Workshop Portfolio

<FOOLISH WORKSHOP>

Keystone History Update

by Jim Stevens (JimStevens@aol.com)

Burlington, VT (Feb. 18, 1999) -- Time for an update of the complete Keystone model. Keystone was originally backtested for 12 years starting January 1, 1986. Now, with 1998 gone and a little of 1999 behind us, we have over 13 years of history for this screen. Our weekly Current Rankings list 30 Keystone picks, even though we only track the top 10 on the Workshop Returns page. It's nice to look at the full complement of thirty stocks in the model, to see how the final ranking improves performance. It also serves to expand the knowledge horizon for people who want to own more than 10 stocks from the model.

Keystoners pick their stocks like this: Screen for the 30 largest US stocks (highest market cap) that have a Timeliness ranking in the Value Line Investment Survey of 1 or 2. Rank those by 26-week total return. The backtest was run on an annual update cycle, with January 1 for the update.

From January 1, 1986 through February 17, 1999, the annualized returns for the different Keystone ports look like this:

30.02% Keystone 5
27.78% Keystone 10
25.02% Keystone 15
24.16% Keystone 20
22.65% Keystone 25
22.11% Keystone 30

Not bad, eh? My guess is you'll continue to read and hear investment gooroo types thumb their noses at all the attributes of a complete portfolio of Keystone or Keystone-like stocks. The drone will inevitably continue: "Too heavy in stocks.... Not enough foreign exposure.... You need to diversify into small-caps.... Rotate out of the high fliers." I often wonder if these so-called experts ever retrace their advice and determine how damaging it would have actually been to a real person's portfolio. I guess there's no time for that as long as their phones still ring for interview requests!

As for this year's Keystone 30, here are the year-to-date numbers as of yesterday:

America Online (NYSE: AOL)          -1.37%
EMC Corp. (NYSE: EMC)               17.65%
Oracle Corp. (Nasdaq: ORCL)         18.84%
Int'l Business Mach. (NYSE: IBM)    -7.53%
Intel Corp. (Nasdaq: INTC)           5.11%
Dell Computer (Nasdaq: DELL)        11.44%
Cisco Systems (Nasdaq: CSCO)         2.49%
Home Depot (NYSE: HD)               -5.21%
BellSouth Corp. (NYSE: BLS)         -8.77%
Time Warner (NYSE: TWX)              0.30%
Philip Morris (NYSE: MO)           -27.80%
Freddie Mac (NYSE: FRE)             -7.37%
Lilly (Eli) (NYSE: LLY)             -0.42%
Wal-Mart Stores (NYSE: WMT)          4.45%
Lucent Technologies (NYSE: LU)     -12.45%
Microsoft Corp. (Nasdaq: MSFT)       8.16%
Fannie Mae (NYSE: FNM)               0.00%
Schering-Plough (NYSE: SGP)         -1.70%
Tyco Int'l Ltd. (NYSE: TYC)          2.40%
Medtronic Inc. (NYSE: MDT)           0.97%
Abbott Labs. (NYSE: ABT)            -8.16%
Xerox Corp. (NYSE: XRX)             -4.87%
AirTouch Communic. (NYSE: ATI)      24.68%
Gen'l Electric (NYSE: GE)           -2.63%
Pfizer  Inc. (NYSE: PFE)             4.00%
Johnson & Johnson (NYSE: JNJ)        2.24%
Merck & Co. (NYSE: MRK)              3.31%
Warner-Lambert (NYSE: WLA)         -10.72%
First Union Corp. (NYSE: FTU)      -15.72%
Amer. Int'l Group (NYSE: AIG)       15.52%
                       Top 5         6.54%
                       Top 10        3.30%
                       Top 15       -0.71%
                       Top 20       -0.04%
                       Top 25        0.49%
                       Top 30        0.23%

S&P Dep. Receipts (AMEX: SPY)       -0.46%

The top of the group (which looked a lot like the Bits & Bytes port!) started out white-hot this year but has been taking a bit of a haircut lately. Taking a long view (ten or more years), these types of pull-backs have all eventually proven to be great buying opportunities.

