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Author: tonyr007 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 398  
Subject: Re: Is there anyone who... Date: 11/26/1999 7:21 PM
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Barb,

This is a long post.

Actually, I cheat. The Fool does this for us daily. Visit Foolish Four. They rank the top 10. This is due to O'Higgins original thesis that these 10 stocks (adjusted annually) will consistantly beat the overall performance of the Dow Jones Industrial Average returns. 10 Stocks were orignally chosen to add some diversification.
The Motley Fool did a little testing and come out with RP4. One note however, you never buy the lowest priced, highest yielding stock in the bunch; in this case MO. Typically this stock is in that unenviable position for a reason. The others are have solid fundamentals and are simply out of favor at the moment. It could be nothing more than fund managers cashing in to lock in some profits and boost their earnings or people look to some short sighted event such as a strike.
Just buy numbers 2-5. At the Fool they also mark these with *. The only thing is that you spend 20% of your cash on numbers 3-5 each and 40% on number 2. Number 2 seems to rebound the most over the course of the year (usually). Also, dividends are factored in to your overall return.
As an example, if I were to invest $10,000 monday,
I would buy $4,000 worth of CAT, and $2,000 each of EK, GM, and DD.
Another reason this was used on the Dow 30 only is that these are the largest and most watched companies in the world. It's not dificult to sell 20 - 1000 shares of Kodak when more than 1,000,000 shares of this company are traded on an average day.
As for strategies which go beyond the Dow, the Fool has a workshop report. This looks at other mechanical investing strategies.
Edit your Favorite Features to include the Foolish Four Report and the Workshop Report. The workshop reports are archived, so you can read the specifics of the various strategies. The Fool also publishes the rankings for each of these strategies, so once you decide on a strategy, all you have to do is check the Fool for your answers. I'm still trying to decide if I want to add one of these strategies to my portfolio.
Enjoy the rest of your day off. Hope you don't have any jerks on your next flight.

tony

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