In our January 2, 2022 posting on the Dogs of the Dow, we said the following:
- "In the coming year, we’re expecting the market to underperform generally and accept that there is no real 'safe haven.'”
- "As shown in the 2017 article, the assumption is that if the year ends in the negative, these two categories will lead the way down. Meanwhile, if the year ends on the downside, the high yield stocks should have the market beating performance."
One year later, we see that the market, as represented by the Dow Jones Industrial Average, has decline by -8.78%.
Additionally, the category of stocks expected to decline the most matched exactly what was anticipated to occur WHILE the high yield stocks (top 10) beat the low yield stocks AND the market.
What does this say about the Dogs of the Dow strategy and our interpretation of the data? It says that the data is consistent and that the few times you can win with the Dogs of the Dow (top ten high yield stocks) strategy is when the stock market declines.
However, when the stock market is in a rising trend, then the market will award better performance to the high p/e & low yield members of the index.
see also:
- January 2, 2022 Dogs of the Dow