We know Dogs of the Dow (DoD) strategy presented in Beating the Dow (1990) written by Michael O'Higgins. O'Higgins selected the ten highest paying dividend stocks in the DJIA and bought them at year-end and held them for a year, and then bought the next batch of highest yielding stocks, etc. That strategy did great in back-testing, but has not done well in the past few years.
Then Charles Carlson, the author of Winning with the Dow's Losers, has uncovered a simple strategy using the worst calendar-year Dow performers to beat the Dow Jones Industrial Average (DJIA).
Carlson's strategy does not use dividend yield as his selection criteria, but instead focuses on those stock(s) that have the worst yearly percentage price performance.
I got their ideas and come out with Singapore's own version of Winning with the STI's Losers. :)
The basic ideas are :-
1) Select the worst performance of 1-, 3-, 5- and 10-stock STI index stocks. And the worst performance is based on percentage difference from its 200 day moving average basis. Of course the number of stocks depends how affordable you are. One thing you need to know is that the more stocks you hold the less risky it will be.
2) Hold the stock(s) for actually 1 year time period.
3) Re-evaluate using 1) step. Sell the stocks and buy the new worst performance stocks.
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