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Author: misterkaygee Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 40850  
Subject: Expand! Date: 12/13/1999 1:58 PM
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I'm most happy to see Ann's recent columns, in which she suggests that the F4 strategy might benefit from a closer look. Here's my two cents, which might seem obvious to some but might also seem heretical to the more dogmatic Fools: Although the advantages of a long term buy-and-hold strategy are considerable, try your very best to BUY LOW AND SELL HIGH!!

I've gotten out of funds and into stocks this year, and I've been using the F4 as a starting point. I apply the F4 *principles* to my stock selection while adding some criteria of my own, such as buying only those stocks that are 1) within 10% of their 52-week lows, 2) showing good earnings growth, 3) increasing in sales to institutional investors, and 4) highly rated by analysts.

(Sure, I know that the experts aren't always right, but I've got a better shot with their help than I ever would alone!)

Regrettably, I had not developed my own strategy back in the spring when I bought S and GT, but that's not such a big deal. They're still paying dividends, and someday they'll be back up. DON'T *EVER* SELL LOW!!

The cardinal sin in fooldom seems to be doing anything that resembles the behavior of (*shudder*) an active trader. I have sold my F4 stocks when they were up, and by doing so I have pocketed 12.5% of my investment principal (in seven months) and then put it back into the market, sometimes into the SAME stocks at a LOWER price! (I've bought and sold JPM three times this year.)

No, of course I didn't know that those stocks were going to go back down again -- and I didn't care. Even if we restrict ourselves to the Dow and the SP500, there are plenty of possibilities; and there are 100 different ways you can make money in the markets, even if you only hold long positions. Study the daily "winners" and "losers" for a week or so and you'll see what I mean: while S and GT languish, something else is jumping 10% in one day, and many of these stocks would seem like quite Foolish opportunities to anyone willing to step outside the *apparent* safety of Dow investing.

Yes, it does take some time and effort, but I stop short of saying "work". What I do all day at the office is work; making money while playing with my computer is fun!! But I realize that that's a personal thing, and there are many people for whom the F4 is superior because it does take such little time.

The main weakness of the F4 is that it looks at only a couple of numbers while banking heavily on the history and size of DJ30 companies. There is clearly some sense in this, but I think we can increase the stability of the returns without increasing risk just by doing a bit more research and expanding our universe of options. The SP500 would seem like a logical step outward.

I am deeply indebted to the Motley Fool for helping me find the courage to get away from funds and into stocks.

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