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(More customer reviews)Charles Carlson, the author of seven previous investment books, has uncovered a simple strategy using the worst calendar-year Dow performers to beat the Dow Jones Industrial Average (DJIA) at its own game! Carlson's strategy is a twist to the Dogs of the Dow (DoD) strategy presented in Beating the Dow (1990) written by Michael O'Higgins. O'Higgins selected the ten highest paying dividend stocks in the DJIA and bought them at year-end and held them for a year, and then bought the next batch of highest yielding stocks, etc. That strategy did great in back-testing, but has not done well in the past few years.
For the uninitiated, Carlson provides the historical basis of the DJIA and devotes an entire chapter to the DJIA components, developments, and changes in the index. At least one page is devoted to each stock in the index with complete information on its historical significance and business. Another chapter is devoted to counterpoint arguments against the naysayers of his strategy.
Carlson's strategy does not use dividend yield as his selection criteria, but instead focuses on those stock(s) that have the worst yearly percentage price performance. He simply buys the DJIA stock(s) with the worst annual performance at the end of the year and holds it for one year, then he selects that year's worst performer and buys it, etc. In addition to the one stock portfolio, Carlson also shows the comparative results using the worst performing 3-stock, 5-stock and 10-stock portfolios. The 5- and 10-stock portfolios show the most consistent performance and have less risk than a one stock portfolio.
The book focuses on the performance of the worst 1-, 3-, 5- and 10-stock DJIA portfolios, and provides statistical information showing how these different stock strategies compared to the DJIA annually since 1931 (using back-testing) on a dollar-term, percentage, annual return, and percentage difference from its 200 day moving average basis. He also provided comparative results for last 30 year, 20 year, 10 year and 5 year periods. In addition, there is as 37-page appendix containing the performance of each DJIA stock since 1931 as far as annual performance change, the DJIA annual change, and the performance of each of his stock strategies in each of the years.
In a separate chapter, he even compares his strategies with the Dogs of the Dow and indicates their superiority over the DoD since 1999. The performance before that time showed mixed results depending upon which of Carlson's strategies are used.
Overall, the author presents a credible case for considering his DJIA strategies. He warns investors that they should only invest a portion of their money in any of these strategies, and to be sure to have a diversified portfolio overall to be successful. This book offers investors a mechanical stock selection process that takes the emotion out the investment equation. In that respect it has much to offer.
Click Here to see more reviews about: Winning with the Dow's Losers: Beat the Market with Underdog Stocks
In the course of his research, bestselling author and market expert Charles B. Carlson noticed a surprising trend in the 30 stocks that make up the Dow Jones Industrial Average -- the worst-performing stocks in one year turned out to be among the best-performing stocks the following year.
For example, the worst performer in the Dow in 1999 was Philip Morris, declining 57 percent during the year. In 2000, however, Philip Morris was the best-performing Dow stock, rising 91 percent and far outpacing the Dow's negative 6-percent return. Something similar happened with AT&T, which hit bottom in 2000 and bounced back in 2001. And Eastman Kodak, which was among the 10 worst performers in the Dow in 2001, was the best-performing Dow stock in 2002, gaining 26 percent versus a 15-percent loss in the Dow the year before.
These simple observations, now backed by extensive research, have become the basis of a new and startlingly effective method of stock investing that is the subject of this book. Carlson's "worst-to-first" strategy yields amazing results again and again. In fact, if you simply invested in the worst-performing Dow stock each year beginning with $1,000 in 1983, your nest egg would have grown to an astounding $68,000 by the end of 2002. In contrast, an investment in the Dow Jones Industrial Average would have netted only $14,000.
In Winning with the Dow's Losers, Carlson shows how an investor, with any size portfolio or any level of investment knowledge, can employ this simple, sound, and time-tested strategy to generate impressive wealth over the long term.
Start with as little as $1,000.
Invest in as few as 1 or as many as 10 Dow stocks.
Review and adjust your portfolio no more than once a year.
Achieve better results than the famous "Dogs of the Dow" approach.
Stock market fads come and go. Investors who chase them usually enrich their stockbrokers and not themselves. Not any longer. Now, with the help of Winning with the Dow's Losers, you can pick winning stocks year after year.
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