<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (Feb. 4, 1998) -- Here in the Bluegrass we're experiencing our first significant snow (blizzard) in a couple of years, and of course, it is paralyzing the region and playing havoc with power and telephone lines.

As an investor, does any of this matter? Not greatly. But it brings up a point about the Foolish Four that's central to the success of a life-long saving/investing program. Don't get so caught up in watching the day-to-day movements in your stocks that it drags your emotions into the process and distracts you from real life.

The Foolish Four derives a large part of its success from the mechanical and disciplined nature of its stock-selection rules. If one's following the Foolish Four rules, there's never a question of whether this is the right time to switch from one stock to another. There's no second-guessing about whether one should be in the market at all.

In other words, the Foolish Four, and other strategic indexing approaches like it, eliminates the individual investor's biggest foe -- emotion. And it not only frees one from such emotions during the actual buying/selling process, but also allows one to go through the rest of the year without constantly worrying about whether it's time to bail on a stock or not.

I can't count how many readers in the Daily Dow area last year bemoaned the strategy's lousy start and that AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> was going to ruin the portfolio for the whole year. And many of them gave up after a few months. I even wondered myself about AT&T's fate, but the point is, if you stick with the approach, you won't act on those fears and natural emotions. And by now, of course, you know that AT&T finished the year in a startling fashion, one of the top performers out of the entire Dow, vindicating the Dow Dividend Theory and rewarding those Fools who held their stock for the duration.

So on a day like this, where I'm likely to lose my power again, maybe even the phone lines, and the car's not going to get me anywhere, it's comforting to know that my investments aren't a major issue today. I don't have to watch them; I don't have to worry about closing out my day-trade positions before the lights go off. I don't have to worry about whether Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> is going up or down today. In other words, I can deal with real life away from Wall Street. And for most of us individual investors, that's really what we'd like our lives to be anyway, isn't it? Fool on!

[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   +   1/4   47.25 
 IP   -1  5/16  47.63 
 MO   -  11/16  42.38 
 EK   -   1/2   65.44 
 
            
                    Day   Month    Year 
         FOOL-4   -1.12%   3.61%   5.53% 
         DJIA     -0.38%   2.82%   2.80% 
         S&P 500  +0.09%   2.72%   3.76% 
         NASDAQ   +0.84%   3.77%   7.01% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  289 Int'l Pape    43.13     47.63    10.43% 
  12/31/97  291 Union Carb    42.94     47.25    10.04% 
  12/31/97  206 Eastman Ko    60.56     65.44     8.05% 
  12/31/97  276 Philip Mor    45.25     42.38    -6.35% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  289 Int'l Pape 12463.13  13763.63  $1300.50 
  12/31/97  291 Union Carb 12494.81  13749.75  $1254.94 
  12/31/97  206 Eastman Ko 12475.88  13480.13  $1004.25 
  12/31/97  276 Philip Mor 12489.00  11695.50  -$793.50 
  
  
                              CASH     $77.19 
                             TOTAL  $52766.19