The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Mar. 10, 1997)

Today launches our official "March" monthly portfolios. You'll find all of the new rankings, of course, in the Workshop Data area, but one thing I'd like to include periodically is the month-by-month returns for the Growth screens.

These are the returns we compound in order to calculate the year-to-date return for the monthly screens. We assume each month begins with an equal investment in each of the stocks in the model, so we don't have to bother with numbers of shares within the confines of this model.

Below are the year-to-date returns for each of the screens followed by the individual monthly returns used to generate that aggregate.

                                   Jan      Feb
   9.56%  Relative Strength       27.00%  -13.73%
   8.59%  Low Price/Sales          9.60%   -0.92%
   8.07%  YPEG Potential          22.13%  -11.51%
   7.61%  S&P 500 Index            5.55%    1.95%
  -4.89%  Investing for Growth     4.69%   -9.15%
 -12.40%  EPS Plus RS             -8.21%   -4.56%
 -17.27%  Unemotional Growth      -8.55%   -9.53%
 -18.16%  Formula 90              -6.58%  -12.40%

The quarterly models, of course, remain as they have been since the beginning of the year for one more month. Their first update comes with the new rankings on April 4. At that point, we'll also split out the Semi-Annual model, and then in July, the Annual model.

At that point, we'll be tracking each growth screen over four different holding periods. This will give us some perspective on how different factors react over various holding cycles. For instance, my contention is that for a long-term screen (one year), relative strength has proven to be a very powerful screen (read Jim O'Shaughnessy's What Works on Wall Street for support here). A screen like the earning per share growth used for the Unemotional Growth screen, however, doesn't do well over longer periods, but over short ones (one month), appears to do very well historically. We'll keep track of it all right here for you.

On a negative note, there's been a great gnashing of teeth so far this year because (gasp) stocks and mechanical screens proved again that they can go down, too. But keep in mind what this area's about. We're not building a magic bullet that will make money without ever suffering a loss. Ain't gonna happen. This is a legitimate workshop where we get together to discuss, test, play around with and examine possibilities and share the results online. Don't take that as a recommendation of anything, good, bad, or indifferent. In this area of Fooldom, perhaps more than in any others, the material you'll see is tentative at best. If you treat it as anything else, you're not fulfilling your end of the bargain as an investor.

Be Foolish and think through any and all implications of any investment strategy you adopt. And when you invest in something, if you don't understand why you've done it or what the possibilities are, you're making a mistake, even if it goes up. Until you take full responsibility for every call to your broker, you aren't living up to your responsibility as an investor. No one here is telling you what to do with your own portfolio.

I've found some of the the reactions in the folders when readers lose money reminiscent of my days as a college teacher. Ask a student who gets an "A" on a test how he did and he'll say, "I aced it" or "I earned an A." Ask another student who failed and you'll hear a remarkable shift in responsibility: "Can you believe it, man, he failed me." The rhetoric of failure is loud and clear; "it couldn't be my fault, no way."

If there's anything that makes me hot under my belled cap it is a shifting of responsibility away from where it belongs. Don't be that "F" student, who fails in more ways than he knows when he believes it's the teacher's fault that he's got to repeat the course. Do your own homework, make your own decisions, and then learn from the results (good and bad).

Monthly Growth Screens
     (Jan. 3 to present)
  10.66%  Relative Strength  
   9.15%  Low Price/Sales  
   8.77%  S&P 500 Index  
   5.81%  YPEG Potential  
  -3.66%  Investing for Growth  
  -9.19%  EPS Plus RS  
 -16.58%  Formula 90  
 -17.00%  Unemotional Growth  

Annual Value Screens
     (Jan. 1 to present)
  10.69%  Dogs of the Dow  
   9.79%  Dow Jones Ind Avg  
   5.58%  Beating the S&P  
   2.81%  Dow Combo  
   2.62%  Unemotional Value  
   2.62%  Beating the Dow  
  -0.89%  Foolish Four