The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (July 17, 1997)  It's been a Tale of Two Quarters for the Unemotional Growth model this year. Proving once again that when I announce the results of a research experiment, it's doomed to perdition for the coming months. The UG approach had a horrific January through March, but since then it's been a world-beater.

After a phenomenal 1996 gain of nearly 88%, the UG model went into a three-month tailspin to begin 1997. Losing 8.55%, 9.44%, and 10.81% in successive months, the model started the year with a cumulative deficit of just over 26%.

Since the first quarter, though, the model's regained all of that first-quarter loss plus an additional 18%. With gains in April through June of 18.35%, 9.27%, and 11.32%, and a partial month gain in July of more than 10%, the model has gained nearly 60% in the last 100 days.

Both the first and second quarter should point to a crucial element of this approach - volatility. Whether losing 26% in three months or gaining 60% in the next three, the portfolio moves extremely quickly. If you use this approach in your overall portfolio, you have to live up to the approach's name (Unemotional) or it'll flatten you. And it's very hard to do (speaking from my own past experiences with aggressive growth models).

Emotions are perhaps the investor's single greatest foe, and when things move rapidly, emotion can be even more crippling because making decisions quickly when emotion is involved can lead to panic, frustration, and ultimately, poor decision-making.

Monthly Growth Screens
(Jan. 3 to present)
46.54%  Relative Strength  
24.54%  S&P 500 Index  
17.42%  Unemotional Growth  
16.60%  Low Price/Sales  
16.51%  Investing for Growth  
 8.74%  EPS Plus RS  
 6.05%  YPEG Potential  
-8.57%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
24.39%  Dow Jones Ind Avg  
20.24%  Beating the S&P  
18.43%  Dogs of the Dow  
15.09%  Unemotional Value  
15.09%  Beating the Dow  
13.64%  Dow Combo  
 2.33%  Foolish Four