All posts tagged book

Dogs of the Dow – This has always been a very interesting stock investment strategy to me. But being a person that isn’t terribly familiar with the stock market, it has always eluded me. But if you are around the stock world for any extended period of time or read any books about it, then you will eventually hear about it. It is quite popular and on the tip of the tongues of many investors and would be stock moguls. Dogs of the Dow Dogs of the Dow Let’s get  into the details of this contrarian investment strategy. The idea was popularized in a book that was written in 1991 called “Beating the Dow”. Michael O’ Higgins was the author. He outlined that the so called Dogs of the Dow killed the market average from 1973 to 1989. And every since then people have been falling over themselves to figure out how to put these ideas and this strategy to work. Therefore, let’s find out how it works now. #1 The Key Metric – You need to identify the stock dividend yield of the stocks on the Dow Jones Industrial average. Rank them from lowest to highest. This will make it easy for you make your next step. #2 Identify the Dogs – These are the worst performing or out of favor stocks on the Dow Jones industrial average over the past year. In fact, you need to get the 10 worst ones. This is how the strategy goes. #3 Purchase the Dogs – In the coming year, you are to purchase all ten of the Dogs of the Dow and hold them in your portfolio. This sounds like a bad idea to many, but it actually turns out to do pretty well based on what Higgins found in his book. You hold these stocks for the entire coming year. #4 Rinse and Repeat – At the end of the year, you dump all ten stocks that you have. Then you start back at number one in this process and eventually find the new ten dogs of the Dow and repeat the strategy this way. Obviously, nothing works perfectly all the time. However, this method of stock selection has done many people very well over the years and it is hard to deny a strategy that has such a long standing track record such as this one. Glad we were able to get to the bottom of this investment strategy because I was wondering about it for a while. I am sure you were wondering the same. But I am curious to hear what you think about it. Do you ever see yourself using this strategy and investing in the Dogs of the Dow? Related posts: 3 Ways to Find Your Investing Groove Should LETS go global? What’s Love and Commitment Got To Do With Forex Trading?