Buy only the Dow Components with positive earnings?

Perhaps both with positive earnings and positive analyst estimates?

 

Like Warren Buffett said:

"I like shooting fish in a barrel, but after water has run out"

 

"Exit strategy? An exit strategy? What's that?"

 

Exit (sell) if the company becomes uncompetitive or troubled, or the stock becomes overvalued.

 

You can pay too much for positive earnings and too much for the future (positive analyst estimates - assuming they are accurate).

You're headed in the right direction. But "value" pitfalls must still be avoided.

Most people agree that the Honda Accord is a good car.

But you don't want to pay $50K or $75K for it.

When are these positive earnings "cheap?" There's the rub.

In times like these, the list of favorable companies gets to be pretty small - A lot of money tries to find a way to get into these names "cheaply."

But ... it can be done. Good Luck.

 

OP you make an interesting point, but how about some thoughts from some of you that trade stocks especially the Dow 30 regularly?

Was reading an older book on trading, the author suggested that the Dow 30 should be seperated into 3 groups for trading purposes and that this changes over time. He suggested the 3 groups would be Leaders, Secondary and the rest of the Dow 30. What issues would you place in what group currently?

 

It's pretty easy to classify them into those categories lately. The Dow is a dollar-based index, so the price of a stock determines how much it moves the underlying index. The leaders are the ones that can move a lot of dollars in a day.