<FOOLISH WORKSHOP>

Monthly Trading Strategies      

by Jim Stevens ([email protected])

Burlington, VT (July 8, 1999) --Those fickle mutual fund managers! Why ,they're always turning over the stocks in their funds based on short-term thinking -- shame on them. Yes, here in Fooldom we always promote the long-term buy-and-hold approach to stock investing. Well, almost always.

On the very short-term front, we've got stock screens like Unemotional Growth and Relative Strength-Investor's Business Daily. They have been working best when traded monthly. Some Workshop visitors have also found that monthly trading improved the raw returns of other Workshop screens in some time periods.

In the Workshop's search for successful mechanical investing strategies, we don't rule out anything. Trading stocks once a month based on recent price action or recent earnings momentum may seem like a stretch from Foolish thinking, but if you look at investing in ever-improving mechanical screens as a lifelong commitment to building wealth, all opportunities should be considered.

As the name implies, stocks in the Rule Breaker portfolio don't always fit the standard mold for stock valuation. Trading stocks monthly or even annually doesn't fit the mold of long term buy & hold investing, but here in the Workshop we think you should hold no rules sacred. We are developing our own rules based on what works. This doesn't mean sticking to one strategy until you die, it just means picking stocks unemotionally and staying in the market for the long run.

Last month was certainly a prime example of how monthly momentum models can really pack some punch when the stock market is advancing. There is a flip side to this -- the stocks tank more rapidly in a market downturn as well. On our official 1999 Returns page we assume no trading during the year, and the returns there are for the stocks that each strategy identified on the first trading day of the year. But today I'm reporting the returns for the monthly version of two screens, Unemotional Growth and RS-IBD:

Unemotional Growth:

             Month              Year-to-date
          6/4/99 - 7/1/99     01/01/99 - 7/1/99   
UG5          14.11%                 2.09%
UG10          9.78%                 3.24%

Relative Strength-Investor's Business Daily:

             Month              Year-to-date
          6/4/99 - 7/1/99     01/01/99 - 7/1/99    
RS-IBD5       9.66%                93.62%
RS-IBD10     14.51%                62.55%