The Motley Fool: The Foolish Four

<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (May 1, 1998) -- A number of readers have asked me to examine the long-term returns if one were to hold a stable of Dow ponies for significantly longer than the one-year cycle traditionally used by the High-Yield models. So today, let's do the mutual fund-style reporting on three-, five- and ten-year holding periods.

Using the current Dow stocks (although they weren't all Dow stocks in years past), the average stock returned 31.0% over the past three years, 23.9% over the past five years, and 19.7% over the past ten years.

In the following lists, I'll outline the best five and worst five stocks over the three periods.

Last Three Years

 
 Best Stocks 
 Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>     67.3% 
 Gen'l Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>       50.3% 
 Merck & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %>         47.3% 
 Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %>            41.5% 
 United Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UTX)") else Response.Write("(NYSE: UTX)") end if %> 41.4% 
  
 Worst Stocks 
 Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %>        20.0% 
 Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %>    19.9% 
 Gen'l Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>         19.0% 
 Int'l Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>          10.2% 
 Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>         9.4%

Last Five Years

 
 Best Stocks 
 Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>     40.1% 
 United Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UTX)") else Response.Write("(NYSE: UTX)") end if %> 34.5% 
 Int'l Business Mach. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>34.3% 
 Gen'l Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>       34.3% 
 Amer. Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %>       33.7% 
  
 Worst Stocks 
 Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %>    14.3% 
 AT&T Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>            13.8% 
 Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>        11.6% 
 Int'l Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>          11.0% 
 Wal-Mart Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %>     10.7%

Last Ten Years

 
 Best Stocks 
 Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %>            34.3% 
 Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>     31.5% 
 Gen'l Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>       27.4% 
 Procter & Gamble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %>     27.0% 
 Merck & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %>         25.1% 
  
 Worst Stocks 
 Goodyear Tire <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GT)") else Response.Write("(NYSE: GT)") end if %>        11.9% 
 Int'l Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>          11.6% 
 Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>        11.2% 
 Gen'l Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>         10.9% 
 Int'l Business Mach. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>10.0%

Enjoy the weekend, Fools. I'll be cheering the Kentucky Derby winner tomorrow and will be back with you on Monday. Fool on!

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 - 5/16 48.19 IP + 3/8 52.56 MO + 1/4 37.63 EK +1 7/16 73.63

Day Month Year FOOL-4 +0.70% 0.70% 10.36% DJIA +0.92% 0.92% 15.66% S&P 500 +0.83% 0.83% 15.52% NASDAQ +0.27% 0.27% 19.30% Rec'd # Security In At Now Change 12/31/97 289 Int'l Pape 43.13 52.56 21.88% 12/31/97 206 Eastman Ko 60.56 73.63 21.57% 12/31/97 291 Union Carb 42.94 48.19 12.23% 12/31/97 276 Philip Mor 45.25 37.63 -16.85% Rec'd # Security In At Value Change 12/31/97 289 Int'l Pape 12463.13 15190.56 $2727.44 12/31/97 206 Eastman Ko 12475.88 15166.75 $2690.88 12/31/97 291 Union Carb 12494.81 14022.56 $1527.75 12/31/97 276 Philip Mor 12489.00 10384.50 -$2104.50 CASH $415.96 TOTAL $55180.34