Stay Foolish,
Jim

Check out the latest file updates for the Workshop:
New Rankings | Workshop Returns


Workshop Portfolio


9/28/01 as of ~5:30:00 PM EDT

Ticker Company Price
Change
Daily Price
% Change
Price
AETAETNA INC NEW0.943.36%28.94
BABOEING CO(1.04)(3.02%)33.36
CATCATERPILLAR INC1.112.53%44.91
COGCABOT OIL & GAS 'A'0.693.59%19.90
DDDU PONT (EI) DE NEMOURS0.992.74%37.14
DGXQUEST DIAGNOSTICS(0.45)(0.73%)61.42
EKEASTMAN KODAK0.421.31%32.49
GMGENERAL MOTORS1.393.38%42.55
LHLABORATORY CORP AMER HLDG(NEW)1.141.42%81.21
MOPHILIP MORRIS COS(0.76)(1.55%)48.24
NEWPNEWPORT CORP0.261.90%13.97
NVRNVR INC(0.54)(0.38%)140.41
PKXPOHANG IRON & STEEL ADS1.097.51%15.61
PVNPROVIDIAN FINANCIAL1.075.64%20.04
QCOMQUALCOMM INC(0.40)(0.84%)47.16
RJRRJ REYNOLDS TOBACCO HLDGS(0.69)(1.19%)57.31
SLESARA LEE CORPUnchg.Unchg.21.09
UNFIUNITED NATURAL FOODS0.563.18%18.15
WMIWASTE MANAGEMENT(0.01)(0.04%)26.74

Overall Return -- total % Gained (Lost)
  Day Week Month Year
To Date
Since
Inception
(12/24/1998)
Workshop1.30%7.32%(12.02%)(20.66%)(18.91%)
Comparable S&P 500n/an/an/an/a(19.07%)
S&P 500 (DA)1.95%7.48%(8.33%)(21.22%)(14.88%)
NASDAQ2.02%4.71%(17.46%)(39.68%)(31.41%)
DJIA (DA)1.68%7.07%(11.07%)(17.86%)(2.22%)

Internal Rate of Return -- Annualized Rate of % Gained (Lost)
  Since Inception (12/24/1998)
Workshop(17.62%)
vs. S&P 500(17.63%)

Trade Date # Shares Ticker Cost/Share Price Total % Ret
1/8/0126MO40.9448.2417.82%
1/8/0122RJR50.1057.3114.39%
1/8/0167UNFI16.4518.1510.34%
12/24/9824CAT43.0844.914.24%
1/8/018NVR136.63140.412.77%
1/8/0140WMI27.4426.74(2.54%)
1/8/0150SLE22.5421.09(6.42%)
1/8/0161PKX17.8315.61(12.46%)
1/8/0115DD48.8337.14(23.95%)
1/8/0129AET38.1728.94(24.19%)
1/8/0139COG28.7519.90(30.79%)
1/8/0114QCOM75.5447.16(37.57%)
1/8/018LH134.6981.21(39.70%)
12/27/9918GM73.2642.55(41.92%)
1/8/0118BA59.5333.36(43.96%)
1/8/019DGX114.4961.42(46.35%)
12/27/9920EK65.0932.49(50.08%)
1/8/0120PVN55.5020.04(63.89%)
1/8/0115NEWP74.9613.97(81.36%)

Trade Date # Shares Ticker Total Cost Current Value Total Gain
1/8/0126MO$1,064.50$1,254.24$189.74
1/8/0122RJR$1,102.25$1,260.82$158.57
1/8/0167UNFI$1,102.12$1,216.05$113.93
12/24/9824CAT$1,034.00$1,077.84$43.84
1/8/018NVR$1,093.00$1,123.28$30.28
1/8/0140WMI$1,097.50$1,069.60($27.90)
1/8/0150SLE$1,126.88$1,054.50($72.38)
1/8/0161PKX$1,087.75$952.21($135.54)
1/8/0115DD$732.50$557.10($175.40)
1/8/0129AET$1,107.00$839.26($267.74)
1/8/0139COG$1,121.37$776.10($345.28)
1/8/0114QCOM$1,057.62$660.24($397.39)
1/8/018LH$1,077.50$649.68($427.82)
1/8/0118BA$1,071.50$600.48($471.02)
1/8/019DGX$1,030.44$552.78($477.66)
12/27/9918GM$1,318.62$765.90($552.73)
12/27/9920EK$1,301.75$649.80($651.95)
1/8/0120PVN$1,110.00$400.80($709.20)
1/8/0115NEWP$1,124.37$209.55($914.83)
 
Cash: 
Total: 
$10.80
$15,681.03
 

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
Note: The Workshop Portfolio was launched on December 24, 1998, with $4,000 which was invested in the Foolish Four strategy. Approximately $15,000 was added on January 8, 2001, to support five additional mechanical strategies. At that time approximately $1000 was transfered out of the Foolish Four strategy to bring the Foolish Four into balance with the other strategies. (That's why the Foolish Four's overall return is not consistent with stock values.) Such rebalancing will take place each year among the strategies so that each will start out with approximately the same value at the begining of the year. No more cash additions are planned. The first four tables above show the overall performance of the portfolio. Below that we also track the performance of each component strategy. All transactions are announced 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 using strategies developed by the Workshop community.