Every year, one of the best strategies is the Dogs of the Dow.
You simply buy a basket of underperformers on the Dow that pay dividends, and sell by the end of the year. Here’s how the 2024 Dogs of the Dow are doing so far.
With a yield of 3.47%, Amgen (AMGN) fell from about $281 to a recent high of $274.
With a yield of 2.87%, IBM (IBM) ran from $157 to a recent high of $232.
With a yield of 2.15%, 3M (MMM) ran from $89 to $130.
With a yield of 10.11%, Walgreens (WBA) fell from about $25 to a recent low of $9.89.
With a yield of 4.22%, Chevron (CVX) ran from $145 to $155.
With a yield of 3.03%, Johnson & Johnson (JNJ) fell from about $153 to $146.
With a yield of 2.7%, Cisco (CSCO) ran from about $49 to $59.
With a yield of 5.49%, Dow Inc. (DOW) slipped from about $53 to $41.
lWith a yield of 6.44%, Verizon (VZ) ran from about $36 to $42.
With a yield of 2.88%, Coca-Cola (KO) ran from about $58 to $63.72.
The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones’ Industrials. Still, with the appreciation in most of the 2023 Dogs coupled with dividends, investors still did well overall.
Metaphorically, you could compare bull and bear trends to the seasonal variations of the earth’s annual journey around the sun. Each day the sun comes up in the east, and at high noon during summer months the full energy of the sun triggers very warm days. By contrast, during winter months, even at high noon, the mid-day sun seems to do little to alleviate bone chilling cold.
The difference between summer and winter temperatures is due to a small angle created when the earth is tipping either toward or away from the sun. A few degrees in one direction or the other creates a dramatic shift in temperatures.
Comparing it to the markets, bear markets don’t need dramatic changes in conditions to start dropping stock prices. In fact, it only takes a few small increases in interest rates to turn a bull market to bear.
When a bear market is upon us, stock prices drop like the temperatures in a freezing wind. Even hot stocks can barely move their own needle when broader markets are falling. Investors can then choose to either avoid the markets altogether, or they can consider trading in the other hemisphere where down actually means up.
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