<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (Jan. 12, 1998) -- Today has been an interesting day for me. As many of you know, three years ago I was an obscure English teacher at the University of Kentucky and Georgetown College, agonizing over the last chapter of my Ph.D. dissertation on contemporary British and Commonwealth fiction. The stock market was about as far from my consciousness as you can imagine.

Now I write for the most-followed investing forum on the Internet, have a book coming out in May (never did finish the dissertation), and because of a recent article in my local newspaper I've been the guest on a local radio talk-show and tonight did a brief interview for the local TV news. Does any of this make me an expert? Of course not. (The appeal's really the silly hat, but I'll never admit it publicly.)

But today's TV news interview was very telling in that what brought it about was the recent market volatility and questions about what individual investors should do about it. The traditional media have made hay with the hundred-point swings almost daily for the Dow, the 550-point drop in October, now called Black Monday, Blue Monday, or Gray Monday depending on your color fashion sense. And the impression everyone's getting is that we're suddenly riding a thriller at a theme park.

But the real answer I had for the interviewer and the readers of the Fool is anything but profound. No one -- let me repeat -- NO ONE knows what's going to happen in the short run. We're only about 8% off the Dow's all-time closing high, set in early August, and the large raw numbers for daily movements on the Dow don't mean very much off of a base between 7,500 and 8,000. Hey, a 100-point move four years ago was real news. Today, it's typical. It's not the "wild ride" we hear every day on the business channels.

I know; I never answered the question. So what's an individual investor to do? Nada. Zippo. Squat. Zilch.

If you're a Fool, you're not even concerned primarily with this year or next year. Your goal, perhaps, is a retirement fund thirty years from now or a vacation home in a decade or two. Where else are you going to put your money for that kind of long-term horizon? The stock market is consistently the best long-term investment vehicle and the Wise prove year after year that timing the market is futile. So the individual investor should find the strategies that work well year after year (hint, hint: the Foolish Four) and then ignore the daily activity of the market.

If I could make only one point clear in my entire writing career, it would be this: Don't get emotional about your portfolio. The minute you do, you increase the risks of making a devastating mistake. To stress how important I think this single idea is, I named my book after it: The Unemotional Investor. (Shameless plug coming: Amazon.com has already started taking pre-orders for my book if you're interested in getting one of the first copies. It should be available in late April or early May.)

Fool on!

TODAY'S NUMBERS

Stock Change Last -------------------- UK + 1/16 41.56 IP - 11/16 41.94 MO + 15/16 46.38 EK + 9/16 63.00

Day Month Year FOOL-4 +0.39% 0.14% 0.14% DJIA +0.88% -3.30% -3.30% S&P 500 +1.24% -3.22% -3.22% NASDAQ +0.29% -4.00% -4.00% Rec'd # Security In At Now Change 12/31/97 206 Eastman Ko 60.56 63.00 4.02% 12/31/97 276 Philip Mor 45.25 46.38 2.49% 12/31/97 289 Int'l Pape 43.13 41.94 -2.75% 12/31/97 291 Union Carb 42.94 41.56 -3.20% Rec'd # Security In At Value Change 12/31/97 206 Eastman Ko 12475.88 12978.00 $502.13 12/31/97 276 Philip Mor 12489.00 12799.50 $310.50 12/31/97 289 Int'l Pape 12463.13 12119.94 -$343.19 12/31/97 291 Union Carb 12494.81 12094.69 -$400.13 CASH $77.19 TOTAL $50069.32