Winning with the Dow's Losers: Beat the Market with Underdog Stocks

Overview

Bestselling author Charles B. Carlson returns with a counterintuitive yet simple strategy for beating the Dow and making money in the stock market.

In Winning with the Dow's Losers, Carlson shows how any investor — with any size portfolio or any level of investment knowledge — can apply his worst-to-first strategy to generate impressive wealth over the long term. By following this simple, sound, and ...

See more details below
Other sellers (Paperback)
  • All (21) from $1.99   
  • New (10) from $1.99   
  • Used (11) from $1.99   
Sending request ...

Overview

Bestselling author Charles B. Carlson returns with a counterintuitive yet simple strategy for beating the Dow and making money in the stock market.

In Winning with the Dow's Losers, Carlson shows how any investor — with any size portfolio or any level of investment knowledge — can apply his worst-to-first strategy to generate impressive wealth over the long term. By following this simple, sound, and time-tested strategy, investors can invest in high-quality stocks at beaten-down prices and watch them rebound year after year.

Investors can:

  • Start with as little as $1,000.
  • Invest in as few as 1 or as many as 10 Dow stocks.
  • Review and adjust your portfolio no more than once a year.
  • Achieve better results than the famous "Dogs of the Dow" approach.

Stock market funds come and go, while investors who chase them usually enrich only their stockbrokers and not themselves. Now, with Winning with the Dow's Losers, you can regularly pick winning stocks and make money for yourself.

Read More Show Less

Editorial Reviews

Publishers Weekly
The simplest approach to investments has been the mantra of market strategist Carlson. As editor of the newsletter DRIP [Directory of Dividend Reinvestment Plans] Investor and author of several books, he has long advocated holding stocks that pay dividends and then reinvesting these dividends back into stock. Here, he offers a new approach to stock investing. According to research on the performance of the stocks that compose the Dow Jones Industrial Average-Boeing, Wal-Mart, McDonald's, Home Depot, etc.-a bad year is likely to be followed by a great year for these stocks. By tracking the stock performance of the companies, investors can then choose which stocks to buy and will be able to buy the stock "low" and sell "high." Carlson explains the research in easy-to-understand language: "Indeed, if you can make successful bets on the Dow's lowest priced stocks (and, conversely, determine what high-priced Dow stocks are pricey and avoid or short them), you should consistently generate index-beating returns." Carlson also offers several compelling reasons why this strategy works, including consistency of performance over various time frames, simplicity, tax advantages and flexibility. Also included are snapshot profiles of all the companies in the Dow. Given the turbulent swings of the stock market over the past few years, most investors now understand there is no single guaranteed approach to investing. However, Carlson's plan is sound and his suggestions for incorporating it into an existing portfolio will let readers easily test it out. (Jan.) Forecast: With Carlson's track record from the bestselling Buying Stocks Without a Broker, this one should sell well, especially if the author receives some national TV exposure. Copyright 2003 Reed Business Information.
Read More Show Less

Product Details

  • ISBN-13: 9780060576585
  • Publisher: HarperCollins Publishers
  • Publication date: 12/14/2004
  • Pages: 320
  • Sales rank: 1,027,457
  • Product dimensions: 5.31 (w) x 8.00 (h) x 0.72 (d)

Meet the Author

Charles B. Carlson, cfa, is CEO of Horizon Publishing and Horizon Investment Services, a money management firm. He is the editor of DRIP Newsletter and a contributing editor to Dow Theory Forecasts. Carlson is the author of eight books, including the bestselling Buying Stocks Without a Broker. He earned his MBA from the University of Chicago.

Read More Show Less

First Chapter

Winning with the Dow's Losers
Beat the Market with Underdog Stocks

Chapter One

Worst to First -- Why it Works

... And the last shall be first.

I'm about to reveal to you an investment strategy that is so powerful yet so simple and logical that it will change the way you invest. Bold statement? You bet. But it's also true.

Indeed, by following this simple strategy, since the end of 1930, an investor would have turned a $1,000 investment into $2 million. That's roughly double the return of the Dow Jones Industrial Average over that same time frame. Of course, few of us have 74 years to invest. So let's look at how the strategy performed over shorter time frames:

  • Over the last 50 years, this investment strategy (which, by the way, requires you to took at just 30 blue-chip stocks, once a year) turned $ 1,000 into nearly $215,000, outperforming the Dow Jones Industrial Average over the same time period.

