FOOLISH FOUR PORTFOLIO

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Timing Isn't Everything
Just what is it?

By Barbara Eisner Bayer (TMF Venus)

WOODSTOCK, NY (August 31, 1999) -- Do you remember the first time you fell in love?

For me, it was in the sixth grade, when I fell in love with Richie K. because of his ideals and strength of character.

Richie, who had yet to experience his growth spurt, was offended when our teacher admonished him by saying, "For a little man, you have a big mouth." Richie responded, "Shut up." When the teacher demanded an apology, he refused. After all, he had been more insulted than she had. The teacher forced him to stand outside our classroom until his lips could form the syllables for "I'm sorry."

Hours went by and there Richie stood. And stood. He stood for an entire day. He stood until the assistant principal came by and told the teacher that "Richard apologizes" (even though he hadn't). It was at that point that my 11-year-old heart soared with passion, and the butterflies in my stomach refused to allow me to eat until I could devise a plan to share an ice cream with that brave boy!

Once I had made the decision to "go for it," all the questions began: When was the right time to make my move? Should I do it now or take my time and wait for the right moment? I was more than ready to commit long-term to this wondrous 11-year-old; but did I really know enough about him and his potential?

Now, go back and read the last paragraph with investing in mind. The same questions about "timing" and "readiness" apply to both scenarios.

In last week's column entitled "Foolish Advice," there were seemingly conflicting statements about the proper time to begin investing. The question:

If you could give one piece of advice to a beginning investor, what would it be?

The seemingly conflicting advice:

TMF2Aruba: Take your time. Anything that looks good today will look good tomorrow (or next month) if it truly is good.

TMFJudy: If you're a young beginning investor, do it NOW. Don't wait. If you're an older person, just starting out, do it now too. Time is money.

One says wait and one says act now. Who is correct?

TMFJudy wrote me about the apparent inconsistency in this advice:

"So, Venus, after I 'recovered' from the feeling of celebrity at having my name appear for the first time in a Foolish Four column, I looked a little more carefully at the article. There in close proximity were two snippets of advice, one from me and one from Tony (TMF2Aruba). Tony said, 'Take your time,' and I said, 'Do it NOW' -- which at first glance looks like conflicting advice. Well, even at second glance it looks conflicting. It surely makes me look like a reckless, precipitous investor, and Tony the reasonable, deliberate Fool. On my third pass over that section, though, I realized that Tony and I would probably agree on both our points were we to expand on what we'd said.

"We would no doubt agree that instead of sitting on the sidelines, waiting to amass large amounts of money, you should start to invest irrespective of the amount (my point); and once having made the decision to invest, to do it based on some investigation, some research, and slow, sober thought (Tony's point)."

Good point, Judy!

The bottom line is, if you're ready to begin investing, now is the time to start. But starting doesn't necessarily mean immediately buying your first stock. It means beginning your education by learning about the various investing techniques and methodologies available to you. It means taking the time to get out of debt, or begin a savings plan, or develop a financial plan, which will serve as a guide for your future investing endeavors.

When choosing the Foolish Four as your initial investing method, the issues regarding the best time of year to begin are eloquently put forth in our Foolish Four message board FAQ. You can begin now, or wait until December, the month that this mechanical approach has proven to generate the highest returns. If you start now, though, do plan to switch to a December renewal cycle within the next year or two to take advantage of the seasonal effect.

What is ultimately important, though, is that you begin now by committing to educate yourself about investing

As for Richie, we shared lots of ice cream, but it ended when I moved to another town. Still, my instincts were right: His ideals and strength of character led him to a lifetime of invaluable service as a fireman and a committed husband and father. Even though the timing wasn't right back then, he would have been a marvelous investment.

Today's Stock Lists | 1999 Dow Returns

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Foolish Four Portfolio

8/31/99 Closing Numbers
Ticker Company Dly Pr Chg Price
CATCATERPILLAR INC-2 7/8$56.63
IPINTL PAPER-2 13/16$47.06
JPMMORGAN (JP)-1 9/16$129.19
MMMMINNESOTA MIN'G/MFG-1/2$94.50

  Day Week Month Year
To Date
Since
12/24/98
Annualized
Foolish Four -2.97% -5.59% -.62% 22.20% 24.01% 36.78%
S&P 500(DA) -.27% -2.06% -.62% 8.00% 8.06% 11.94%
NASDAQ .98% -.71% 3.82% 24.93% 26.09% 40.12%
DJIA (DA) -.77% -2.33% 1.62% 18.78% 19.02% 28.84%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
12/24/9824CAT43.083$56.6331.43%
12/24/9814MMM73.571$94.5028.45%
12/24/989JPM105.514$129.1922.44%
12/24/9822IP43.551$47.068.06%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
12/24/9824CAT$1,034.00$1,359.00$325.00
12/24/9814MMM$1,030.00$1,323.00$293.00
12/24/989JPM$949.63$1,162.69$213.06
12/24/9822IP$958.12$1,035.38$77.25
  Cash: $80.43  
  Total: $4,960.50  

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.