Tuesday, January 19, 1999

Space Odyssey: 1998
(A Testimonial to Foolishness)


I started investing ten years ago. The market had just crashed -- the big one, 1987. With absolutely no business background, I started in mutual funds on the advice of a colleague. From 1988 through 1994 I stayed with mutual funds and earned to within a point or two of the S&P 500.

In 1995 I started buying a few individual stocks while maintaining my mutual fund positions. From 1995 through 1997, my investing ideas came from two sources:
a monthly publication written by S&P especially for Fidelity investors and companies I chose that appeared in the Appendix of Bill Staton's "America's Finest Companies" book. I largely went with companies rated by S&P as 5 star and with an earnings rating in the A range. Listed below are my underperforming returns:

  YEAR     Me        S&P 500
  1995     27%         34%
  1996     15%         20%
  1997     29%         31%

Then in February 1998 I happened on The Motley Fool Investment Guide in my university Barnes & Noble bookstore. I had never heard of these guys before. I read the book and immediately switched my investment style along the lines advocated by this book.

The first thing I did was sell all my mutual funds. During 1998 I visited the (formerly called) Fool Port and Cash King pages each night. I have twelve stocks, not counting my Foolish RP Four and my SPY stock. Nine of my twelve stocks appear in either one or the other of these portfolios. I did not simply mimic the portfolios but I did my research through Valueline, S&P, IBD ratings, Staton's book, and Zacks reports. During 1998 I also read the Motley Fool Workbook, You Have More Than You Think and this month I completed Rule Makers, Rule Breakers.

Bottom line:

  YEAR       Me        S&P 500
  1998      166%        29%

What more could be said? Maybe if I would have found the Investment Guide in January rather than February I would have bested the Rule Breaker/Fool Port's 199%? At any rate, I'm satisfied!

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