  • Over the last 30 years, this investment strategy (which makes all the investment decisions for you, including the always-difficult sell decision) turned $1,000 into more than $46,000 -- a gain of 4,500 percent on your investment and a profit that was 53 percent greater than the return of the Dow over the same time period.

  • Over the last 20 years, this investment strategy (which is so easy that you don't even need a calculator) turned $1,000 into more than $14,100 -- a gain of more than 1,300 percent, handily beating the Dow over the same time frame.

  • Over the last 10 years, the strategy (which is so inexpensive that your total "research" cost is the price of one Wall Street journal) once again trumped the Dow, more than tripling your money over that time frame.

  • Over the last 5 years, the strategy (which will take you less than an hour to research and can be implemented anytime during the year) produced a 67 percent return on your investment versus a measly 6 percent return in the Dow. And remember-that 67 percent profit occurred during one of the worst bear markets in history, when most investor portfolios and major market indexes were deep in the red.

  • And for 2003 (through June 30), this investment strategy (which requires less than $1,000 of investment capital) returned 27 percent on your investment, roughly three times better than the return of the Dow.

To summarize, this investment strategy has handily beaten the Dow Jones Industrial Average

  • Over the last 74-year period
  • Over the last 50-year period
  • Over the last 30-year period
  • Over the last 20-year period
  • Over the last 10-year period
  • Over the last 5 -year period
  • Over the last 4-year period
  • Over the last 3-year period
  • Over the last 2-year period
  • Over the last 1 -year period

And if you don't think the Dow Jones Industrial Average is a worthy benchmark to beat, consider this: The Dow Jones Industrial Average has whipped the S&P 500 Index, Wilshire 5000, Nasdaq Composite, and most other major market indexes over the last 5 years, as the following chart shows:

The Worst-To-First Phenomenon

Everyone's favorite investment mantra is "buy low, sell high." The problem is that nobody actually buys low and sells high. Rather, we buy high and (we hope) sell even higher.

The stock market is the only market on earth where the merchandise becomes more popular as it becomes more expensive. Why? Because investors feel comfortable staying with the herd when it comes to buying stock. After all, if everyone loves a stock and its price is rising, it must be worth buying, right?

The problem is that investing with the herd is a surefire way to lose money. Look at all the technology stocks that soared in the late '90s only to come crashing down in the last 3 years. Everyone wanted to buy those technology stocks when they were skyrocketing and trading at extreme prices; nobody wanted to buy them when they crashed.

Successful investing is all about forcing you to do the smart thing even when your emotions are telling you otherwise. And the smart thing to do as an investor is to buy low and sell high. Fortunately, strategies exist that force investors to buy high-quality stocks when they are down and to sell them when they are up. I call them my worst-to-first strategies.

These strategies emerged as a product of my research into the Dow Jones Industrial Average. As an editor of Dow Theory Forecasts investment newsletter and a money manager, I've been following the Dow for more than 20 years. During my research of Dow stocks, one theme that jumped out was how the Dow's losers in one year (that is, the Dow stocks showing the greatest percentage price decline for the year) became winners the next.

This worst-to-first phenomenon has been especially pronounced in recent years. For example, in 1999, the worst-performing stock in the Dow was Philip Morris (now called Altria). An investment in the tobacco giant lost a whopping 54 percent of its value in 1999. In 2000, however, the story was much different for Philip Morris shareholders. To say Philip Morris rebounded would be an understatement; the stock was the best-performing issue in the Dow in 2000, returning 105 percent. In fact, Philip Morris's triple-digit return in 2000 was nearly twice the return of the runner-up that year, aerospace giant Boeing. Even more impressive was that while investors were more than doubling their investment in Philip Morris in 2000, the Dow actually lost money (nearly 5 percent) during the year.

In 2000, same story, different players. The two worst-performing stocks in the Dow in 2000 were AT&T (down 65 percent) and software behemoth Microsoft (down 63 percent).

Winning with the Dow's Losers
Beat the Market with Underdog Stocks
. Copyright © by Charles Carlson. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.
Read More Show Less

Customer Reviews

Be the first to write a review
( 0 )
Rating Distribution

5 Star

(0)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously
Sort by: Showing 1 Customer Reviews
  • Anonymous

    Posted January 16, 2004

    An outstanding investment book

    I have followed 'dogs of the Dow' for years and this is a quantum leap forward. Clear, easy to read, provocative, and scholarly. Well worth your time.

    Was this review helpful? Yes  No   Report this review
Sort by: Showing 1 Customer Reviews

If you find inappropriate content, please report it to Barnes & Noble
Why is this product inappropriate?
Comments (optional)