stock market update for today
Something curious happens on 2 January each year. Hundreds and thousands of investors wake up and run to your computer as it was Christmas morning. They are in huge trouble to do some quick calculations and determine your investment strategy for new year. based on this little math to blind their entire investment decisions.
It is a simple strategy. a strategy based on the stocks comprising the Dow Jones Industrial Average, these investors are looking for high dividend yields. His hope (at the investor) is better than the market.
So, what strategy I'm talking about?
"Dogs of the Dow" investment theory of course. In 1991, Michael Higgins published a book entitled "Beating the Dow." Michael, according
to his own biography, is considered one of the best investment managers in US. began on Wall Street in 1971 and founded his own money management firm in 1978. In this book he presented a very simple strategy of buying shares of Dow 10 with the highest yields.
In the long term, say 15 years, dogs Dow's strategy had not only exceeded the Dow Jones Industrial Average, but the S & P 500 well. Sounds good, eh?
The problem. . . not working as before.
In the last 5 years and periods of 10, the strategy actually underperformed the market. In the go-go, the days of the Internet, people were less focused on traditional companies that paid dividends. As a result, the strategy could not beat the averages. addition, in 2004 and 2005, the new strategy failed – miserably.
Then in 2006 the strategy of a good performance, exceeding 10%. A This, unfortunately, brought new life to the Dogs of the Dow.
In 2007 the results were again unimpressive. The 10 companies selected this year include: Pfizer, Verizon, Altria, AT & T, Citigroup, Merck, General Motors, DuPont, General Electric and JP Morgan Chase.
A basket of these stocks, one share each, would cost approximately $ 427.50 and would be able to sell today for $ 424.12. Including the dividend of the strategy returned a miserable 3.5%.
The Dow Jones as a whole this year is up almost 7%. . . not including dividends.
Only investment in the Dow absolute best results have occurred because of the "Dogs" Why strategy. results not so miserably in 2007 after a 2006 right?  can be attached directly to the poor results this year to two shares of Citigroup (C) to 47% and General Motors (GM) to 17%.
A wolf in sheep's clothing?
In fact this famous trading strategy is a simple One It is a very basic value strategy. These stocks are traditionally behind the market, but still have big business with some inherent value. generally tend to be out of favor for some reason. This makes the value plays. Ah, but we know the value tends to invest the time … sometimes more than 1 year.
And now, the market favors growth stocks.
So here we are on the last trading day of 2007. Tomorrow, a new Stock lot of dogs selected for the Dow and investors around the world begin their new investment strategy.
I suggest you let the "dogs" to another person.
Resist the temptation to select stocks purely on a data point – that will save you much pain by Wikipedia line.es to the strategic reasons behind every investment rather than blindly following one general strategy.Â
Never buy or sell a stock just for performance, try to understand the company and its industry. With a little additional research I really think smart investors can beat the market in the short term and long term.
Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today.
In addition to dogs of the DOW trade ideas, you’ll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit. Click here to start your free subscription today: http://www.DynamicWealthReport.com/new.htm
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