Has anyone used this?

Discussion in 'Strategy Development' started by mauzj, Feb 1, 2003.

  1. mauzj



    I went to an investment seminar the other day, and the speaker said this strategy will return 20% on average per year:

    1 ) Get the list of DJ30 companies
    2 ) Select the 10 with the highest dividend yields.
    3 ) Select the 5 with the lowest share price
    4 ) Buy and hold these for a year
    5 ) Go back to step 2

    Has anyone tried this, and does it work?


    The Stats Monkey
  2. And it's easy to test! Just get some data starting from January 2000 and find the stocks that meet your criteria and see where they were at the end of 2000. Then repeat the process for 2001 and 2002. I'm sure you'll find it's been an amazingly profitable strategy for the last 3 years or so. And YTD it's looking good so far...

  3. The strategy you are referring to is called the "Dogs of the Dow." It was popularized by O'Higgins and Downes in the book "Beating the Dow." However, most people know this strategy from those wacky fellows, The Motley Fool.

    Smurf Commentary: Sometimes a Fool is just a Fool.

    The Dogs of the Dow strategy has a few different forms, but the basics are essentially the same.
    Here are some returns:

    1996 = 28% Looks good so far!
    1997 = 22% Can't complain!
    1998 = 10% We'll get 'em next year!
    1999 = 4% I'm feeling lucky!
    2000 = 6% (not bad considering the Dow was -8% and the S&P500 was -13%)
    2001 = -5% Don't worry... It's just a retraction...
    January 2002 - September 2002 = -27% I suspect the rest of the year was crap, also.
    2002 = I don't have any #'s but I'm going to bet they were not in the + column.

    Hope this helps
  4. Love the snapple facts!

    Using the Dow Dogs method, I wonder if you lose less than the overall market percentage-wise in a bear market.
  5. Here are the results for the overall market over the past couple of years:

    1996: Dow30 = 26% , S&P500 = 20%
    1997 : Dow30 = 22%, S&P500 = 31%
    1998: Dow30 = 16%, S&P500 = 27%
    1999: Dow30 = 25%, S&P500 = 20%
    2000: Dow30 = -6%, S&P500 = -10%
    2001: Dow30 = -8%, S&P500 = -13%
  6. Quaker Oats ain't too bright...........................
  7. nitro


  8. I got me one of them there stock split pagers, that is where the green is!! Don't waist your time on the dogs of the dow. Wade Cook will hook you up. Every time it goes off I piss my pants and forget where I am for an hour, then I call my broker.(always just in time to catch the offer)
  9. Does your cellmate drink the problem? Is that why it takes an hour to call your broker?
  10. dogs of dow have been around awhile, htere are a lot of mutual funds that mimic this. no strategy is fool proof, but its not bad, basically all its just a value strategy with a regimented selection. certainly could do much worse as an investor, but am weary of whatever seminar your at and anyone who promises 20% gains
    #10     Feb 3, 2003