<THE FOOLISH FOUR>
by Rick Aristotle Munarriz
(TMF Edible)
MIAMI, FL (Aug. 4, 1998) -- Last time I was here, almost a year ago actually, I wrote about Disney <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %>. It's one of the better known names in the Dow Jones Industrial Average but rarely gets mentioned around these parts. With good reason, too. The stock's price has always been too high, and the dividend too low, to even come close to Beating the Dow, and much less Foolish Four, ranking.
But with the entertainment giant's 3-for-1 stock split last month it is now the lowest priced stock of the Dow 30. In the words of the always profound Goofy -- "Gawrsh!" Is this the dawning of something special? Disney's inaugural induction into Robert's UV4 model? Well, that would appear to be the case if not for one tiny, itsy, bitsy detail. Tomorrow morning Disney would have to quadruple its dividend.
Neverland, you say? Well, sadly, a puffy payout for Disney is about as likely as finding a grown-up who enjoys listening to It's a Small World again and again. Oh, and again -- those prissy marionettes never stop singing, you know. Face it, the size of Disney's quarterly shareholder checks will always be inversely related to the ego and bonus of Michael Eisner. That's not a bad thing, on all levels. Disney has plenty of uses for its earnings beyond dividends and the Miramax NC-17 truth is that the company doesn't earn enough to bump up its yield fourfold.
So accepting that Pluto, Lady, and Tramp will probably never become Dogs of the Dow, let's take a closer look at Disney anyway. This past weekend the Disney Magic set sail on its maiden voyage. Roy Disney Jr.'s wife christened the ship and away it went -- three months late over shipyard delays and with the cruise industry dealt a short-term blow with the well-publicized though ultimately harmless fire on Carnival <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCL)") else Response.Write("(NYSE: CCL)") end if %> Cruise Line's Ecstasy the week before.
Blazing Ecstasy aside, the Disney ship looks amazing. From a restaurant that is perpetually changing colors and wall artwork to a whole deck devoted to children's activities, the bookings for the rest of the summer are running at 90%. Granted, once school starts, the lure for the typical adult cruise-goer will be missing given the wholesome Disney image and the lack of an onboard casino.
Yes, I said "wholesome Disney image." I know it's a hot potato. From the Baptist boycott to the Texas board decision to sell its stake in the Mickey Mouse stock, Disney has come under fire -- like the Ecstasy -- but this one is just as easy to put out. Few entertainment companies cater to the family segment as fully as Disney does, regardless of the lack of uniformity in its moral standards. Shhh, don't tell anybody that Haunted Mansion's 999 happy ghosts is actually the inversion of 666, the number of the beast! That's our little secret, okay?
No, Disney is not evil, but even if it was, if it were to ditch the ailing ABC Network and use the proceeds to produce all future financial statements on a Ouija board and also quadruple its dividend -- as a Foolish Four follower, you would soon own it come your switch date.
It's a dilemma some may have first had when they found Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> sitting there to the right. Kraft Cheese? Tasty. Jello? Jiggly. Marlboro? Man! Check your ethics at the door, The Unemotional Investor produces results, not moral debates. The Foolish Four does not play favorites. Actually, when you think about it, it plays the least favorites.
You look over the Foolish Four stocks for this year and it's Controversy Incorporated. Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %>? Bhopal, India. International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>? Logging. Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>? I really hate the way my high school yearbook picture turned out. Yet it's there, as easy as M-I-C. Cold, callous yet capitalistically climactic.
K-E-Y? That's the key, really. A system like the Foolish Four that is backtested and true. And, as I close out my final refrain with M-O-U-S-E, I sit, waiting for that Disney press release of a massive dividend hike -- as When You Wish Upon a Star lulls me gently into childlike slumber.
[Robert Sheard is on vacation this week. He will return on August 10.]
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.]
08/04/98 Close
Stock Change Last -------------------- UK - 13/16 46.88 IP -1 7/8 43.13 MO -1 11/16 42.44 EK - 7/16 81.06 |
Day Month Year
FOOL-4 -2.36% -3.02% 10.54%
DJIA -3.41% -4.46% 7.32%
S&P 500 -3.62% -4.33% 10.48%
NASDAQ -3.54% -4.63% 13.71%
Rec'd # Security In At Now Change
12/31/97 206 Eastman Ko 60.56 81.06 33.85%
12/31/97 291 Union Carb 42.94 46.88 9.17%
12/31/97 289 Int'l Pape 43.13 43.13 0.00%
12/31/97 276 Philip Mor 45.25 42.44 -6.22%
Rec'd # Security In At Value Change
12/31/97 206 Eastman Ko 12475.88 16698.88 $4223.00
12/31/97 291 Union Carb 12494.81 13640.63 $1145.81
12/31/97 289 Int'l Pape 12463.13 12463.13 $0.00
12/31/97 276 Philip Mor 12489.00 11712.75 -$776.25
CASH $754.73
TOTAL $55270.11
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