Thursday, June 04, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (June 4, 1998) -- Tomorrow ends our May reporting period for the monthly version of the Unemotional Growth model and the closing rankings at that time will determine our holdings for June. (Keep in mind that our monthly cycle for this model stretches between the closing bells on each month's first Friday.)

As of noon today, it looks like the model might suffer its first monthly loss of the year, but the loss is only a fraction under one percent, so today's late-afternoon rally and tomorrow's trading might well boost it back into positive territory. The 0.98% loss is still ahead of the S&P 500 Index's loss of 3.25%, however.

The individual holdings are ending up the month this way:

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> -1.11%
Anchor Gaming <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLOT)") else Response.Write("(Nasdaq: SLOT)") end if %> 4.79%
PeopleSoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %> -2.82%
AirTouch Comm. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ATI)") else Response.Write("(NYSE: ATI)") end if %> -6.82%
HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %> 1.08%

For the year, the five-stock Unemotional Growth model is sitting on a gain of 30%. In January, it gained 4.83%. It gained 12.14% in February, 9.46% in March, and 2.02% in April before this month's loss of 0.98%.

Since the model's inception on January 2, 1987, $10,000 would have grown into $431,140 for an annualized return of 39% (excluding taxes and trading costs)

The returns, as you can see in our UG History File, tend to get strung together. The longest losing streak has been four months, during the recession in 1990, but the annual return for 1990 was a loss of only 3.06% -- the only losing year for the model since its inception.

Last year, however, it had two awful stretches where it lost money for three consecutive months. Despite the volatility, though, the model recorded a gain of 1.00% for the whole year. That's still disappointing in a year when the S&P 500 Index recorded a gain of better than 30%, but earnings momentum models suffered last year overall. The PBHG Growth Fund, managed using a similar approach to stock-picking and sporting a very good long-term record compared to its peers, actually lost money last year. So UG investors weren't alone.

As always, look for a complete set of new Workshop rankings tomorrow afternoon (or evening). The new UG rankings at that time will be used for the holdings for June (from June 5 through July 3). 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.]