Thursday, February 05, 1998

<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (Feb. 5, 1998) -- One of the primary tenets of Folly is the need for self-reliance in personal finance, whether that's saving, insurance, taxes, or investing. And our efforts to teach individuals how to manage their own stock portfolios are but one part of that equation.

Too often the financial industries have it in their best interests to keep individuals ignorant and dependent, and it can often lead to abuses. And given the Motley Fool's literary leaning, it's hard to find a better passage to support this idea of abandoning the Wise and taking control of one's own finances than the following selection from Mark Twain's classic, The Adventures of Huckleberry Finn.

For those of you who haven't read the book in some time, there's a passage where Jim, Huck's companion and a runaway slave, explains how he lost his riches trusting others. Jim felt rich because he had $14 at one point, so he "tuck to speculat'n', en got busted out."

He started out speculating in stock, "live stock," to be precise. He stuck $10 into a cow that promptly died. But he didn't lose everything; he was able to sell "de hide en taller for a dollar en ten cents." That left him $5.10.

Another slave had started a bank and promised to repay anyone who put a dollar in with four dollars at the end of the year. But Jim knew he could get a better deal since he had more money than the rest of the slaves. Jim was promised $35 at the end of the year for putting in his five dollars.

Now Jim understood compounded growth and planned to take the $35 and invest it again immediately in something "en keep things a-movin'." So he promised the $35 to another slave in exchange for a wood-flat. But that night someone stole the wood-flat and the next day the "banker" told Jim that the bank went bust. "So dey didn' none uv us git no money."

Down to his last dime, Jim had a dream that told him to let another slave, Balum, invest it for him:

"But he's lucky, dey say, en I see I warn't lucky. De dream say let Balum inves' de ten cents en he'd make a raise for me. Well, Balum he tuck de money, en when he wuz in church he hear de preacher say dat whoever give to de po' len' to de Lord, en boun' to git his money back a hund'd times. So Balum he tuck en give de ten cents to de po', en laid low to see what wuz gwyne to come of it."

"Well, what did come of it, Jim?"

"Nuffn' never come of it. I couldn' manage to k'leck dat money no way; en Balum he couldn'. I ain't gwyne to len' no mo' money 'dout I see de security. Boun' to git yo' money back a hund'd times, de preacher says! Ef I could git de ten cents back, I'd call it squah, en be glad er de chanst."

Extreme case, perhaps? But nevertheless, it's the very point we stress in teaching the Foolish Four and all other Foolish investment ideas: Rely on yourself; do your own homework; take control of your own decisions and investments. 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.]

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TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   -  11/16  46.56 
 IP   -   5/8   47.00 
 MO   +1  5/16  43.69 
 EK   -   5/8   64.81 
 
            
                    Day   Month    Year 
         FOOL-4   -0.28%   3.32%   5.24% 
         DJIA     -0.15%   2.67%   2.64% 
         S&P 500  -0.33%   2.37%   3.41% 
         NASDAQ   -0.21%   3.55%   6.78% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  289 Int'l Pape    43.13     47.00     8.99% 
  12/31/97  291 Union Carb    42.94     46.56     8.44% 
  12/31/97  206 Eastman Ko    60.56     64.81     7.02% 
  12/31/97  276 Philip Mor    45.25     43.69    -3.45% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  289 Int'l Pape 12463.13  13583.00  $1119.88 
  12/31/97  291 Union Carb 12494.81  13549.69  $1054.88 
  12/31/97  206 Eastman Ko 12475.88  13351.38   $875.50 
  12/31/97  276 Philip Mor 12489.00  12057.75  -$431.25 
  
  
                              CASH     $77.19 
                             TOTAL  $52619.00