<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (April 27, 1998) -- Foolish Four component Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %> posted much-better-than-expected earnings today, beating Wall Street's consensus estimate by five percent. For the first quarter, Union Carbide earned $1.01 per share. According to the company, a strong performance of the specialties and "intermediates" segment pushed the numbers higher.

Chairman and CEO William Joyce says the company may earn $4.00 per share in 1999 and 2000, which would mean the company "has truly entered a new, more productive and profitable era."

The company has a cost-saving target of $1.1 billion over 1993 levels by the year 2000, and Joyce announced that the company's more than halfway there. He also claimed they have reached their intermediate $637 million cost-saving target three years early.

The news hasn't helped the stock today, though, as you might expect on a day when the overall market stubs its toe. With today's drop of 1.6%% for the Dow, one would think we were in the midst of the October 1987 crash, listening to the parade of experts on television today. Words like crisis, meltdown, bubble, froth, and scores of others are being thrown out by those hoping to get famous by being right once in a while on their market-timing predictions.

And who knows? Maybe we will see 8,000 for the Dow again before we climb back above 9,000. None of us is capable of predicting that, so why bother? If you're a long-term investor (and if you're using the Dow Approach, you must be, by definition), you simply ignore the market fluctuations and stick with the strategy you've adopted. The minute you get nervous and decide to dance in and out of the market, your odds of becoming road kill soar.

The Wall Street Journal article that fostered today's negative tone isn't a factor you should include in your investment equation with this approach. If the Federal Reserve raises rates, you'll stay invested. If the Fed lowers rates, you'll stay invested. If we enter a bear market, you'll stay invested. (Don't forget that the Foolish Four made money in 1973 and 1974). You'll always stay invested with this approach.

So if today's market activity is enough to make you itchy to sell out, turn off the television, ignore the nightly news with its inevitable overblown coverage of what amounts to a minor move, and grab those wedges and practice your short game. Shaving another three strokes off your handicap is probably a more profitable use of your time than agonizing over the stock market's daily movements. (And I mean profitable in terms of money as well as quality of life. Three more strokes off your game will win you a few more of those Nassaus. Jump in and out of the market on blips like today's and you're pretty much assured of losing.)

Relax, take the long and unemotional viewpoint, and be Foolish!

Current Dow Order | 1998 Dow Returns

[Robert Sheard is the author of The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and soon at your local bookseller.]

TODAY'S NUMBERS

Stock Change Last -------------------- UK -1 5/16 48.00 IP -1 3/4 51.31 MO - 9/16 37.69 EK - 15/16 71.25

Day Month Year FOOL-4 -2.23% 1.67% 8.59% DJIA -1.62% 1.34% 12.76% S&P 500 -1.93% -1.38% 11.96% NASDAQ -2.60% -0.84% 15.92% Rec'd # Security In At Now Change 12/31/97 289 Int'l Pape 43.13 51.31 18.99% 12/31/97 206 Eastman Ko 60.56 71.25 17.65% 12/31/97 291 Union Carb 42.94 48.00 11.79% 12/31/97 276 Philip Mor 45.25 37.69 -16.71% Rec'd # Security In At Value Change 12/31/97 289 Int'l Pape 12463.13 14829.31 $2366.19 12/31/97 206 Eastman Ko 12475.88 14677.50 $2201.63 12/31/97 291 Union Carb 12494.81 13968.00 $1473.19 12/31/97 276 Philip Mor 12489.00 10401.75 -$2087.25 CASH $415.96 TOTAL $54292.52