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Hello everyone,

I will have around $2,500 by the end of this year to start a discount broker account. I have been reading "The Unemotional Investor" by Robert Sheard and would like to know a few things.

First off, at what time of year should I be starting this Foolish Four strategy? Is January 1st or August 11th just as good as December 3rd? Or do I want to do this in line with a certain time period in the fiscal year?

My second question is if you could recommend a specific variation of the strategy that would suit me. I first off have a small starting capital (which I will be increasing come next year) of $2,500 as previously stated. I have the stomach for this. I have some experience in online poker (as a winning player lol) and I know that I can watch my money do the jitterbug along a graphs X and Y axis, before making a decent return. So, volatility is not an issue.

If there are any nay sayers to this strategy or its suitability for a first time investor like myself, please let me know your opinion.

Thank you in advance for any and all help.

Hi StraitBiznes - welcome to TMF.

I see you've also posted over at the Ask a Foolish Question board some similar questions I'll also try to address here.

"The Unemotional Investor" and Sheard's other work at the Foolish Workshop

were the foundation of what is now called Mechanical Investing, the board for which is here:

As you can well imagine, there's been considerable evolution since those early days, with vast increases in screening options, data available for backtesting, etc.

JimZipCode compiled a tutorial on the basics of MI available as a series of postings on the MI board.

You may have noticed there's very little recent activity on the Foolish Four board, and that TMF no longer promotes this strategy. It was developed using what data were available at the time but subsequent data compilations covering both longer periods of time and more data points within those time periods, e.g. weekly or even daily rather than quarterly, have shown the the Foolish Four strategy is not actually as robust as it had seemed.

In fact, it appears to provide no greater returns than simple index investing but with greater volatility.

With the capital you have available now, I would suggest sticking with some sort of index investing with limited rebalancing to lessen the transaction costs (broker fees, price slippage, etc.).

TMF has its own page on index investing with basic info and links to more:

Use the time to study the material available. Try to read the last 6 months or so, at least, of the postings on the MI board. Play with the backtesters, e.g. (thanks, Jamie). Try running a few paper portfolios of some likely-looking screens.

Just to give you an idea of the variety of screens now used, here are two of the latest rankings posts:

Then there are combinations of screens, timing options and much more.

It's a huge amount of stuff to digest, I know, but when you feel you've got your feet back under you and have some more assets on hand you'll be far readier to make an informed decision.

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