Friday, June 20, 1997

The Hippo Feet Fribble
by Selena Maranjian TMF Selena

It's a long story, but I was essentially dared to write this Fribble. Someone insinuated that I couldn't write a Fribble about Hippopotamus feet. They weren't aware that I once wrote a long poem -- a sestina -- on a dare. It had to use the words "crepes suzettes," "chainsaw," "transubstantiate," "cedar chips," "fjord," and "nationalism" in each of seven stanzas. It wasn't a very good poem, but I did it.

So, now that your hopes are high for this Fribble, let's get on with it. I suppose it would be easy to write it if The Motley Fool were all about mythology. Then I'd be able to weave in the African folk tale where God creates the Hippo and assigns him the job of cutting the grass. In it, the shrewd Hippo negotiates a deal where it gets to hang out in the cool water by day, and cut grass by night.

But alas, the whole point of Foolishness is not to help us all incorporate mythology into our lives. Instead, we aspire to convince you that by taking your savings into your own hands, you can beat the market by a sizable margin. So what can that possibly have in common with Hippo feet? Well, actually, there are some interesting parallels.

What's the foundation of a Foolish portfolio? The Dow Dividend Approach, of course, with its Foolish Four stocks. How many feet does a Hippo have? Four. Are they scrawny limbs? No -- they're big and strong, as solid as legs can get. After all, the Hippo is one of the largest land mammals. Just like Dow stocks, which represent some of the largest and most solid American corporations. These Hippo feet have to carry about four tons of weight on a body about 3.7 to 4.2 meters long. 3.7? Could it be mere coincidence that that is the dividend yield AT&T? I think not.

If you aren't yet beginning to see that the hippo is nature's emblem of the Dow Dividend approach, let's look at some non-feet-related features of the Hippo. Hippos live both in the water and on land. Dow Dividend Approach stocks can also survive in environments where others wither, often prospering when the overall market stagnates. Dow stocks are neither for the purely bullish nor purely bearish. They have their infrequent down years, but on the whole they advance relentlessly. Likewise, the Hippo is neither bull nor bear, but actually related to the pig family, with its name meaning "river horse." This is getting scary, eh? You must be exclaiming aloud now that, "I can't believe I didn't notice this before! It's so true!"

But wait -- there's more! We all know our beloved Foolish high-flying stocks. The zippy Iomegas and nimble America Onlines. They're quite the colorful set. Not so our Dow beauties, though. Like the noble Hippo, they're more brown or gray. And they have thick skins, to withstand market fickleness. They'll never be a "hot stock" like Netscape, and they'll never win a popularity contest. But they'll always be around, hanging out in the water, perhaps with only their nostrils and eyes visible. Just like with the Dow Approach stocks, you have to know what you're looking for when you're seeking a Hippo.

Hippo teeth grow continuously, just as money sunk into the time-tested Dow Dividend Approach will also grow (by roughly 20% per year). Hippos give birth to one offspring at a time, just as Dow stocks issue one dividend at a time. The Hippo's skin secretes an oily liquid. Not unlike some Dow stocks (Chevron & Exxon) which are also in the oil secretion business. Despite its formidable weight, the Hippo can move very quickly, especially in the water. (In fact, hippos can actually outrun humans.) Look at a sizable Dow heavyweight like IBM -- it has advanced 68% in the past year! (Other fleet-footed Dow stocks: Caterpillar (53%), Coca-Cola (45%), GE (44%).)

Could I go on longer? Sure! But I think I have made the case that Hippopotami and their feet have quite a lot in common with the cornerstone of the Foolish investor's portfolio -- the Dow Dividend Approach. And in case you need just one more amazing similarity, let me point out that Hippos hang out in herds of 20-40. So the average Hippo group will feature how many of our venerable beasts? That's right! 30 Hippos! Just like the 30 Dow Jones Industrial stocks.

So next time you're at the zoo (or in Africa, enjoying the fruits of Foolish investing) and you see a Hippo lift its head out of the water and twirl its ears, you can marvel at how Mother Nature has given us this wonderful reminder not to ignore the Dow Dividend Approach and the Foolish Four.

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