One rule I have always had is never chase yield. Especially now, with the economy getting the shakes, high yields can be particularly dangerous.
Now, having said that, I will say that I like your strategy. My pea brain says to favor value over growth, because growth rates right now are just one big question mark. We flat don't know. No one knows.
I have, on this thread, projected a decline in the Dow to about 7,000 (not far off your estimate). I based my guess, and yes, it's a guess, on a recession that will last longer, but won't necessarily be deeper, than most expect. We need time to work off excess capacity, in other words. So the blue chips grind lower. Japan is another drag on the economic and earnings outlook. I have no idea how the Japan situation will be resolved.
OK, so let's say the Dow, over the next 12 months, goes to 7,500 or so. There are 30 stocks in the Dow. We all know who they are.
I have a hard time shorting MSFT. I have a lot of respect for Gates' ability to compete. When I look at the Dow stocks, the one that sticks out is IBM. I can't envision a scenario in which IBM would be immune to what's going on in the rest of the industry.
If I were to short the Dow, that's how this idiot would play it.
PB |
