<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (March 31, 1998) -- I'm torn today between wanting to use a series of basketball metaphors for the Dow Approach to celebrate the Kentucky Wildcats' National Championship victory and wanting to use a series of baseball metaphors to celebrate opening day of the Major League season. Or maybe golf metaphors to get ready for the Masters in ten days. What's a sports fan Fool to do?

Well, let's just skip the metaphors altogether (the celebrating last night has made my creativity a little dubious today anyway) and lay out the simple facts:

The Dow Approach is simple. Anyone who can look at two numbers and discern which of the two is higher can use this approach. (We even gather the numbers for you daily.)

The Dow Approach is inexpensive to use. On a Foolish Four portfolio, you can expect anywhere from four to a maximum of eight trades a year. With deep discounts today in the $5 - $8 range, total costs for the year can be capped at a maximum of $64. That means that with a minimum of $3,200, your expense ratio for the year should not climb above 2% of your total investment.

The Dow Approach is low-maintenance. There is only one set of trades per year (or 18 or 24 months if you're working to get the lower tax rate). The whole process takes less than 30 minutes a year, half of which will be inputting your trade orders with your broker.

The Dow Approach is consistently powerful. Decade after decade, the Dow Approach has generated portfolio returns that are greater than the returns achieved by the vast majority of professional money managers. Given the points above, this is truly astounding.

The Dow Approach is here to stay. Despite the nay-sayers who claim dividends are irrelevant today, or who claim that the approach is too well-known to work, or who declare history irrelevant, it's not different this time. This approach has worked for as long as the Dow's had 30 stocks (7 decades). Do you really believe that's a coincidence? No one will claim that the approach will make money or beat the market every year, but over the long haul, the odds are on its side to keep pounding the market.

Fool on indeed!

Current Dow Order | 1998 Dow Returns

[Robert Sheard is the author of the forthcoming book, The Unemotional Investor, due out from Simon & Schuster on May 12. To pre-order your copy, please visit Amazon.com, where it's available at a discounted price.]

TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   +   3/8   50.13 
 IP   -1 15/16  46.81 
 MO   -1  7/16  41.69 
 EK   +   7/8   64.88 
 
 
                    Day   Month    Year 
         FOOL-4   -1.23%   1.58%   6.80% 
         DJIA     +0.20%   2.97%  11.27% 
         S&P 500  +0.75%   5.00%  13.53% 
         NASDAQ   +0.93%   3.68%  16.90% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  291 Union Carb    42.94     50.13    16.74% 
  12/31/97  289 Int'l Pape    43.13     46.81     8.55% 
  12/31/97  206 Eastman Ko    60.56     64.88     7.12% 
  12/31/97  276 Philip Mor    45.25     41.69    -7.87% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  291 Union Carb 12494.81  14586.38  $2091.56 
  12/31/97  289 Int'l Pape 12463.13  13528.81  $1065.69 
  12/31/97  206 Eastman Ko 12475.88  13364.25   $888.38 
  12/31/97  276 Philip Mor 12489.00  11505.75  -$983.25 
  
  
                              CASH    $415.96 
                             TOTAL  $53401.15