<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (Feb. 3, 1998) -- Investors have lots of reasons not to put money in stocks today. The market's overvalued. P/E Ratios are too high, dividend yields too low. We've had three great years in a row so we're due for a bad year. The Asian currency meltdown is going to hurt corporate profits. The January effect didn't occur. The Broncos won the Super Bowl. And worst of all, Elvis is doing pizza commercials. And this doesn't even touch on all the reasons one might want to avoid individual stocks.

But I'll tell you what I always tell readers, invest anyway, and keep adding every month for the rest of your life.

There's something called Analysis Paralysis, which is the syndrome investors suffer from when they read and read and read and read, and then can't act because they've got so much conflicting information keeping them from investing.

We're all for individual homework here at the Fool, but at some point, you have to dive in the pool, and the idea that any of us can predict what will happen in the near future has been proven silly again and again. And if you're truly a long-term saver/investor, it doesn't matter anyway.

I recently did a study where two investors "market-timed" an annual contribution into the market over twenty years. One investor hit the exact peak for the S&P 500 each year; the other hit the exact low for the year. And yet, after twenty years, the difference in their annualized return was only two percentage points. The reason? They both kept adding new money each year, regardless of whether the market was too high or too low.

You can't time the market. Period. And you don't need to try as long as you stay fully invested and keep adding new money regularly. Your net worth will continue to increase. You won't be paralyzed by each new decision, and you'll sleep better at night. If you find you're the real agonizing type, the mechanical nature of the Foolish Four will be even more attractive to you because it eliminates every decision. All you have to do is adopt the discipline to carry out the process each year. If you can do that much -- just once a year -- you've already increased your odds of long-term success substantially. Break out of the fear and doubt. Just do it.

[Still confused about the changes to the Foolish Four? Visit our special collection which explains why the Fools have modified our beloved Dow Approach.]

[Want to be the first Fool on your block to get a copy of Robert Sheard's forthcoming book? Click here to pre-order your copy of The Unemotional Investor.]

TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   +2  1/16  47.00 
 IP   +1  5/16  48.94 
 MO   +   1/2   43.06 
 EK   +   9/16  65.94 
 
            
                    Day   Month    Year 
         FOOL-4   +2.37%   4.79%   6.73% 
         DJIA     +0.65%   3.21%   3.19% 
         S&P 500  +0.47%   2.62%   3.67% 
         NASDAQ   +0.82%   2.90%   6.11% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  289 Int'l Pape    43.13     48.94    13.48% 
  12/31/97  291 Union Carb    42.94     47.00     9.46% 
  12/31/97  206 Eastman Ko    60.56     65.94     8.88% 
  12/31/97  276 Philip Mor    45.25     43.06    -4.83% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  289 Int'l Pape 12463.13  14142.94  $1679.81 
  12/31/97  291 Union Carb 12494.81  13677.00  $1182.19 
  12/31/97  206 Eastman Ko 12475.88  13583.13  $1107.25 
  12/31/97  276 Philip Mor 12489.00  11885.25  -$603.75 
  
  
                              CASH     $77.19 
                             TOTAL  $53365.50