As of 10/03/2024
Indus: 42,012 -184.93 -0.4%
Trans: 15,745 -226.81 -1.4%
Utils: 1,058 -6.74 -0.6%
Nasdaq: 17,918 -6.64 0.0%
S&P 500: 5,700 -9.60 -0.2%
|
YTD
+11.5%
-1.0%
+20.0%
+19.4%
+19.5%
|
43,500 or 41,600 by 10/15/2024
16,800 or 15,700 by 10/15/2024
1,125 or 1,025 by 10/15/2024
19,000 or 17,600 by 10/15/2024
5,900 or 5,600 by 10/15/2024
|
As of 10/03/2024
Indus: 42,012 -184.93 -0.4%
Trans: 15,745 -226.81 -1.4%
Utils: 1,058 -6.74 -0.6%
Nasdaq: 17,918 -6.64 0.0%
S&P 500: 5,700 -9.60 -0.2%
|
YTD
+11.5%
-1.0%
+20.0%
+19.4%
+19.5%
| |
43,500 or 41,600 by 10/15/2024
16,800 or 15,700 by 10/15/2024
1,125 or 1,025 by 10/15/2024
19,000 or 17,600 by 10/15/2024
5,900 or 5,600 by 10/15/2024
| ||
The Dogs of the Dow worked for many years by outperforming the Dow stocks but in recent years, its performance has deteriorated. I do not recommend using the strategy.
In 1991, the team of Higgins and Downes introduced the world to what is now called the Dogs of the Dow strategy upon publication of their book, Beating the Dow, pictured on the right. They published a revision in 2000 (shown).
At the time, the book made quite a splash, including having a few mutual funds based on the strategy. Why? Because the technique, which I'll describe below, seemed to work well. According to them, following the method from 1973 to June 1991 would have made a cumulative profit of 1,753.14% compared to the complete Dow return of 559.31%, not including commissions and taxes. As fantastic as that seems, it's just 16.61% annually for the Dogs and 10.43% for the regular Dow stocks.
In 13 of 19 contests, or 68% of the time, the Dogs beat the Dow. However, according to one source, the Dogs only beat the Dow once in the last 5 years (in 2006). As of year end 2008, the Dogs have posted annual returns less than the Dow stocks in each of the last 1, 3, 5, 10, and 15 years. It's as if once a technique becomes well known, it stops working.
There are other variations of the Dogs of the Dow, namely the Flying Five, Little/Small Dogs of the Dow, Foolish Four, and Penultimate Profit Prospect. The Flying Five, Little Dogs, and Small Dogs of the Dow (all are synonyms) have flopped (failed to consistently outperform the Dow) over the last 1 to 15 years as well, according to one source I checked.
Here are the rules for the Dogs of the Dow setup.
Here are the rules for the Flying Five, Little Dogs, and Small Dogs of the Dow.
The rules for the Penultimate Profit Prospect are as follows.
The Foolish Four is from the Motley Fools, as you might have guessed. They have several variations on the basic theme.
The Motley Fool website warns that performance since introduction has declined.
My historical test of the dogs of the Dow, Flying Five, and Penultimate Profit Prospect shows the following.
-- Thomas Bulkowski
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