The Motley Fool: The Foolish Four

<THE FOOLISH FOUR>

by Robert Sheard

LEXINGTON, KY. (July 6, 1998) -- As we start into 1998's second half, let's look at the performance of the Dow stocks for the first half. As I've written on several occasions, it's been an inauspicious start for the Dow this year, and in fact, the DJIA is trailing the other two major averages by a fair margin. With the Nasdaq Composite up 20.66% and the Standard & Poor's 500 Index up 17.13%, the DJIA is only sporting a 13.20% gain through 6/30. Our own index (an equally weighted basket of all 30 Dow stocks) is up 14.78%.

Unfortunately, none of the Dow Approaches we follow is even keeping pace with the DJIA, let alone the S&P 500 Index or Nasdaq. Of the very concentrated portfolios, the Unemotional Value 2 is keeping touch with the Dow. UV2 is up 13.06% on the strong returns of Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %>, up 25.41%, and despite the performance of the PPP stock, Int'l Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>, up only 0.70%.

The 4-stock RP Variation is up 11.24% and the Foolish Four (Unemotional Value 4) is up 9.28%. The culprit holding these models back, of course, is Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %>, which has recovered some of its early loss, but is still down 11.23% for the first half. The entire High Yield 10 is up just 7.87%.

There are a number of terrific performers on the Dow this year, however. The following list is in order by the year-to-date returns for all 30 Dow stocks:

54.48 Wal-Mart Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %>
44.93 McDonald's Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %>
36.03 Sears Roebuck <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: S)") else Response.Write("(NYSE: S)") end if %>
28.72 Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %>
27.98 Amer. Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %>
27.97 United Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UTX)") else Response.Write("(NYSE: UTX)") end if %>
27.14 Merck & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %>
25.51 Du Pont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %>
25.41 Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %>
24.34 Gen'l Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>
22.23 Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>
18.08 Exxon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %>
15.14 AlliedSignal Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALD)") else Response.Write("(NYSE: ALD)") end if %>
14.80 Procter & Gamble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %>
13.09 Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %>
12.76 Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>
11.59 Gen'l Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>
10.42 Chevron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %>
10.17 Caterpillar Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %>
10.17 Int'l Business Mach. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>
6.58 Disney (Walt) <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %>
5.27 Morgan (J.P.) & Co <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %>
2.16 Goodyear Tire <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GT)") else Response.Write("(NYSE: GT)") end if %>
2.03 Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %>
0.70 Int'l Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>
-3.53 Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
-5.38 Aluminum Co. of Amer. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AA)") else Response.Write("(NYSE: AA)") end if %>
-5.82 AT&T Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>
-8.42 Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %>
-11.23 Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %>

Last year at this time, the Dow approaches weren't doing particularly well, either, so don't be too disheartened. Often the stocks flounder for several months and then make a run late in the year, but no two stocks follow precisely the same pattern. Maybe the recent slight recovery in Philip Morris is a sign that at least the biggest loser is starting to rebound. Hang in there.

Current Dow Order | 1998 Dow Returns

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

07/06/98 Close

Stock Change Last -------------------- UK +1 1/4 55.63 IP + 3/8 43.75 MO - 3/16 40.00 EK + 3/16 73.50

Day Month Year FOOL-4 +0.83% 2.71% 11.53% DJIA +0.74% 1.56% 14.97% S&P 500 +0.95% 2.07% 19.26% NASDAQ +0.81% 0.78% 21.59% Rec'd # Security In At Now Change 12/31/97 291 Union Carb 42.94 55.63 29.55% 12/31/97 206 Eastman Ko 60.56 73.50 21.36% 12/31/97 289 Int'l Pape 43.13 43.75 1.45% 12/31/97 276 Philip Mor 45.25 40.00 -11.60% Rec'd # Security In At Value Change 12/31/97 291 Union Carb 12494.81 16186.88 $3692.06 12/31/97 206 Eastman Ko 12475.88 15141.00 $2665.13 12/31/97 289 Int'l Pape 12463.13 12643.75 $180.63 12/31/97 276 Philip Mor 12489.00 11040.00 -$1449.00 CASH $754.73 TOTAL $55766.36