Dogs Of The Dow
DOTW is an investment strategy that just suggests you buy the worst few performers in the Dow 30 each year—and those dogs, i.e. the stocks everyone hated and sold down aggressively last year, should do better than the overall basket of 30 stocks this year.
The notion is that most of these companies are mature, in slow-growing industries, and a lot of their interest to investors comes from their dividend yield more than from their intrinsic growth. They kind of "regress to the mean" (or the nice).
So the dogs usually have the highest yield...and as long as the dividends are safe from being cut, then the dogs theory is really more of a cash dividend plus recovery story than it is a long-term buy and hold strategy, which would just be like...The Cool Cats of the S&P...or something like that.
Related or Semi-related Video
Finance: What is Efficient Markets Theor...141 Views
Finance a la shmoop what is the efficient markets theory well
there should just be a big picture of Warren Buffett right here it should be [Two men carrying a framed picture of Warren Buffett]
the man Warren explaining the efficient market theory himself and that theory
states that it's impossible to beat the market over a sustained period of time
it should be Warren Buffett who explains that all relevant information comes [Warren Buffett giving a presentation on stage]
public in public stocks and that the market more or less immediately
incorporates all that information in its pricing
hence nobody can ever beat the market over a long period of time so why should [Men falling asleep during a presentation]
Warren Buffett be giving this little definition because the efficient market
theory is wrong Buffett has beaten the market for decades in a row in every way [Warren Buffett beating up the market with a stick]
shape and form so you have a really memorable huge figure in finance this
guy and then pipsqueak professors who are kind of a laughing stock whenever the [Professor jumping on the microphone stand trying to talk]
wealthy power crowds gather in Omaha for their National Convention that's what
they say at the Woodstock of Finance if you will fortunately most people keep [Man with arms folded standing naked in a corridor]
their clothes on for this one
Up Next
The random walk hypothesis is a financial theory that suggests the market is unpredictable, and can't be beaten. (Cough-cough-B.S.)