
   7.70%  Dow Jones Ind Avg  
   4.25%  Beating the S&P  
   1.16%  Dow Combo  
   1.01%  Unemotional Value  
   1.01%  Beating the Dow  
  -2.31%  Foolish Four