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Strategies & Market Trends : Beating the Dow funds?

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To: Stingray who wrote (30)3/5/1997 10:24:00 PM
From: Brian Channon   of 47
 
Finally, I have found a critical thinker on this thread. I, like you, am somewhat skeptical of the application of this strategy going forward. Having said that, there are three things working in the favor of this investment strategy: 1) it forces an investment discipline and a buy-and-hold philosophy and a disregard for daily market noise (many of us find a buy-and-hold approach intuitively appealing but we get swept up by the noise); 2) buying stocks with relatively high dividend yields does reduce significantly the risks associated with stock purchases (i.e., a bird in the hand...); and 3) this investment strategy has become so well known that there may be a self-fulfilling prophecy in place (not too different from the major movement of funds to S&P 500 index funds which has fueled the overvaluation of the large cap stocks).
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