At the risk of oversimplifying, Paul, isn't the 'Dogs of the Dow' based on the old premise of buy low-sell high? (Like most of you, I'm confounded right now that the successful strategy in the near term has been 'Buy high-sell higher'). But, as you said, the same buy low/sell high premise might hold for certain smallcap stocks such as PMSI. In fact, most of my investment successes have been buying excellent companies that were out of favor without good reason. However, that strategy usually requires considerable patience since it's almost impossible to call the bottom. Still, I think one gets a better risk/reward profile that way. I finally jumped off the sidelines and bought some CSCO last week. I may or may not have caught it near its nadir, but looking out several years, it looks like a winner to me.
I am also very tempted to buy more PMSI at these bluelight special prices, but I'm trying to remember the virtues of diversification in this highflying market. The market is already discounting almost every bit of good economic news, and yet the inflation blips are slowly growing more numerous. Moreover, the Clinton situation could conceivably lead to deteriorating relations with China. Meanwhile, the budget deal stagnates and the CPI issue looks to be DOA. Considering all this, I'm buying carefully with my eyes wide open to the potential risks and thinking long-term. But I think a good case could be made for accumulating cash right now. |
