The Bull Hunters Guide

Hey there. Welcome once again to our series of posts covering some of the most popular and effective methods for selecting stocks. These methods have been documented and compiled over the years, and while they differ dramatically in terms of execution and philosophy, they all share the common element that, depending on who you ask, they work!

While every stock selection is something of a gamble, it’s our hope that by looking at these time-tested strategies, you’ll begin to gleam some idea from them of how winning stocks are usually chosen, and begin to develop your own strategy that will be effective for you.

Beating The Dow

Today, we’re going to look at what is probably one of the simplest methods in all of investing. This method was first presented in a book by Michael Higgins called “Beating the Dow”, and is commonly known as the “Dogs of the Dow” method. Selecting stocks by this method couldn’t be easier. You simply take a look at the top 30 companies with the highest dividend yields, according to the Dow Jones Industrial Average, and then spread your portfolio among the top ten.

That’s really all there is to it. You just check back every so often, perhaps every quarter, and make changes based on what you see, so that your portfolio always accurately reflects the top ten dividend yield stocks at any given time.

Depending On The Dividends

Clearly, this strategy is depending highly on the dividends that you’ll receive from the stocks in question, but it always takes into consideration the future potential of those stocks. The idea is basically that, if a stock is in the Dow top 30, it will typically be a strong stock with enough of a foundation to weather passing storms and eventually return to a position of prominence, whereupon you can sell it for an amazing profit. In the meantime, you just enjoy those dividend yields.

Well, that’s it for now. Told you it was a simple method. Next time, we’re going to wrap this series up by taking a look at the last method on our list: technical analysis. Stay tuned!

See you next week for part 10 of Stock Picking Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

Social Bookmarks:

Hello Fellow Bullhunters

What I would like to give you today is a brief overview of the different types of analysis you can use to help you in selecting shares. The methods most commonly used to select shares to invest in are:

1. Fundamental Analysis is when we use the history of a company, combined with their financial status and the management of the company as a whole. Basically, what we hear on the news and read in the papers gives us this information.

2. Technical Analysis is charting the stocks and backtesting historical data to look for various patterns that the stock might be producing. By using this method, we see that history has a way of repeating itself. Especially in the blue chip stocks.

3. A combination of both.

These methods are widely used. In fact, Warren Buffet, the second richest man on the planet uses just fundamental analysis. He has been doing this for many, many years.

Personally, I like to use technical analysis. Reading charts is a simple method of learning about a stock. The more practice you do, the better you get at it.

Bullhunters, I learnt how to chart stocks by hand when I was first interested in trading the stock market. Drawing candlestick charts took plenty of discipline, but it was well worth it for me. It has given me a background in understanding charts.

The software available today makes it unnecessary to chart stocks by hand as you have it all at the click of a button now. There is a vast array of charts available to you on the internet as well. You can have a look at bigcharts.com, marketwatch.com and finance.yahoo.com.

I would like to recommend for those of you who are here to learn about trading that you start to look at some charts to get an idea of some of the trends that certain stocks have.

Has this article helped you?

Are you getting what you need from this blog? Let me know how I can best help you to learn about the US Stock Market.

I have just returned from Barbados… I enjoyed a little R & R, and got in with the locals and all that Calypso music. Unfortunately, there wasn’t any cricket in town while I was there… they certainly love their cricket… there are signs up everywhere you go about how much they love their cricket. Everybody should get there at least once… it really is a nice place to visit.

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

Social Bookmarks: