Foolish Four

The "Foolish Four" is a discredited mechanical investing technique that, like the Dogs of the Dow, attempts to select the member stocks of the Dow Jones Industrial Average that will outperform the average in the near future.

To identify the "Foolish Four", first determine the current dividend yield and current price for each of the 30 stocks comprising the Dow Jones Industrial Average. Then, divide the yield for each stock by the square root of the stock's price. Rank the stocks from highest to lowest using the number resulting from the division. Buy the stocks ranking the second highest, third highest, fourth highest, and fifth highest in equal dollar amounts. Do not buy the highest ranking stock.

Subsequent review of this technique suggested that it was unlikely to outperform a simple indexing strategy, and, after an extended period of resistance, the Motley Fool discontinued its promotion in December 2000.

External links

* [http://www.fool.com/school/dowinvesting/dowinvesting.htm "The Foolish Four...Explained"]
* [http://www.fool.com/ddow/2000/ddow001214.htm "Foolish Four Research Results"]
* [http://www.fool.com/ddow/2000/ddow001229.htm "Fool Four Moves On"]