<THE FOOLISH FOUR>
by Robert Sheard
LEXINGTON, KY. (July 17, 1998) -- A reader asked me this morning whether it's counter-intuitive to preach long-term approaches to investing while, as a forum, we write about a number of portfolios on a daily basis. And somewhere in the slowly eroding gray matter holding my ears apart, I knew I had addressed such a question before. In fact, it was almost precisely two years ago in a Fribble called "The Whole Season." With my five-year-old son recently having become an obsessed baseball fan, I think the text is particularly appropriate, so let me reprise it here.
One of the periodic criticisms of The Fool is that it plays both ways when it stresses a long-term horizon while fastidiously recounting each day's action. Not surprisingly, this criticism seems to pop up only when the Fool Portfolio return has slipped, but we'll leave that aside.
I think this criticism is simply wrong-headed and I believe so because of my long-time fascination with sports. Investing is, after all, a very keen competition. We wouldn't be so obsessed with returns and comparisons if it weren't. And yet, the same criticism about being long-term and short-term followers is never leveled at sports commentators.
Let's put it in terms of baseball, as we head into this July 4th [1996] holiday, traditionally a baseball fan's dream day, with the season roughly at its half-way mark and ESPN advertising its holiday triple-header. In baseball, we enjoy watching each game. We cheer when our favorite team wins and groan when it falls short. And then we head to sports bars or living rooms or coffee houses and dissect every memorable play. The next day, we do it all again.
But that doesn't mean for a minute that any fan loses sight of the fact that a single game means little in light of the entire season. Each fan knows that the teams with the best records for the whole year make it to the playoffs, and ultimately the World Series. But that in no way lessens our enjoyment of each individual contest.
Investing in the stock market is an identical competition. We can watch each day's action with rigorous attention, celebrate the wins and bemoan the losses, and still be focused ultimately on the long-term results. Most fans don't abandon their favorite teams just because they lose a game, or even have a poor season occasionally. (Heck, some fans never abandon a team, even when it's hapless for decades.) And in investing, we Fools are the same way. We stick with our strategies even when they hit a rough patch, knowing that we'll win more than we lose.
So, don't look at our daily commentaries, our exaltations and lamentations, as counter to our long-term philosophy about investing. We're just baseball fans with season tickets, watching every game, but hoping to make it to the World Series.
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.]
07/17/98 Close
Stock Change Last -------------------- UK - 5/8 52.06 IP + 3/16 45.00 MO + 1/16 39.63 EK - 7/8 86.44 |
Day Month Year
FOOL-4 -0.50% 6.19% 15.31%
DJIA +0.10% 4.31% 18.08%
S&P 500 +0.23% 4.66% 22.28%
NASDAQ +0.41% 6.02% 27.92%
Rec'd # Security In At Now Change
12/31/97 206 Eastman Ko 60.56 86.44 42.72%
12/31/97 291 Union Carb 42.94 52.06 21.25%
12/31/97 289 Int'l Pape 43.13 45.00 4.35%
12/31/97 276 Philip Mor 45.25 39.63 -12.43%
Rec'd # Security In At Value Change
12/31/97 206 Eastman Ko 12475.88 17806.13 $5330.25
12/31/97 291 Union Carb 12494.81 15150.19 $2655.38
12/31/97 289 Int'l Pape 12463.13 13005.00 $541.88
12/31/97 276 Philip Mor 12489.00 10936.50 -$1552.50
CASH $754.73
TOTAL $57652.54
|