Many investors follow the Dogs of the Dow, a well-known trading
strategy that is intended to buy value stocks. Originally, the Dogs of
the Dow strategy consisted of buying the 10 highest yielding stocks in
the Dow Jones Industrial Average and rebalancing the portfolio once a
year.
Every January, a new list of Dogs would be compiled and
changes made to the portfolio to reflect them. Most years, at least some
of the stocks remain on the list and turnover is relatively low.
Once
the Dogs of the Dow strategy was first published, a number of
variations have been developed. One of the variations of the strategy is
to buy only the five lowest priced stocks from the list of the 10
highest yielding stocks. This is the approach Amber detailed last month. She suggests using call options to lower the purchase cost and increase the potential gains from the strategy. (more)
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zerohedge.com / by Tyler Durden on 01/06/2014 14:21 -0500
The predictions of Blackstone’s octogenarian Byron Wien (born in 1933) have been all over the place in the past 10 years, some correct, most wrong (with a recent hit rate of about 25%) – his 2013 year end S&P forecast was for 1300 – yet always entertaining. Which is the only value in the latest release of his 10 forecasts for 2014. Naturally, take all of these with a salt mine.
Byron’s Ten Surprises of 2014 are as follows:
- We experience a Dickensian market with the best of times and the worst of times. The worst comes first as geopolitical problems coupled with euphoric extremes lead to a sharp correction of more than 10%. The best then follows with a move to new highs as the Standard & Poor’s 500 approaches a 20% total return by year end (ZH: or, said otherwise, S&P 500 at 2200).
- The U.S. economy finally breaks out of its doldrums. Growth exceeds 3% and the unemployment rate moves toward 6%. Fed tapering proves to be a non-event.
- The strength of the U.S. economy relative to Europe and Japan allows the dollar to strengthen. It trades below $1.25 against the euro and buys 120 yen.
- Shinzo Abe is the only world leader who understands that Dick Cheney was right when he said that deficits don’t matter. He continues his aggressive fiscal and monetary expansion and the Nikkei 225 rises to 18,000 early in the year, but the increase in the sales tax, the aging population and declining work force finally begin to take their toll and the market suffers a sharp (20%) correction in the second half.
- China’s Third Plenum policies to rebalance the economy toward the consumer and away from a dependence on investment spending slow the growth rate to 6% in 2014. Chinese mainland traded equities have another disappointing year. The new leaders emphasize that their program is best for the country in the long run.