The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (June 17, 1998) -- Despite the general choppiness of the recent market correction, one of our Dozens models has poured on a little steam of late. The Keystone Dozen portfolio is now sporting five of six solid performers and has closed the gap in returns between it and the more aggressive Relative Strength and Formula90 Dozen models.

At the beginning of the year, our first hypothetical $1,000 was invested in Fifth Third Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FITB)") else Response.Write("(Nasdaq: FITB)") end if %>, which is the one loser in the portfolio, down 3.4%. But it's recovering from a bigger loss several weeks ago, so there's hope for this regional bank to become a good holding yet.

The second $1,000 (at the end of January) went into Schering-Plough <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGP)") else Response.Write("(NYSE: SGP)") end if %>. Even with the critics saying drug stocks had no room to go up further, this one is up 25.9% in four and a half months.

The third $1,000 (end of February) was invested in another drug stock, Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %>. And in only three and a half months, it's up big also, 25.8%. [Insert your favorite Viagra joke here!]

The fourth $1,000 (end of March) was placed in cable TV giant Tele-Communications Inc. 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %>. After stalling briefly, TCI is up 11.1% in just two and a half months.

Our fifth stock (end of April) was none other than the mother ship, America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>. With the news today that AOL spurned a buyout bid from telecommunications giant AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, the stock's now up 16.7% in just a month and a half.

Most recently (end of May) the portfolio picked up monster box maker Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>. Despite buying into a market correction, Dell is nevertheless up 3.9% in the past 17 days.

Altogether the original $6,000 is now worth $6,784.06. That's an annualized return (based on the different purchase dates) for the Keystone Dozen of 60.2%. The same $6,000 invested on an identical schedule into the Standard & Poor's 500 Index Spyder <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: SPY)") else Response.Write("(AMEX: SPY)") end if %> would be worth $6,337.43. That's an annualized return of 23.6%. (Neither return includes dividends.)

If we convert those annualized returns to an equivalent year-to-date return for the 168 days we've completed, the Keystone Dozen has returned 24.2% versus the Spyder's return of 10.2%.

The Formula90 and Relative Strength Dozens have annualized returns somewhat higher than Keystone's, but they've been less consistent across the range of holdings. The Relative Strength Dozen's annualized return is 70.6%, chiefly on the back of Best Buy's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %> 87.9% return for the portfolio's initial purchase. Nothing since that first purchase has performed particularly impressively. A great performer early in the purchase order can help the overall return significantly because that money's been at work longer.

Formula90's annualized return is 69.6%, but it too is riding the good returns of its first two selections and nothing much since. Safeskin <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFSK)") else Response.Write("(Nasdaq: SFSK)") end if %> is up 30.6% for the life of the portfolio and Dell is up 72.3% since being added at the end of January.

If you'd like to chat with me and/or get an autographed copy of my book, please join us tomorrow evening at 9:00 (eastern) in the America Online Motley Fool auditorium. I'll be answering questions and we'll be taking online orders for autographed copies of The Unemotional Investor until roughly 9:45 (or whenever they kick us out). If you'd like an autographed copy of the book but can't attend the chat, you may still order a book using the special AOL order form anytime up until the time of the chat. Hope to see you Thursday night!

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.]