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<FOOLISH FOUR PORTFOLIO>
Now That's REAL Money!
A Pinocchio Portfolio
by Ann Coleman
([email protected])
Reston, VA (December 2, 1998) -- We're gettin' real! This very month, the Foolish Four portfolio will be transformed from a wooden, virtual portfolio into a flesh-and-blood-and-cash, real-money portfolio, just like the other boys in the Foolish Hall of Portfolios.
Although the Motley Fool has always had real money in Foolish Four stocks, those stocks have been part of our other portfolios: The Fool Portfolio (soon to be Rule Breakers) and Cash-King (soon to be Rule Makers). The numbers we have been reporting have been for a virtual portfolio -- kind of a portfolio on training wheels. This month when we "buy" our Foolish Four stocks we get to take away the quotation marks, plunk down some real cash, and hopefully, zoom off down the road straight and true.
When it becomes a real-money portfolio, the Foolish Four will be subject to the trading rules that govern all of our other portfolios, meaning that all trades will be announced in advance with the trade taking place at some point during the next five days.
As Chris Rugaber discussed last week, there were some problems last year when after hours trading caused an unforeseen jump in prices between the time the stocks were announced on December 31 and the first time you could have actually bought them on January 2. We will be doing things differently this year -- we will be making different mistakes.
I'm still working out the details, but the buys for the new portfolio will be announced sometime before the Christmas holiday and will take place before the end of the year. We will be discussing the details as the time for the trade draws closer.
We are using cash from my own IRA account for this demonstration, which means I get to mess around with transferring the money and setting up a separate account -- just like many of you will be doing. Hey! Let's do it together!
Having started the process today, I've decided that the major reason most people just let their money sit in mutual funds is because they don't want to do all that paperwork -- at least, not "now." (Next week, maybe...)
The paperwork is no fun, but it's not that onerous, either. Sometimes you've just gotta DO it.
First -- you need a broker. What? You already have one? OK, you can just read a library book quietly at your desk. The rest of you may want to check out our Discount Brokerage Center.
Here's the key to picking a broker -- don't agonize over the choice. For an account that is going to be making 8 trades a year, max, you don't really care if the broker executes your trade in 30 seconds or less. If you have an IRA account, you'll probably want a broker that doesn't charge a yearly IRA fee, but you won't care what kind of tax statements he sends out at year end. (If you have a taxable account, you might want copies of those.)
Our Discount Brokerage Center has a wonderful guide to picking out a broker. Just don't let worrying about picking the wrong one stop you from picking one. If you don't like the broker you pick, you can always switch -- yes, it's a pain, but it's easier the second time, and at least your money will be working for you while you go through the process.
Here's my recommendation, for what it's worth: Once you have your short list of possible brokers (and if you want a good place to start, our advertisers do make this all possible!), call their customer service departments. Go with the one that treats you best. One caveat: If you are not an experienced trader, pick a broker that lets you do phone trades, even if it costs more. First time trades online can be rather intimidating -- having someone to hold your hand and answer questions the first time can be worth an extra charge. You might even want to do it that way every time.
Most online brokerages will let you download their application forms from their website. This is great. Some of them even let you fill out the form online. You download the filled-in form, print it out, sign it, and send it off. Include a check or a note saying you will be transferring the money from another account.
Transfer forms should be available online, too. If you are transferring from anything other than another brokerage, check to see if you need to send anything directly to holder of the old account. Broker-to-broker transfers can usually be handled by the receiving broker, once they have your official permission.
OK. That's your assignment, class. Get started NOW. The best time to buy (statistically speaking, of course) is between now and January 2. If you want to do it, get ready -- no excuses will be accepted for tardies.
Those of you who already have a broker and maybe even a Foolish Four portfolio running, congratulations. Bear with us for the rest of this week as we discuss the preliminaries. Next week we will start exploring options for picking stocks. That's when the fun starts.
Fool on and prosper!
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Get the Fool's new book - The Foolish Four
Current Dow Order | 1998 Dow Returns
12/02/98 Close
Stock Change Last -------------------- UK + 3/8 43.88 IP - 3/8 43.81 MO - 1/4 56.75 EK + 5/16 73.19 |
Day Month Year
FOOL-4 -0.01% 0.34% 14.52%
DJIA -0.76% -0.57% 14.62%
S&P 500 -0.34% 0.65% 20.69%
NASDAQ -0.43% 2.34% 27.05%
Rec'd # Security In At Now Change
12/31/97 276 Philip Mor 45.25 56.75 25.41%
12/31/97 206 Eastman Ko 60.56 73.19 20.85%
12/31/97 291 Union Carb 42.94 43.88 2.18%
12/31/97 289 Int'l Pape 43.13 43.81 1.59%
Rec'd # Security In At Value Change
12/31/97 276 Philip Mor 12489.00 15663.00 $3174.00
12/31/97 206 Eastman Ko 12475.88 15076.63 $2600.75
12/31/97 291 Union Carb 12494.81 12767.63 $272.81
12/31/97 289 Int'l Pape 12463.13 12661.81 $198.69
Dividends Paid YTD $1092.81
TOTAL $57261.87
</FOOLISH FOUR PORTFOLIO> |
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