Trading Tips
In a recent article, we looked at the traditional
approach to a trading strategy known as the Dogs of the Dow. Several
readers have questioned how a simple strategy like the Dogs can work. In this
article, we will explain why the Dogs of the Dow can work and look at a
variation of the Stock trading tips that can be implemented at a relatively low cost.
A common question among investors is how a strategy
can work when a large number of investors already know about it. Researchers
have shown that if a strategy is based on sound investing principles, it can
work no matter how well known it is. This idea applies to the Dogs theory which
has been well known for many years. Although most investors believe the theory
dates back to the 1991 book Beating the Dow by Michael B. O’Higgins, we
showed in our earlier article that the strategy was actually first written
about in the June 1951 issue of the Journal of Finance. Although the strategy has been
available to investors for more than 65 years, it still works because it is
based on sound investing principles. Those principles are diversification, time
and value.