FOOLISH FOUR PORTFOLIO

Foolish Four Portfolio
Gator Aid
Navigating "The Land of the Trembling Earth"

By Ethan Haskel (TMF Cormend)

BALTIMORE, MD (Nov. 19, 1999) -- It was the road trip to hell... or heaven, depending on your perspective. Last weekend, I took a few days off and traveled with two friends down to southeastern Georgia. We needed to get away, so we decided to take a canoe trip in the Okefenokee Swamp.

Our original plans included four would-be adventurers, but our fourth canceled due to family obligations. The recruitment process for his replacement was an interesting experience. We invited scores of our male colleagues and friends for our weekend of male bonding.

Some of the potential recruits already had plans, or so they said. But the excuses weren't limited to packed social calendars.

Many couldn't believe we were going to travel 800 highway miles each way from Baltimore, just for a three-day excursion. We were told that the bugs would eat us alive. What if it rained the whole time, or if there were lightning strikes in the unprotected waters? Some were concerned about getting lost and not making it out of the wilderness maze.

Other hazards were brought to our attention. What if someone got injured or sick and couldn't get medical help? One associate was all set to sign on, but scratched when told of the alligators indigenous to the area, along with bears and snakes.

Unfortunately, the recruitment for a replacement was a failure. Borrowing a 27-foot, 14-year-old, gas-guzzling Winnebago, just the three of us set out last Friday evening to start the 15-hour overnight road trip.

Once in our canoes and out on the water, the experience was nothing short of sublime. We paddled through the dark, tea-colored river of grass. Through marshes, grasslands, and lakes. We were alone but for the soaring hawks, wading egrets, and miniature frogs, no larger than my thumbnail, which hopped on a seemingly endless carpet of lily pads.

The land through which we oared, though appearing firm, couldn't hold the weight of a human. If we left the boats for just one step on what seemed like solid peat, we would sink down, helpless, into the bog. (The name "Okefenokee" derives from an Indian term meaning "Land of the Trembling Earth," in reference to the unstable land masses.)

At night, stuffed from a steak dinner fried up on the propane stove, we sat outside on our partially covered platform over the bog. We gazed upward at the night sky, supersaturated with celestial delights, punctuated occasionally with shooting stars. The nocturnal sounds of the swamp filled our ears. Much later, we awoke in our tent before sunrise, and explored a nearby mist-covered lake. Cypress trees covered with Spanish moss outlined the distant horizon.

Later that day, we reluctantly paddled back to our motor home, as the sun set behind us. We traveled through a canal with water so still that the reflections of the tree-lined banks seemed indistinguishable from their mirror images. We sighed as our visit to this tranquil world ended when we reached the boat landing.

One might reasonably ask what any of this has to do with the Foolish Four or investing.

Let's consider the swamp as a metaphor for the investment world, as we navigate through the seemingly endless complexities of the financial maze. Potential hazards abound, enough to discourage the casual investor.

For instance, while returning home on the last leg of the trip, I picked up a copy of America's favorite daily paper, USA Today. On the front page of the Money section, I was greeted with a litany of hazards facing investors today:

  • The recent good corporate earnings numbers are overstated because the prior year was dismal by comparison.
  • The breadth of the market is declining.
  • Many stocks are too high-priced.
  • The specter of inflation is poised to rear its ugly head.
Many would-be investors, like the recruits for our trip, are dissuaded by these potential hazards. But Foolish investors and venturers alike have learned that most perils can be overcome by careful planning.

Our Winnebago allowed us to wake up from the long, overnight trip relatively refreshed, each sleeping in turn while one of us drove. Any biting bugs (which were relatively few) were quickly dispatched by our insect repellent. The weather turned out to be absolutely perfect. But, if needed, we brought our rain ponchos; my down vest kept me comfy when the temperature dropped at night.

There were, thankfully, no medical mishaps, but we brought along a rudimentary first aid kit, to be used if the need arose. Through reading, we knew that the bears were rarely seen, the alligators were docile unless provoked to the extreme, and the swamp housed few dangerous snakes. We brought a map and compass to help navigate should we become lost, although the well-marked trails made that unlikely.

Just like those bugs, gators, and other potential hazards that awaited us in the Land of the Trembling Earth, potential hazards of the investing swamp are always present. The Wise stand ready to convince us that we can't travel these waters without the accompaniment of an expensive tour guide. Full-service brokers and underperforming money managers are not yet endangered species.

Sure, the ultimate disaster could always strike. One of us might have had a seizure or a severe allergic reaction. Lightning might have struck. A true market meltdown, similar to that of the Depression, is always a possibility. But nothing in life is truly risk-free, not even our morning commute.

Armed with proper knowledge and planning, gained right here in The Motley Fool and elsewhere, the hazards can be tamed. Don't miss out on opportunities because of irrational fears. Learn to be your own swamp tour guide and enjoy watching those alligators float right by.
Beating the S&P year-to-date returns (as of 11-18-99):  

Schlumberger (NYSE: SLB)       +45.0%
Kimberly-Clark (NYSE: KMB)     +23.7%
Campbell Soup (NYSE: CPB)      -13.6%
Ford Motor Co.  (NYSE: F)      -10.3%
Bank of America  (NYSE: BAC)   +11.0%
Beating the S&P                +11.2%
Standard & Poor's 500 Index    +15.9%

Compound Annual Growth Rate from 1-2-87:
Beating the S&P                +25.4%
S&P 500                        +17.9%

$10,000 invested on 1-2-87 now equals:
Beating the S&P              $182,400   
S&P 500                       $82,500

Today's Stock Lists | 1999 Dow Returns

Read More Foolish Four Reports


Top Dow Stocks
( RP Order )

11/19/99

1. Philip Morris
   (NYSE:MO)
2. * Caterpillar
   (NYSE:CAT)
3. * General Motors
   (NYSE:GM)
4. * Eastman Kodak
   (NYSE:EK)
5. * DuPont
   (NYSE:DD)
6. AT&T
   (NYSE:T)
7. SBC Comm.
   (NYSE:SBC)
8. Int'l Paper
   (NYSE:IP)
9. Exxon
   (NYSE:XON)
10. JP Morgan
   (NYSE:JPM)

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

Foolish Four Portfolio

11/19/99 Closing Numbers
Ticker Company Dly Pr Chg Price
CATCATERPILLAR INC-6 3/4$49.19
IPINTL PAPER-2 3/16$52.63
JPMMORGAN (JP)7/16$138.63
MMMMINNESOTA MIN'G/MFG-1/2$102.31

  Day Week Month Year
To Date
Since
12/24/98
Annualized
Foolish Four -3.98% -1.62% .47% 26.56% 28.44% 31.81%
S&P 500(DA) -.21% 1.86% 4.33% 16.26% 16.33% 18.16%
NASDAQ .66% 4.60% 13.58% 53.66% 55.08% 62.29%
DJIA (DA) -.29% 2.18% 2.55% 21.24% 21.40% 23.86%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
12/24/9814MMM73.571$102.3139.07%
12/24/989JPM105.514$138.6331.38%
12/24/9822IP43.551$52.6320.84%
12/24/9824CAT43.083$49.1914.17%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
12/24/9814MMM$1,030.00$1,432.38$402.38
12/24/989JPM$949.63$1,247.63$298.00
12/24/9822IP$958.12$1,157.75$199.63
12/24/9824CAT$1,034.00$1,180.50$146.50
  Cash: $119.51  
  Total: $5,137.76  

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.