The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Apr. 4, 1997)

About the time I became "hooked" on the stock market and the Dow Approach, I also took up another addictive pastime -- golf. Now that winter seems safely tucked away here in the Bluegrass and the weather's gorgeous again, it's tough to say which one I prefer, golf or stocks, but it doesn't matter much. I probably love them both because they're so similar.

The first and perhaps most obvious similarity is that so many people are so bad at both golf and investing. And I'm not even talking about form and style. No one cares if your grip looks goofy and you wear cut-off jeans and worn out tennis shoes as long as you're driving the ball 250 yards right down the center of the fairway. Your competitors' reaction will only be "nice ball," and then their $250 designer sweaters starts to get tighter around their necks as they step up to the tee. What counts is performance. And for golf, as with investing, performance must be measured objectively.

For golf, the measure separating golfers from hackers (a group that claims me as a proud member) is par. If you're breaking par, you're a stud, a scratch golfer, "da man" (to quote some rich buffoon who travels to every pro tournament and yells the phrase as each player tees off). The reason breaking par is such an accomplishment is that so few of us hackers out there will ever pull it off. I've been golfing for a while now and I've come close once. I was on a streak of really good rounds one summer and before it all came tumbling down, I was even par one afternoon, heading to the 17th tee -- a par 3 island hole. No room for error. As any sports fan will tell you, adrenaline does strange and wonderful things to you, so when I stepped up to the tee with my usual 7 iron, I was dead before I swung. I was so excited about shooting par for a whole round that the adrenaline was coursing through my body. Splash! I should have hit a 9. Since that day, I've never threatened par again. I'm one of those comfortable golfers, shooting in the 80s.

Investing has a similar benchmark that so many people lose to -- the S&P 500 Index. Like par in golf, the S&P 500 gives us an objective target to aim for, and it takes some intelligence to beat that mark. Most professional money managers and mutual funds don't do it. Most individual investors don't do it. What's amazing about this fact is that for Fools, the S&P 500 benchmark is actually TOO LOW! Anyone spending the fifteen minutes a year it takes to use Beating the Dow has crushed the investing game's "par" for decades. And with a little more Foolishness, the standard set by Beating the Dow can be bested.

One last similarity between the two "games." Too many people cheat at both. You show me someone who takes a "mulligan" after bad shots, who improves his lie, who doesn't count penalty strokes, who doesn't putt out the short ones, and I'll show you someone who doesn't count commissions and spreads (investing's penalty strokes), who front-runs his picks in his newsletter, who talks up a stock he's currently dumping to inflate the price. But those aren't "golfers"; they're "hackers" in expensive suits.

Be Foolish -- break par. Fortunately for those of us addicted to both games, it's at least reasonable to expect to break par at one of them. Now if I could just get my short game under control.

Monthly Growth Screens
(Jan. 3 to present)
 15.47%  Relative Strength  
  4.68%  YPEG Potential  
  1.32%  S&P 500 Index  
  0.11%  Low Price/Sales  
 -3.81%  Investing for Growth  
-14.00%  EPS Plus RS  
-21.15%  Formula 90  
-26.21%  Unemotional Growth  

Annual Value Screens
(Jan. 1 to present)
 2.85%  Dogs of the Dow  
 2.28%  Beating the S&P  
 1.21%  Dow Jones Ind Avg  
-3.71%  Dow Combo  
-3.83%  Unemotional Value  
-3.83%  Beating the Dow  
-7.32%  Foolish Four