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Author: brenjg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 264980  
Subject: foolish four approach Date: 10/9/2012 1:22 PM
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Hi,

I have a question about the Foolish Four approach - I was reading recently in Investopedia that you recommend in your approach to put down 40% for the 1st stock of the final four (once I've narrowed it down to four)and then 20% to the final three...is that correct? In your workbook it seems like the approach is to put equal amounts down for each of the final four on your list? Which is it?

Thanks for any help,
Brenna
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Author: colbyhouse Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259451 of 264980
Subject: Re: foolish four approach Date: 10/9/2012 2:13 PM
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The Foolish Four is no longer endorsed by TMF and has been disproven - come on over to the 'Mechanical Investing' board for info on some other profitable screens that have been developed by fellow Fools: http://boards.fool.com/mechanical-investing-100093.aspx?mid=... .

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259455 of 264980
Subject: Re: foolish four approach Date: 10/9/2012 6:12 PM
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The Foolish Four (and later Foolish Eight) premise was that most of the gains of the S&P 500 could be secured by owning the four main contributors to the index. Doing so allows you owns the stocks and not pay expense ratios.

That seemed to work for a while during the dot com boom, but in time the tracking faded. Hence, Foolish Four is in some of the older Motley Fool postings but is no longer recommended.

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259456 of 264980
Subject: Re: foolish four approach Date: 10/9/2012 11:08 PM
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As others have indicated, the Foolish Four is no longer endorsed nor discussed at TMF. Regarding the discrepancy you pointed out, this was two variations of the approach.
There is still a FF message board at http://boards.fool.com/foolish-four-100081.aspx?mid=29960074... but, it doesn't get many postings. If you are interested is this mechanical system you might want to look at the FF board's FAQ at http://boards.fool.com/the-unauthorized-dow-faq-and-compendi...
The FF was a version of the Dogs of the Dow which selected ten stocks from the DJIA. More information about it can be found at http://www.dogsofthedow.com/

Bob

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Author: brenjg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259484 of 264980
Subject: Re: foolish four approach Date: 10/13/2012 7:12 PM
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Thanks for the tip ColbyHouse! Glad I did not actually invest yet...

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Author: brenjg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259485 of 264980
Subject: Re: foolish four approach Date: 10/13/2012 7:14 PM
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Thanks for the info. on this...I'll keep reading - obviously I've been reading some very old information...

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Author: brenjg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259486 of 264980
Subject: Re: foolish four approach Date: 10/13/2012 7:15 PM
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Thanks Bob for the tips. I'll read more on these links!!

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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259507 of 264980
Subject: Re: foolish four approach Date: 10/18/2012 12:39 PM
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Hi,

I have a question about the Foolish Four approach - I was reading recently in Investopedia that you recommend in your approach to put down 40% for the 1st stock of the final four (once I've narrowed it down to four)and then 20% to the final three...is that correct? In your workbook it seems like the approach is to put equal amounts down for each of the final four on your list? Which is it?

Thanks for any help,
Brenna
- brenjg | Date: 10/9/2012 1:22:38 PM | Number: 259505

The "Foolish Four" investment approach, actually more accurately called The Dogs of the DOW(Industrial's) is just another example of how old and out-of-date the Motley Fool Investment Guide by the brothers Gardner has become. The "Dogs of the Dow" at one time used to be an effective year-end investment strategy, that actually has not worked very well for well over a decade or more. Like nearly all "Old-time" Mechanical Investment "Rules" once they become widely know and more importantly followed and exploited the superior performance of the Rule ceases to exist. There are even several Mutual Funds that try to employ the "Dogs of the Dow" technique.

Other "Old Market Saws" such as Sell in May and go away until September become too widely followed and hence cease to be valid and effective investment rules. One that still sometimes has a small effect is to sell semiconductor and electronic component stocks in April and May, buy them back, hopefully at lower prices in late August to early September still has a small positive return component left to it.

The rational for the semiconductor and electronic stocks Rule is that much of Europe goes on Holiday during July and August returning to work in September. While on Holiday, electronic component demand declines sharply in Europe during the Summer months. While this is still true to some extent, very little electronic component demand still originates in Europe. Most of that manufacturing has moved to Asia and even some to South and Central America. When markets adjust to old rules, those old rules have lost their profit potential.

Markets while not perfectly Efficient, the Markets do adjust their behavior to perceived patterns by competing simplistic Rule based excess returns investing. If Investing were only that simple, we would all be Rich and comfortably Retired early.

Kahuna, CFA
Investment Professional
1974-Present

Disclosure: Retired for a time from 1995-2011, initially at age fifty. Un-retired in 2012 to start an Institutional Only Venture Capital Limited Investment Partnership 2012 - 2019. Last VC Portfolio returned an annualized compound rate of return of 58.4%, 1992-1995 inclusive.

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Author: PeterLincoln Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259649 of 264980
Subject: Re: foolish four approach Date: 11/16/2012 7:36 PM
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Hi,

F4 and F5 actually do work a lot but they don't work all the time. Nothing works all the time.

I rather suspect that if you do F4/5 now you will wind up with a nice dividend but not much else.

p

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