DRIP PORTFOLIO
Stock Strategies Abound
The Fool offers a successful bundle

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By Jeff Fischer (TMF Jeff)

ALEXANDRIA, VA (Jan. 18, 2000) -- The Fool offers a handful of successful stock strategies, all of them discussed daily. To start at the beginning and read about all of the stock investment strategies that the Fool offers, your best bet is to read the Fool's famed 13 Steps to Investing Foolishly. There you learn to pay off your credit cards first, and then when you have money that you can invest for at least three years (ideally longer), you're first told to consider the S&P 500 Index fund. This nifty index holds 500 of America's leading companies (including America Online, Intel, J&J, Wrigley) and the performance of the index typically outperforms at least 80% of professionally managed mutual funds, many of which you pay extra to use!

For an extremely slight fee, you can buy the whole 500-stock index and thereby you can match the S&P 500's annual return (which on average has been 11% a year since 1926). This is sweet, hands-off, essentially worry-free investing that beats most pros and can easily lead to wealth over long periods! In the Fool's Strategies area, we offer the Harry Jones S&P 500 Index portfolio as a real-money example port. This port links you to more S&P 500 Index fund information.

If you're ready to invest in individual stocks, Fool Strategies (and the 13 Steps) next suggest the Foolish Four, which is a mechanical investment approach that has doubled the stock market's average return based on data from 1971 to 1996. The data shows a return of about 22% annually, which turned $10,000 into well over a million bucks during the time period. In a nutshell, the strategy has you invest in the highest-yielding Dow Jones Industrial Average stocks. The Fool's Strategies page offers a real-money Foolish Four Port for your education regarding all the details of this simple, successful approach (and for your amusement!).

Next in Strategies is our very own port, the Drip Port. You know what we're about: We invest directly (either traditionally or through new, low-cost synthetic Drip services) in companies at low to zero cost, we reinvest all dividends, and we invest regularly using dollar cost averaging to our advantage. We are, I like to think, the "average Fool's" port, and by that I mean a portfolio for a vast majority of the country. Fact is, most people in the country (and in the world) do NOT have money saved. They must start from essentially nothing, and our investment method allows precisely that. You can find more information about direct investing (or Drip investing) in the links to the right of this column and in our direct investing book.

Next, there is the Boring Portfolio, which is a portfolio that focuses on in-depth valuation methods in hopes of buying high-quality businesses below their intrinsic value. This method overlaps somewhat with our own investment approach in Drip Port (we did feel that we were getting Intel at a good price beginning back in 1997, for example), but Bore Port takes value investing several steps further. Currently, management of the port is in flux, but a quality column appears every Monday. Click the following link for much more on the Bore.

The Fool's newest real-money portfolios are perhaps the most intriguing. In December, three real-money Retiree Portfolios were launched to demonstrate how three retired Fools might invest (more aggressive to less aggressive) for fixed income and for capital appreciation throughout retirement. The portfolios use the Foolish Four and bond funds in their strategies. Certainly check out the Retiree Portfolios and think ahead.

Heading off the list of strategies offered by the Fool are the Gardners' portfolios, the Rule Maker (founded by Tom and run by a cadre of Foolish chaps) and the Rule Breaker, founded by David. David is assisted on Rule Breaker by me and, as with Rule Maker, an exceptional group of Fools who regularly offer columns of insight about the portfolio.

Rule Maker investors buy established, industry dominators such as Coca-Cola, Microsoft, Gap. Rule Breaker investors buy emerging, new industry leaders: Amazon.com, AOL, Amgen, and other companies that don't start with an "A." Both portfolios offer exceptional investment principles and "steps" that teach you their respective investment philosophies. Both also offer a daily column that shouldn't be missed. (Plus, David Gardner is offering an interactive Rule Breaker seminar in February. To learn about it, drop a note with the subject line "Tell Me More" to learn@fool.com.)

Another popular feature offered in the Fool's Strategy area is the Foolish Workshop. This is where Fool community members run screens on stocks and follow (and test) various mechanical investing models to their hearts' content. Related to this, the Fool offers Stock Screens, too.

Finally, the newest Strategy-related offering on the Fool is the Fool's NOW 50 Index. This is so interesting that I'll soon devote a full column to it. In a nutshell, the NOW 50 Index contains 50 companies that we believe are leading the world in their respective industries, and that we believe lead with more verve than any of their competitors. The NOW 50 could be seen as our answer to the Dow's antiquated ways, although it is much more than that. Launched on January 3, 2000, the NOW 50's return is tracked daily on The Motley Fool site. Click on the link to learn all about the NOW 50.

For much more on the Fool's various investment Strategies offerings, and namely on our real-money portfolios offered within, please visit these links:

Strategies
Strategies' Portfolio Quick Facts
Strategies Trading OnePage

Fool on!

P.S. Mellon Financial (NYSE: MEL) announces quarterly results today. The EPS estimate is $0.48. We'll cover the news this week.

Drip Portfolio

1/18/00 Closing Numbers
Ticker Company Dly Pr Chg Price
CPBCAMPBELL SOUP-3/16$35.13
INTCINTEL CORP-15/16$102.13
JNJJOHNSON & JOHNSON-2 3/8$91.31
MELMELLON FINANCIAL CORP-2 7/16$31.94

  Day Week Month Year
To Date
Since
7/28/97
Annualized
Drip -2.53% -2.53% 8.00% 8.00% 40.31% 14.65%
S&P 500 1.24% -.68% -.96% -.96% 55.00% 19.35%
S&P 500(DA) 1.24% -.68% -.96% -.96% 57.63% 20.16%
S&P 500(DCA) n/a n/a n/a n/a 29.97% 11.16%
NASDAQ 1.64% 1.64% 1.51% 1.51% 163.18% 47.78%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
9/8/9722.9799INTC45.635$102.13123.79%
11/14/9711.292JNJ80.007$91.3114.13%
11/5/9828.3741MEL34.416$31.94-7.20%
4/13/988.174CPB54.586$35.13-35.65%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
9/8/9722.9799INTC$1,048.68$2,346.82$1,298.14
11/14/9711.292JNJ$903.44$1,031.10$127.67
11/5/9828.3741MEL$976.51$906.20($70.32)
4/13/988.174CPB$446.18$287.11($159.07)
  Cash: $24.33  
  Total: $4,595.57  


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

Note
Drip Port launched with $500 on July 28, 1997, adds $100 to invest every month, and the goal is to own $150,000 in stock by August of the year 2017. Due to the slow nature of dollar-cost-averaging and our relatively significant starting costs, we do not expect to seriously challenge the S&P 500 for the first three to five years as we build an investment base. The long-term advantages of dollar-cost-averaging still overcome the short-term disadvantages, however. Final note: our investment in Campbell Soup is frozen due to fees instituted in its investment plan. Click here for a history of all Drip Port transactions.