FOOLISH FOUR PORTFOLIO

Foolish Four Portfolio
The Gift of Commitment
...and IP reports
By Barbara Eisner Bayer (TMF Venus)

WOODSTOCK, NY (OCT. 12, 1999) -- Foolish Four stalwart International Paper (NYSE: IP) reported earnings of $0.46 per share today, blasting through analysts' estimates of $0.40 per share. Third quarter profits more than doubled to $192 million from $91 million last year. The company also gave a very bullish outlook for the future. While this was widely anticipated, it still makes a shareholder feel good.

It's fun to analyze earnings reports, especially if you enjoy quantum physics. But for Foolish Four investors, it's totally unnecessary. One of the major reasons we choose the Foolish Four as an investment vehicle is because of the ease it takes to execute it.

What is necessary, however, is the ability to remain committed to the Foolish Four throughout the long term. It's too tempting to bail out when one of your holdings exhibits a short-term mouth-watering gain or a frightening loss. Since the stellar returns of the Foolish Four occur over an extended period of time, it's essential that you follow through on your commitment to this strategy once you make it.

Breaking a commitment is nothing more than a bad habit that can begin very early in life, sometimes at birth. Imagine that you've been in the comfort of the womb for nine months. Sure, you're committed to leave then; but it's so warm and cozy inside, you decide to stay an extra couple of weeks until some doctor in a white coat invents a kooky method to spook you out.

Or, as a toddler, you commit to your folks that you'll let them know when it's time to go potty and then poof! You decide it's more fun to fill up your pull-ups.

People resist commitment because they fear it restricts their future options. What if I commit to marriage and it doesn't work out? What if I commit to serving on a volunteer board and I don't have enough time to fulfill my obligations? What if I commit to the Foolish Four and lose money during the first year?

Commitment is not some devious devil denying us our human right to freedom of choice. On the contrary, it's actually liberating. Adhering to a commitment gives us a structure to follow, a list of do's and don'ts that actually make life easier. If you make a commitment to losing weight, decisions become simple. That scrumptious wedge of cherry cheesecake is not within the barriers of your commitment. The decision is a no-brainer... don't eat it, or you'll have a weight-gainer. Or perhaps there's an IPO that dazzles you; since you'd have to sell a Foolish Four holding to purchase it, it's not within your investment structure.

If you are committed to the Foolish Four principles, you never have to worry about calling the market's highs and lows or missing out on that "hot tip." Your commitment serves as a guideline and protects you from making mistakes that other novice investors make in order to jump on the hot stock bandwagon. Just read through some of our stories in the My Dumbest Investment folder to see what I mean.

As a Foolish Four investor, you should be fully prepared to stick to your commitments. You know why you bought the stock in the first place. You did as much research as was necessary. You bought it because it was a Foolish Four stock, and you craved a long-term average stock market return upwards of 20%. And there aren't too many worries about when to sell. Just follow the program every December.

Of course we'd prefer that International Paper's earnings shatter analysts' expectations. Fools always prefer making money to losing it. But over the long term, what International Paper does this quarter will have a minute effect on how the overall strategy will perform.

Today's Stock Lists | 1999 Dow Returns

Read More Foolish Four Reports


Top Dow Stocks
( RP Order )

10/12/99

1. Philip Morris
   (NYSE:MO)
2. * Sears
   (NYSE:S)
3. * General Motors
   (NYSE:GM)
4. * Goodyear Tire & Rubber
   (NYSE:GT)
5. * JP Morgan
   (NYSE:JPM)
6. Caterpillar
   (NYSE:CAT)
7. Chevron
   (NYSE:CHV)
8. International Paper
   (NYSE:IP)
9. Eastman Kodak
   (NYSE:EK)
10. DuPont
   (NYSE:DD)

NOTE: Today's Foolish Four stock selections are marked with an asterisk.

Foolish Four Portfolio

10/12/99 Closing Numbers
Ticker Company Dly Pr Chg Price
CATCATERPILLAR INC-2 15/16$55.50
IPINTL PAPER3/16$48.69
JPMMORGAN (JP)-1 11/16$113.88
MMMMINNESOTA MIN'G/MFG-2 5/8$92.38

  Day Week Month Year
To Date
Since
12/24/98
Annualized
Foolish Four -2.40% -1.65% -.51% 18.28% 20.04% 25.57%
S&P 500(DA) -1.66% -1.72% 2.36% 7.40% 7.46% 9.38%
NASDAQ -1.49% -.49% 4.60% 31.00% 32.22% 41.64%
DJIA (DA) -2.17% -2.19% .77% 14.37% 14.54% 18.44%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
12/24/9824CAT43.083$55.5028.82%
12/24/9814MMM73.571$92.3825.56%
12/24/9822IP43.551$48.6911.79%
12/24/989JPM105.514$113.887.92%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
12/24/9824CAT$1,034.00$1,332.00$298.00
12/24/9814MMM$1,030.00$1,293.25$263.25
12/24/9822IP$958.12$1,071.13$113.00
12/24/989JPM$949.63$1,024.88$75.25
  Cash: $80.43  
  Total: $4,801.69  

Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.
• DJIA (DA) = dividend adjusted. Dividends have been added to the total return of the DJIA.

Note
The Foolish Four Portfolio was launched on December 24, 1998, with $4,000. Additional cash is never added, all transactions are discussed and explained publicly before being made, and returns are compared daily to the S&P 500 and the Dow. (Dividends are included in the yearly, historic and annualized returns.) Stocks are chosen once per year using a formula based on dividend yield and price. See The Foolish Four Explained for details.