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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (67)	3/14/1998 3:20:00 AM
From: Berney	Respond to of 1722

Commentary on Berney's Model Portfolio I find myself spending considering time educating individuals that an Index is simply a mathematical average. It represents the best of the worst and the worst of the best. To do better than the Index, one need only eliminate those stocks that contain the characteristics of the poor performers. If we can reduce the number of poor performers in our portfolio, we will, by default, beat the Index. The effort to eliminate the poor performers is an art and not a science. The art allows for numerous different concepts of investing to co-exist. It has been my experience of analyzing portfolio performance that about 1/3 will achieve returns greater than the Index, about 1/3 will achieve positive performance but less than the Index, and 1/3 will achieve negative stock performance. Morningstar's Stocktools has a universe of 7,486 companies with a one year stock performance record. At the end of February, 37% of this universe beat the Index for one year, 29% yielded positive performance but less than the Index, and 34% provided negative returns. The results do not very greatly when we look at the performance of these companies over 5 years. Of the 4,373 companies that had a five year stock performance record, 33% beat the Index, 43% provided positive returns but less than the Index and 24% had negative stock performance over 5 years (ouch). If we look at the 30 DJIA stocks, 10 (our 1/3) beat the Index in 1996. It's amazing how consistent these ratios seem to exist in the investment world. As you will see in the next post, Berney's Model Portfolio is beating the Index 19% to 11% for the period since the creation of the portfolio on 11/21/97. What makes the performance of this group of 15 stocks so outstanding is that 9 of them (60%) are beating the Index. Returning back to premise of the portfolio's creation, I again note that, if we eliminate those stocks with the characteristics of the poor performers, we dramatically enhance our ability to beat the Index! Enjoy! Berney

To: porcupine --''''> who wrote (67)	3/14/1998 3:40:00 AM
From: Berney	Respond to of 1722

Berney's Model Portfolio -- A Performance Update Well, the Model Portfolio will be celebrating its four month birthday next week. Since I'll be out of town on its birthday, I decided, to go ahead and post its current performance results. It is soundly stomping the S&P 500 Index, as follows: 11/21/97 CHG FR DESCRIPTION SYMBOL PRICE 03/13/98 BEGIN BUY & HOLD: INTEL INTC 80.25 76.63 -4.52% CONTINENTAL HOMES CON 32.56 49.69 52.59% BEAR STEARNS BSC 41.75 50.13 20.06% BOWNE BNE 37.63 41.19 9.47% JEFFERIES GROUP (split) JEF 36.50 51.00 39.73% KAYDON KDN 33.94 37.69 11.05% ROBBINS & MYERS RBN 39.50 38.00 -3.80% DELL COMPUTER (split) DELL 41.69 63.19 51.58% RAYMOND JAMES FIN'L RJF 35.44 40.31 13.75% ROSS STORES ROST 41.38 41.25 -0.30% 498.82 603.25 20.94% DIVIDEND YIELD 11-15: DU PONT DD 62.44 62.81 0.60% UNION CARBIDE UK 44.81 46.63 4.04% GOODYEAR TIRE GT 61.19 68.94 12.67% SEARS, ROEBUCK S 47.38 56.38 19.00% MERCK MRK 94.56 128.25 35.62% 310.38 363.00 16.96% TOTAL MODEL PORTFOLIO 809.19 966.25 19.61% S&P 500 iNDEX 963.08 1,068.58 10.95% SO FAR, SO GOOD! Berney