Dogs of the Dow strategy

Posted by blackswan > 2013-09-13 16:55 | Report Abuse

I wonder if anyone is using the Dogs of the Dow investment method for the local KLSE. Feedback on the profitability and feasibility of such method would be appreciated.

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5 comment(s). Last comment by kcchongnz 2013-09-13 17:39

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-09-13 16:58 | Report Abuse

Why do you want to use a losing strategy?

blackswan

3 posts

Posted by blackswan > 2013-09-13 17:03 | Report Abuse

kcchongnz,

could you elaborate why you think it is a losing strategy? I was reading about it recently and wonder if it works hence my posting.

have you used it before?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-09-13 17:11 | Report Abuse

If I remember, the strategy was successful initially in US. But later the strategy under-performed the market. Go Google and check.

the strategy basically buy the highest dividend stocks each year and reshuffle every year. There are also many academic research which showed that there is no statistical significance of extra-ordinary return with the strategy.

Intuitively I would say it is not a winning strategy because a company pay high dividend because it has no better use of its free cash flow. Without adequate capital expenses, a company won't grow.

blackswan

3 posts

Posted by blackswan > 2013-09-13 17:22 | Report Abuse

thanks kcchongnz, let me dig deeper.

On a side note, today's dogs are the following.
MISC
MBB
MAXIS
DIGI
AXIATA
BAT
TM
UMW
SIME
FGV

Which of these will you consider?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-09-13 17:39 | Report Abuse

blackswan, none of the above. I am a follower of Warren buffet and Cold Eye as a value investor. See the thread appended below:

http://klse.i3investor.com/servlets/forum/900214344.jsp

But actually i am more towards Joel Greenblatt's magic formula. See appended link below:

http://klse.i3investor.com/servlets/forum/900255072.jsp
http://klse.i3investor.com/servlets/forum/900285510.jsp

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