To: Renee Scherb who wrote (1867 ) 10/27/1997 12:01:00 AM From: sea_biscuit Read Replies (2) | Respond to
RE: "Analysts caution that [Dow dogs] investments, whether funds or trusts, may yet become victims of their increasing popularity ... So far this year, the three mutual funds and the ML trust that started on Jan 2 have underperformed the S&P 500 ..." but also a much higher Standard Deviation than the Dow. So there could be occasional instances of underperformance, even severe underperformance.An analyst is quoted as warning that the dogs may lag the market, "If the Dow dog strategy becomes too popular, it will lose its contrarian edge. The key to the strategy working is that it's based on buying overlooked, unpopular stocks." after it has performed well! And investors who jump in, usually abandon it after it underperforms the market a year or two (one of the variants of the Dow Dogs strategy -- the Foolish Four, has underperformed the Dow as many as 7 times in the last 26 years, and yet outperformed it by a factor of 8.3 to 1). Maybe we have the goddess to thank for spreading the word too widely? <g> In any event, I'm shy of any "system" for buying stocks, whether it's called the Nifty Fifty or Dow Dogs. Best bet, IMO, is either to buy the market (BB's beloved indexes) or be a selective picker of stocks you really know and understand. Each to his own!
