Conference nyoss1::market_investing

    I had a look at some of their pages, starting at
    http://fool.web.aol.com/fool_mn.htm
    and was reasonably impressed. They definitely poke well-deserved holes
    in the blowhards of the financial industry.
    
    One thing that bothers me is that they tend to emphasize high-volatility
    stocks. The next market correction may lose them a few subscribers.
    I want to see if they're still around in, say, July 1998.
    
      John

    I have a tape of theirs, and it expouses the Dogs of the Dow theory
    (buy the top 10 yielding DOW stocks, hold for a year, then adjust
    portfolio again to top 10 yielding DOW stocks...etc.  You only review
    and adjust once/year).  But they recommend a variation that says look
    at the cheapest 5 of these 10.  But they don't stop here; they say drop
    the cheapest, and double up on the 2nd cheapest, and that over the past
    20 years this has yielded about 29% ave. annual return.  From what I
    remember, here's the numbers they stated:
    
    	Straight Dogs-of-Dow:	~17% ave annual return over last 20 yrs.
    	Buy 5 cheapest:		~22% ave annual return  "     "   "   "
    	2x 2nd cheapest, buy next 3 cheapest:	~29% ave annual...
    
    I'm curious what the variation to these yields are for each 20 year
    period beginning each year, i.e. year 1-20 vs. 2-21 vs. 3-22, etc.  If
    what they say is true, it's probably one of the best yields to be
    achieved so easily and relatively risk free, as long as you have a long
    time horizon.
    
    As for their own recommended portfolio, I don't remember exactly what
    it's made up of, but I know they were early and big backers of IOMEGA,
    and that may be a big part of their gains.  
    
    By the way, all their info is on America Online.  John, did you say
    they are also on the internet?
    
    /Jon

    Whoops!  I just reread 1005.1 and saw the internet address.
    
    /Jon

        If you have 100 different investing schemes, by definition 5% will
    satisfy a statistical confidence test at the 95% level, even though
    they are no better than average in the long run.

>   			      But they recommend a variation that says look
>   at the cheapest 5 of these 10.  But they don't stop here; they say drop
>   the cheapest, and double up on the 2nd cheapest, and that over the past
>   20 years this has yielded about 29% ave. annual return.

    "Dogs of the Dow" (10 best yielding, traded once a year) is pretty solid.
    "The Dow 5" (5 cheapest dogs, traded once a year) is also pretty solid.
    "Drop the cheapest" is starting to look like one of those 5 lucky-by-
    chance schemes that may or may not continue to work well in the future.
    Maybe a better approach is to drop any stock selling under $15 ($8? $5?)
    or just double up on the most expensive of the 5. There are hundreds of
    such possible "tweaks" and some of them will do better than others,
    though not necessarily because of any superior underlying methodology.
    
    As a general rule, the more tweaking you see, the more likely you are
    looking at a curve-fit system that does well on backtesting but fails
    to continue to provide superior returns. Caveat emptor.

      John

    An excerpt from 
    
    	http://cnnfn.com/news/wires/9605/07/computer_zytec/
    
    (q.v. for the entire story)
    
    > Shares of Minneapolis-based Zytec lost $9.17 to $37.33 on Nasdaq
    > turnover of more than 1.1 million shares. 
    >
    > The stock's fall "is driven by the Motley Fool activity that has been
    > surrounding Zytec," said Clint Morrison, an analyst at John G. Kinnard
    > who has been tracking the company for a year.

    The fools were prominently featured in a recent Fortune Article.  They
    in fact made the cover.  They use a modified "Peter Lynch" methodology
    which worked for Fidelity.  However; their move with Iomega is very
    scary.   The bottom line is be careful.  You might want
    to read the article.  
    
    Good luck.