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Foolish Four Tour

Here are the rest of the answers to our Foolish Scavenger Hunt. Need to know the S&P's return in 1974? How to calculate the RP? Which stocks would make up a Fool Four started today? It's all just a few clicks away.

By Ann Coleman (TMF AnnC)
July 7, 2000

Today, we continue with answers to our Foolish Four Scavenger Hunt. Having fun? I hope you're keeping score. We'll see how you do at the end.

The answers to the first five questions ran yesterday, so today we start with number six.

6. If you were starting a Foolish Four Portfolio today, which stocks would you buy?

   Hint: Not the current portfolio stocks.

   Clickstream: None. They are right here on this page. Just slide your eyes right to the Top Dow Stocks list.

   The Foolish Four are the stocks in positions 2-5 on the list, the ones that are marked with an asterisk. They are usually not the same as the stocks we bought for the real-money portfolio, a fact that still occasionally confuses folks. The current portfolio stocks are the ones that were listed in those positions on the day we renewed the portfolio at the end of last December. But, the list will naturally change as prices and yields change.

7. Which stocks would the Foolish Four strategy have selected in 1968?

   Hint: Which link on the right navigation column reminds you of a college class you hated?

   Clickstream: Statistics Center / Foolish Four Stock History / Scroll down

   URL: http://www.fool.com/DDow/FoolFourHistory.htm

   OK, I loved my statistics class, but you have to admit that the hint works for most people!

   If anyone had known about and followed the Foolish Four strategy in 1968, these are the stocks they would have picked: U.S. Steel (NYSE: X), International Harvester, International Paper (NYSE: IP), and Woolworth. The four were up 18% that year, compared to a gain of 10% by the Dow.

8. Is today's Foolish Four the same as the strategy that was discussed in Tom and David Gardner's first book, The Motley Fool Investment Guide?

   Hint: Remember, you don't have to leave this area!

   Clickstream: F4 Evolution

   URL: http://www.fool.com/School/DowInvesting/FoolFourEvo/FoolFourEvolves.htm

   This series of articles was written to update the many new visitors to this area that learned of the Foolish Four from reading The Motley Fool Investment Guide or You Have More Than You Think. Yes, the Foolish Four has changed, not once but twice, and we will change it again if we find a better way to invest in value-oriented, large-cap stocks.

9. What was the annual return for the S&P 500 in 1974?

   Hint: You can find this on three different pages and they are all one click away.

   Clickstream: Statistics Center, then take your pick

   URL: http://www.fool.com/school/dowinvesting/DowStatisticsCenter.htm

   The annual returns for both the Dow and the S&P 500 are listed on the Foolish Four Stock History page that we've already visited, and on The Performance History of the Foolish Four, and in the downloadable Acrobat file Dow Investing Stock History. The Acrobat file lists the top RP stocks as well as the top stocks in Beating the Dow order for each year from 1961-1998, along with the returns for that year and the return of the Dow and S&P 500. I think it's rather impressive.

10. How do you calculate the RP?

    Hint: Don't buy Foolish Four stocks without understanding this!

    Clickstream: F4 Explained

    URL: http://www.fool.com/DDow/FoolishFourExplained.htm

    The Foolish Four Explained is the obvious answer, but you can also click on RP Order (right under Top Dow Stocks) or Foolish Four (right below the Top Dow Stocks list).

    The RP Order link will take you to a column that goes through the history of the development of the RP and describes the formula briefly. It also references the more detailed description of the formula that is found in the December 14, 1998 column, RP Variation Math, which you could have found in the 1998 archives as well.

    The Foolish Four link takes you to The Foolish Four Explained, the same place that F4 Explained takes you. That's a pretty big file, but it thoroughly describes the RP formula (yield divided by the square root of price) and answers questions like "When should I start?" and "How do I renew a portfolio?" Hopefully everybody's read that page.

    Alternate click stream: Today's Stock Lists / Help

    The Help page for LiveCalc also describes the RP formula. In fact, that darn thing is everywhere. And it should be. If you are going to invest in the Foolish Four, the one thing you absolutely must be able to find around here is the reason we pick the stocks we invest in. LiveCalc makes it easy, but it's no good if you don't understand how and why it works.

OK, for those of you who kept score (and please be generous to yourself when it comes to alternative answers), here's how you rate:

1-3 right: Good start. You get points for sticking it out, and I'll bet you learned a lot in the process.

4-6 right: You're getting there.

7-9 right: Foolish Four Maven.

10 right: Jobs.fool.com.

Fool on and prosper!

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