Fribble

The Wise Dogs of the Dow
by Thomas Roberts (thomas.roberts@telops.gte.com)


This afternoon, whilst eating my rabbit-food sandwich in front of the TV, CNN droned on with its usual menu of murder and mayhem. And suddenly, lo, what should appear but several (that's more than two) of the Wise spouting, on their "Dollars and Sense" series of sound snippets, the benefits of this marvelous technique called "Beating the Dow."

Wonder of wonders, the Wise explained in concise terms that the technique requires one to order the Dow Stocks by dividend yield. Then, one takes the top ten yielding stocks and ranks them in ascending order by stock price. And, finally, if one purchases the five lowest-priced stocks from the second list in equal-dollar amounts and hold them a year, the historical return would be 21%, as opposed to the meager 12% achieved by the Dow 30. (This is what the Fools call the BTD5 approach.)

What has happened? Have the Wise been surreptitiously purloining pearls of Foolishness from the sacred mysteries of the MF Website. Probably.

But, rest easy, Fools. This is just another passing fancy that answers the producer's question of "what do we do when the market acts like a market?" It will all pass and the secret of long-term investing in quality companies will remain safe with the Fools.

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