Sheard Blue-Chip Fund

by Robert Sheard
(TMF Sheard)

LEXINGTON, KY. (June 26, 1998) -- Almost exactly a year ago, I wrote about an informal portfolio I had helped a friend set up based on some of the early research I had done into what eventually become the Keystone model. What I jokingly called the Sheard Blue Chip Fund then was the list of 15 stocks we came up with to buy and hold for a year.

With the advent of the full-fledged Keystone model in recent months, I had virtually forgotten about the list of 15 stocks, but a reader wrote me this morning asking for an update. So let's see how the fifteen stocks did over the past year.

Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>, a lousy performer, dropped 5.49%.
Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %>, up and down on merger news, gained 32.71%
Procter & Gamble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %> scrubbed enough teeth clean to gain 23.25%.
Eli Lilly <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> was fair for a strong drug group, gaining 33.65%.
Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %> put in a stellar performance, up 85.82%.
American Int'l Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AIG)") else Response.Write("(NYSE: AIG)") end if %> wrote plenty of policies, gaining 37.47%.
Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> didn't even need Viagra for a great year, up 105.41%.
Gillette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: G)") else Response.Write("(NYSE: G)") end if %>, gearing up for Mach III, gained 32.98%.
Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> fought currency exchange problems to a 15.43% gain.
Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> jumped 36.80% despite Janet Reno's best efforts.
DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %>, a Dow Dogs choice, barked then bit, up 44.92%.
Merck <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %>, another average drug performer, gained 32.49%.
Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %>, a Dow newcomer, stalled after a 16.74% rise.
Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> couldn't overcome litigation fears and lost 11.89%.
And Abbott Labs <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ABT)") else Response.Write("(NYSE: ABT)") end if %> posted a mediocre 19.69%.

Altogether, the portfolio gained an average of 33.33% (before fees and taxes), versus the Standard & Poor's 500 Index's gain of 30.26%. A tight victory, but a victory nevertheless.

This group of somewhat intuitive picks hasn't kept pace with picks in the Keystone portfolio, but it was partially based on the same concepts that became incorporated into Keystone -- relatively stable large-caps with good earnings growth over the long term. Throw in the relative strength factor Keystone thrives on and my portfolio picks a year ago would probably have been even better. (For example, Keystone's already doubled the S&P 500 Index returns this year, up 34% vs. 17%.) It's amazing how far we've come in the last year on these approaches. Have a Foolish weekend.

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.]