<THE FOOLISH FOUR>

You Gotta Love It
by Robert Sheard

LEXINGTON, KY. (August 28, 1998) -- There are a lot of reasons to like the Dow High-Yield approach (whichever variation one chooses). Since today's my final day and I'm a big fan of a low-maintenance lifestyle, let me lay out some of the best reasons to use this ultimate low-maintenance stock strategy.

You can do this! The Dow high-yield approach can be followed in a lock-step, completely unemotional fashion, and anyone with a decent seventh-grade education can compute the rankings for himself or herself. I like that. Tony should get the same answer as Tina, who agrees with Monica and Mickey.

You can do this quickly! One update a year. Half an hour at most. Even if you don't follow along during the year, you can pull your guidelines out of the desk drawer once a year and be ready to adjust your portfolio quickly and easily. And since you're only adjusting once a year, your costs associated with trading are low, and you're taxed at the long-term capital gains rate.

It puts you ahead of the vast majority of alternatives. This approach has a 70-year track record, ever since the Dow began including thirty stocks in the late 1920s. During that time it's outperformed the Dow Jones Industrial Average and the Standard & Poor's 500 Index consistently. That's something that over 80% of actively managed stock mutual funds haven't done for the past decade. And given that stocks have significantly outperformed bonds, cash, real estate and "collectibles" over that time, you're working with the best investment class -- common stocks.

If there was nothing else to the approach, that would be enough. The fact that it also actually made money in the worst bear market since the Great Depression (1973-1974) should be an incredible source of comfort to investors nervous about today's investment climate.

Plain and simple, if you're a long-term investor, this strategy is a terrific place to begin. You can build a well diversified portfolio around a core of Dow high yielders, and over the decades, it's going to be hard to complain with the results.

This will be my last appearance as TMF Sheard, but you'll still find me around the message boards with my civilian screen name and e-mail address ([email protected]). Please keep in touch. Fool on!

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.]

08/28/98 Close
Stock  Change   Last 
 -------------------- 
 UK   -  13/16  41.63 
 IP   -   7/16  39.00 
 MO   -   1/2   42.75 
 EK   -2  7/8   81.56 
  
 
 
                    Day   Month    Year 
         FOOL-4   -2.03%  -7.46%   5.48% 
         DJIA     -1.40%  -9.36%   1.81% 
         S&P 500  -1.46%  -8.34%   5.85% 
         NASDAQ   -2.77% -12.43%   4.41% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  206 Eastman Ko    60.56     81.56    34.67% 
  12/31/97  291 Union Carb    42.94     41.63    -3.06% 
  12/31/97  276 Philip Mor    45.25     42.75    -5.52% 
  12/31/97  289 Int'l Pape    43.13     39.00    -9.57% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  206 Eastman Ko 12475.88  16801.88  $4326.00 
  12/31/97  291 Union Carb 12494.81  12112.88  -$381.94 
  12/31/97  276 Philip Mor 12489.00  11799.00  -$690.00 
  12/31/97  289 Int'l Pape 12463.13  11271.00 -$1192.13 
  
  
                              CASH    $754.73 
                             TOTAL  $52739.48