Dogs of the Dow Investing Strategy
Dogs of the Dow is a very popular investing strategy that includes investing in 10 DJIA (Dow Johns Industrial Average) stocks with highest dividend yield at the start of a year. The portfolio is readjusted at the start of every year to include the 10 stocks with highest dividend yield; these stocks are known as the 'dogs'. Dogs of the Dow strategy was formulated in 1972 but was popularized by Michael O’Higgins in 1991 through his book 'Beating the Dow'.
Dogs of the Dow investing strategy aims at outperforming normal indexes like S&P 500 and Dow Johns itself. Looking at the history, most times the strategy outperformed the indexes by a healthy average. The period from 1973 to 1996 was most successful, when the dogs outperformed Dow by around 6%. The fact that DJIA is comprised of 30 well established and respected companies of the world and you are investing in 10 cheapest stocks among them makes this a sound investing strategy with reduced downside risk.
Dogs of the Dow is a very passive investing strategy; it can take may be one or two hours to invest and to make portfolio adjustments. The strategy also takes out technical analysis, emotion and market timing from the equation. The stocks to be invested are already defined and one just has to follow the rules. But like everything else, the past performance of the strategy does not guarantee future benefits. The strategy is so popular now that it places high pressure on those 10 dogs involved to do better.
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Dogs of the Dow investing strategy aims at outperforming normal indexes like S&P 500 and Dow Johns itself. Looking at the history, most times the strategy outperformed the indexes by a healthy average. The period from 1973 to 1996 was most successful, when the dogs outperformed Dow by around 6%. The fact that DJIA is comprised of 30 well established and respected companies of the world and you are investing in 10 cheapest stocks among them makes this a sound investing strategy with reduced downside risk.
Dogs of the Dow is a very passive investing strategy; it can take may be one or two hours to invest and to make portfolio adjustments. The strategy also takes out technical analysis, emotion and market timing from the equation. The stocks to be invested are already defined and one just has to follow the rules. But like everything else, the past performance of the strategy does not guarantee future benefits. The strategy is so popular now that it places high pressure on those 10 dogs involved to do better.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
8:56 AM
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