Why the Dow Will Outperform the Nasdaq in 2014

By Travis Hoium – Mar 27, 2014 at 3:42PM

Stock markets are looking expensive, and that means investors have to look to blue chips on the Dow Jones Industrial Average for value in 2014.

The Nasdaq Composite's (^IXIC 1.74%) performance in 2013 beat the Dow Jones Industrial Average (^DJI 1.26%) by 37% to 27%. But most of the gains were due to multiple expansion, and now the Nasdaq's average P/E ratio is 24 to just 16 on the Dow.

Investors looking for value in an economy that's growing at a snail's pace should look to the Dow for better options. In fact, value is why the Dow will outperform the Nasdaq this year.

In the video below, Motley Fool contributor Travis Hoium highlights why Verizon (VZ 0.59%), Microsoft (MSFT 1.50%), and Cisco (CSCO 1.64%) provide the kind of value and competitive moat that investors should be looking for in 2014.

Travis Hoium manages an account that owns shares of Cisco Systems and Verizon Communications. The Motley Fool recommends Cisco Systems, Facebook, Tesla Motors, and Twitter. The Motley Fool owns shares of Facebook, Microsoft, and Tesla Motors. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.