<THE FOOLISH FOUR>
by Robert Sheard
LEXINGTON, KY. (July 24, 1998) -- As poor as the first half of the year has seemed to be for the Foolish Four model, Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> has recently pared some of its early losses and the portfolio is actually ahead of the Dow, finally. True, it's still lagging behind the Standard & Poor's 500 Index, but the gap is closing.
The returns in this report are through July 22 and include dividends. For a full report, see our 1998 Dow Returns file.
The Dow Jones Industrial Average has gained 15.44% so far this year, and the S&P 500 has gained 20.40%. Sandwiched in between is the Foolish Four portfolio, sitting on a gain of 16.09%, despite the fact that one of the four stocks (Philip Morris) has the second-worst return of the entire group of thirty stocks. Only Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> is doing worse than Philip Morris' loss of 6.15%. (Hewlett-Packard is down 10.78%.)
Two of the remaining three stocks are beating the Dow. Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %> is up 17.04% and Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> has soared recently to a 47.22% profit. The final stock, International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>, is limping along with a weak 6.26% gain.
The best stock in the Dow has been Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %>, riding the wave of consumer confidence to a gain of 70.53%. Kodak is next, followed by McDonald's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %>, with a gain of 41.25%.
This year's PPP stock, International Paper, has been a disappointment, and has also dragged down the Unemotional Value 2, which is up only 11.65%.
TMF Sandy's RP4 model, however, is doing quite well, up 21.11% and ahead of both the Dow and the S&P 500. And finally, the High-Yield 10, the most basic of all the Dow Approaches, is up 12.52%. Three of the ten high-yield stocks are losing ground on the year: Philip Morris; Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %>, down 0.15%; and AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, down 4.89%. And finally, an equally weighted basket of all thirty Dow stocks is up 17.01%.
Incidentally, that 16.09% return for the Foolish Four equates to an annual return of 31%. If that were to happen, I'd have a hard time calling it a "poor" year for the approach, as so many vocal critics have been claiming. We'll keep watching.
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.]
07/24/98 Close
Stock Change Last -------------------- UK +1 1/4 50.88 IP - 1/2 43.50 MO - 1/4 41.56 EK - 1/4 84.75 |
Day Month Year
FOOL-4 +0.17% 5.10% 14.12%
DJIA +0.05% -0.16% 13.01%
S&P 500 +0.09% 0.61% 17.56%
NASDAQ -0.21% 1.92% 22.97%
Rec'd # Security In At Now Change
12/31/97 206 Eastman Ko 60.56 84.75 39.94%
12/31/97 291 Union Carb 42.94 50.88 18.49%
12/31/97 289 Int'l Pape 43.13 43.50 0.87%
12/31/97 276 Philip Mor 45.25 41.56 -8.15%
Rec'd # Security In At Value Change
12/31/97 206 Eastman Ko 12475.88 17458.50 $4982.63
12/31/97 291 Union Carb 12494.81 14804.63 $2309.81
12/31/97 289 Int'l Pape 12463.13 12571.50 $108.38
12/31/97 276 Philip Mor 12489.00 11471.25 -$1017.75
CASH $754.73
TOTAL $57060.61
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