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While I lay soaking up the sun in Florida, our BSP stocks had an excellent two weeks. The Official BSP Portfolio gained 2.6% during these turbulent markets, while our arch-nemesis, the S&P 500, lost 1.6%. Our two "F" stocks led the charge, with Ford gaining almost 6%, and Fannie Mae gaining more than 9%. We're now handily back on top for the year, beating the S&P 500 by almost four percentage points.
Our LiveCalc! stock list generator is currently under the weather so here is a list of the current Beating the S&P stocks, as of 4/25/00: Wells Fargo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WFC)") else Response.Write("(NYSE: WFC)") end if %>, Bristol-Myers Squibb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %>, Bank of America <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %>, Ford <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>, and Kimberly-Clark <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KMB)") else Response.Write("(NYSE: KMB)") end if %>. You can use LiveCalc! even while it's "down." The rankings of the stocks will be correct for the BSP list, even though the yield and RP numbers look weird.
In the news department, Ford recently announced a "Value Enhancement Plan" to be implemented toward the end of the summer. In such a plan, all stockholders will trade in their current Ford stock and receive new Ford shares plus the right to receive either $20 cash per share or the equivalent value in additional new Ford shares. Yowsa! Not bad for a company whose stock price is currently in the mid 50s. Ford just happened to find an extra 10 billion dollars in loose change hanging around, and thought they couldn't do much else better with it than give it back to their investors. Should Ford stockholders take the 20 bucks and run, or reinvest it back into the company? Personally, I'll probably reinvest the dividend, since it puts the money back into the BSP in an efficient manner. For more Foolish insight, check out this article. We'll keep you informed of more details as they emerge.
We are all moving at warp speed. At this pace, even the "good old days" not only seem like just yesterday, but they may almost be yesterday.
If you look up "nostalgia" in my Webster's Dictionary, you'll find the definition: "A longing for something far away or long ago or for former happy circumstances." But nowadays the world is moving so far so fast that we can feel nostalgic for events that occurred just a very short time ago. Heck, I'm nostalgic for the mid-1990s.
Oh, those Foolish days of yore! Way back in 1994, I serendipitously clicked that smiling jester icon featured on my AOL welcome page. There I met David and Tom Gardner, two young whippersnappers that penned the "Fool Portfolio" recaps nightly, for an audience only a tiny fraction of today's. There were no Fool books. No radio show. No Foolish stock quotes. Tom even had hair back then. (OK, not quite!)
In 1994, there was no Foolish Four. The official Foolish value strategy was the plain old vanilla Beating the Dow strategy, based on the original book published in the early 1990s by Michael O'Higgins. On the discussion boards, our Ann Coleman was still there. Known then affectionately at times as "Ann of the Many Numbers," she (and many others) were cranking out the statistics that would form the basis of future refinements to the Beating the Dow strategy.
Back in those good ole days, I started out writing Fribbles, whimsical short essays on any topic in particular. One of my earliest submissions, titled "Investing for the Really Long Haul," described how my 8-year-old son invested his $100 in his first two stocks, General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> and Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>. Now he's 12, and, with a little watering, his portfolio has grown to about $3,000.
The creative energy derived from the early Fool pioneers encouraged me to develop an offshoot of the Beating the Dow strategies, called Beating the S&P (BSP). Shortly afterward, after backtesting BSP, I wrote a weekly Beating the S&P Update newsletter. The newsletter was an informal, chatty work, often pasted together slapdash in the wee hours of Saturday mornings. The newsletter gave the results for the Official BSP Portfolio stocks for the year, news of BSP stocks, and anything else I might think of. A joke or two. Contests.
I used to post these updates on what was previously known as the "Dow Dividend Approach" discussion board, the Foolish Workshop board, and a separate e-mail list, which contained over a thousand recipients in its heyday.
But, alas, the BSP Updates went the way of the horse and buggy and the manual typewriter. They fell victim to the time crunch we've all been experiencing lately, as my formal Foolish commitments increased.
In the spirit of Foolish days of yore, here's a good old-fashioned BSP Update. It will also serve as a recap for the BSP Portfolio performance, updating our last review in December.
Ye Olde Beating the S&P Update
Year-to-date BSP Returns (as of 4/25/00):
Bank One <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ONE)") else Response.Write("(NYSE: ONE)") end if %> -0.6%
PepsiCo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %> +6.6%
Ford Motor Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> +4.1%
Bank of America <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> +7.5%
Fannie Mae <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FNM)") else Response.Write("(NYSE: FNM)") end if %> +4.6%
Beating the S&P +4.4%
S&P 500 +0.5%
Dow Jones Average -3.2%
Nasdaq -8.8%
Comparison Year-to-date Returns:
Foolish Four +2.0%
Rule Maker -2.7%
Rule Breaker -18.7%
Drip +18.7%
Boring +12.8%
Compound Annual Growth Rate from 1-2-87:
Beating the S&P +24.1%
S&P 500 +17.6%
$10,000 invested on 1-2-87 now equals:
Beating the S&P $175,200
S&P 500 $85,900
Ford also plans to spin off its automotive components subsidiary, Visteon Corporation, this summer. According to a letter to stockholders, Visteon had sales of $19.4 billion last year, ranking this spin-off among the top 100 companies of the Fortune 500 once the transaction becomes complete. We can only hope Visteon has a better fate than the last Ford spin-off, Associates First Capital <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AFS)") else Response.Write("(NYSE: AFS)") end if %>, which has been a real bow-wow, falling from around $40 to $24 since its spin-off in early 1998.
On a lighter note, what do you get when you mix BSP companies Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> with Gillette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: G)") else Response.Write("(NYSE: G)") end if %> early in the morning? A really "clothes shave," of course!
Take a sentimental journey back to Foolish days of yore, and check out our archived material from The Fool Portfolio or Daily Dow recaps. It's a great read, and truly makes you appreciate the long-term perspective.