The Daily Workshop Report
by Robert Sheard (TMF Sheard)

HILTON HEAD, S.C. (July 30, 1997) -- The bond market continued to soar today, dropping the yield on the 30-year bond to 6.32% and boosting stocks to yet further record highs.

Any number of gooroos have pinned the 1987 label on this year's market, but just looking at the yield on the long bond shows how different at least one major aspect of our current market is from the pre-crash run-up in 1987. The bond yield at the peak in 1987 was hovering around 9.5%, significantly stronger competition for investment dollars than today's bond yield is.

The three things that I fear are higher interest rates, a recession, or astronomical valuations. As of yet, none of the three seems imminent. The economy is growing steadily without inflation raising its ugly head, so the fed is unlikely to do much in the immediate future. As for extreme valuations, we're still enough below the 23-plus market P/E ratios we've seen at other peaks that I don't foresee a meltdown. But my market predictions are almost as accurate as my long bunker shots, so take them for what they're worth.

Some housekeeping news today: first of all, my suspicion about the new budget agreement was confirmed today. It is true that the holding period to qualify for capital gains tax rates has been extended from 12 months (and a day) to 18 months (and a day). Any model currently built around an annual holding period must be stretched an extra six months to take advantage of the reduced rate of 20%. (For details specific to the Dow Approach, check out my Foolish Four column today.)

Second, in tomorrow's Workshop column, I'll present the Thoroughbred holdings for August and update the portfolio's first month's performance as well as my Blue Chip Portfolio performance.

Third, this weekend represents the end of our "monthly" holding period for the Workshop Growth Screens. As I'm on the road, look for the Workshop database to be updated sometime Sunday afternoon on the AOL site. I'll also try to arrange for someone to post it in the Workshop message folder on the Web site late Sunday as well. Fool on!

Monthly Growth Screens
(Jan. 3 to present)
52.52%  Relative Strength  
27.31%  S&P 500 Index  
22.40%  Investing for Growth  
17.33%  Low Price/Sales  
15.54%  Unemotional Growth  
13.13%  EPS Plus RS  
10.59%  YPEG Potential  
-2.96%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
28.02%  Dow Jones Ind Avg  
23.58%  Dogs of the Dow  
22.23%  Beating the S&P  
17.21%  Dow Combo  
16.31%  Unemotional Value  
16.31%  Beating the Dow  
5.61%  Foolish Four