Wednesday, May 13, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (May 13, 1998) -- The average annual return for the Standard & Poor's 500 Index over the last seventy years has been roughly 11%. Already 1998 has been a good year, and it's only May. As of late this afternoon, the index is sporting a year-to-date gain of 15% (without dividends). Not bad.

The Keystone Growth model, though, is already doubling that pace, even with a relatively weak start for the top five stocks. As of this afternoon, without dividends, the Keystone 10 from January 1 are up 30%. (Even the Keystone 5 have surpassed the S&P 500 Index now, up 18% on the year.) And if you went really conservative and bought all thirty Keystone stocks? A 22% gain year-to-date.

Here's a list of this year's top ten and their price gains. Add another small pop for dividends.

Fifth Third Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FITB)") else Response.Write("(Nasdaq: FITB)") end if %> -4%
Coca-Cola Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCE)") else Response.Write("(NYSE: CCE)") end if %> 6%
The Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> 55%
AirTouch Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ATI)") else Response.Write("(NYSE: ATI)") end if %> 23%
Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %> 11%
Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> 13%
Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> 131%
Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> 48%
Norwest Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOB)") else Response.Write("(NYSE: NOB)") end if %> -1%
Safeway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SWY)") else Response.Write("(NYSE: SWY)") end if %> 18%

With only five of the ten stocks ahead of the index, one might think this was a lousy performance, but in fact, I think it just shows that what's important isn't the individual performances of the stocks but the aggregate performance of the portfolio. Where the two bank stocks have been weak, Dell, The Gap, and Pfizer have more than picked up the slack. You don't have to be right about every stock if your strategy is right overall more often than not. I use a lot of sports comparisons in my columns, and this point is just like the baseball batting average. The batting champion -- the very best hitter in baseball -- still makes an out more than six times in each ten at bats. But the other 35% of the time or so, he's very effective and gets the job done. Fortunately, with investing, it's easier to have a higher batting average than it is in baseball.

Tonight at 7:00, Fools, I'll be the guest "speaker" at a Barnes & Noble author's chat, taking questions about The Unemotional Investor. If you'd like to stop by, the address is www.barnesandnoble.com. Hope to see you there.

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database

[Robert Sheard is the author of the The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and your local bookseller.]