Tuesday, June 02, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (June 2, 1998) -- On Friday, I outlined the new purchases that were likely to take place for the Dozens portfolios to begin June, and today I'd like to lay out the actual stocks and prices for those hypothetical purchases.

The rankings changed on us a bit Friday in the Dow Dozen (we use the Unemotional Value rankings), and instead of Exxon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> joining the portfolio as I expected, Caterpillar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %> bounced in and out of the rankings just in time to snag a spot in the Dozens group. So we added 19 shares of Caterpillar to the Dow Dozens at $54.9375 a share.

The rest of the additions went as scheduled since we had the rankings Friday afternoon ahead of the closing bell. The Dow Racers added 15 shares of McDonald's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %> at $65.625 a share. The Keystone Dozen added 12 shares of Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> at $82.4375 a share. The Low Price/Sales Dozen added 18 shares of Lexmark Int'l 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LXK)") else Response.Write("(NYSE: LXK)") end if %> at $55.50 a share. The Formula90 Dozen added 12 shares of Lowes Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> at $79.25 a share. And the Relative Strength Dozen added 12 shares of America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> at $83.3125 a share. A commission of $8 was "paid" for each trade.

The model portfolios continue to give up ground. As I've mentioned often, though, looking at annualized returns this early in the year and for portfolios which only hold half of the intended dozen stocks can be extremely misleading. But as a relative measure, we can certainly use them to see which portfolios are doing the best so far and can compare them to the S&P 500 Index's annualized return.

Through late this afternoon, here are the rankings with annualized returns (since December 31):

49.8% Formula90 Dozen
32.2% S&P 500 Index
23.1% Dow Dozen
21.4% Keystone Dozen
15.5% Relative Strength Dozen
2.6% Dow Racers Dozen
-21.7% Low Price/Sales Dozen

The Low Price/Sales Dozen, which follows our version of Jim O'Shaughnessy's Cornerstone Growth strategy, has had rotten luck so far. Five of the six stocks have lost money since being added to the portfolio.

The January purchase, VWR Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VWRX)") else Response.Write("(Nasdaq: VWRX)") end if %>, has lost 10.5%. The February purchase, Alaska Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %>, is down 4.4%. The March purchase, Whole Foods Market <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %>, had dropped 12.7%. The May purchase, Pillowtex <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PTX)") else Response.Write("(NYSE: PTX)") end if %>, has slipped 7.0%. And the June purchase, Lexmark Int'l 'A' has already given up 6.5%.

Only the April purchase of Lowes has saved the portfolio from a clean sweep. It's up 10.6% since being added to the group.

Of the $6,000 invested in the portfolio ($1,000 each month), $5,696.75 remains. That annualized loss of 21.7% equates to a year-to-date return of -9.7% for the first 153 days of the year, compared to the S&P 500 Index's year-to-date gain of 12.4%. Let me repeat, though, that it's still very early going and such comparisons won't mean nearly as much as the returns once these portfolios are fleshed out with a full group of twelve stocks and have grown more than one year old. Fool on!

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.]