Beating the Dow, 1992: A High-Return, Low-Risk Method for Investing in the Dow Jones Industrial Stocks With As Little As $5,000 (Paperback)

by Michael O'Higgins (Author), John Downes (Author) "In 1985 Texaco, America's third largest oil company, was ordered to pay Pennzoil Company a huge $10.3 billion judgment..." (more)
Key Phrases: portfolio planning worksheet, ten highest yielders, newspaper stock tables, Wall Street, New York, Shares Pref'd (more...)

Editorial Reviews

From Library Journal
Two contrasting investment methods are offered by these titles. O'Higgins, a 20-year veteran of Wall Street, espouses a system that limits the stock universe to the 30 stocks in the Dow Jones Industrial Average. He has followed this system as a successful money manager and states that respectable returns can be realized by selecting the highest yielding of the 30 Dow stocks. Unfortunately, most of the book is background and only a few chapters are devoted to the how-to part of the system. Purchase Geraldine Weiss and Janet Lowe's Dividends Don't Lie ( LJ 1/89) before this one. O'Neil is the founder and publisher of Investor's Daily. His investment approach emphasizes the quality of a company's earnings from quarter to quarter. Having sorted this out, the investor is then advised to find stocks that are performing well in strong industry groups. Frequent mention is made of the fact that only one investment newspaper provides the data needed to conveniently employ this system. Well written and to the point, this updated title should at least be in libraries that carry Investor's Daily .
- Joseph Barth, U.S. Military Acad. Lib., West Point, N.Y.
Copyright 1991 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

Review
"Lucid....O'Higgins' data are persuasive." -- Wall Street Journal

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Product Details

• Paperback: 304 pages
• Publisher: Harper Perennial (January 1992)
• Language: English
• ISBN-10: 006098404X
• ISBN-13: 978-0060984045
• Product Dimensions: 7.8 x 5.1 x 0.8 inches
• Shipping Weight: 8 ounces
• Average Customer Review: 4.2 out of 5 stars See all reviews (19 customer reviews)
• Amazon.com Sales Rank: #1,580,417 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

16 of 16 people found the following review helpful:

5.0 out of 5 stars The easiest no brain way to make money., April 23, 1999

By	[e-mail] (Columbia, MD) - See all my reviews

This book is now quite dated as far as the discussion of the individual Dow stocks, but the principals are still the same. I have never lost money doing this formula ever. In fact, I now average about 27% over the past seven years with only looking at my portfolio once a year. I now buy this book for a lot of my friends who ask me about investing when they have no experience. Adam Shaughnessy [e-mail]

15 of 15 people found the following review helpful:

4.0 out of 5 stars Beating the Dow, Still an Unbeatable Read, December 21, 2001

By A Customer

This review is from: Beating the Dow (Revised and Updated) (Paperback)

Michael O'Higgin's investing classic holds up as well in the New Millenium as it did when it first hit book stands 10 years ago.

He maintains that it is still possible to beat the DOW by buying the 10 highest yielding stocks and tweaking your holdings each year, with correspondingly greater rates of return with a two- or five-stock selection from the group. O'Higgin's admits in the new eidtion that the strategy has been muddied by a drop in the relative importance of dividends as a part of total yield of the DOW. Dividends and payouts have lost lost out to stock buybacks, in part because dividends are taxed at a higher rate than long-term capital gains from stock sales. Changes in the DOW have also reduced the overall dividend payout. Of the most recent additions, Microsoft pays no dividend and Intel and Home Depot have nominal payouts. O'Higgin's strategy may also be less effective because it's simplicity and past returns attracted the attention of Wall Street money managers and of many, many individual investors. There is at least one web site devoted to the Dogs of the Dow and a number of similar investment strategies were profiled for several years on the Motley Fool website.

Nor is the most valuable part of O'Higgin's book his thumbnail sketches of other value strategies for beating the market with a basket of DOW stocks. Several seem downright ridiculous. I remain skeptical that investing based on presidential election cycles or end-of-year asset sales by fund managers can yield meaningful, long-term results for individual investors.

The value of this book is O'Higgin's championing of value investing in general and his highlighting of the resilience of the DOW stocks in markets bull and bear. Most people aren't professional investors and lack the time and resources to profit from a strategy of active trading. If the efficient markets guys are right, then buying all 30 DOW stocks and holding on long-term will beat returns of most professionally baskets of stocks, with less risk and less payouts for taxes and trading costs to boot. Or maybe buying the highest yielders in any given year and holding. Anyway, you get the picture.

Regardless of whether you think the high-yield 10 is still capable of outgaining the overall DOW, O'Higgin's book is, to me, as valuable in 2001 as it was when I first read it in 1993.

16 of 17 people found the following review helpful:

5.0 out of 5 stars Investing sensibly, October 24, 2000

By	Jeremy (little north of golden gate bridge...) - See all my reviews

This review is from: Beating the Dow (Revised and Updated) (Paperback)

Some people might laugh at this book specially the brokers who make living by sucking the commision out of an average investor. What had happened in the NASDAQ in 1999 before the correction was absolutely mind blowing and this book might have looked like a bad joke i.e. advocating to invest in companies like International Paper! but now that the dotcoms are down the drain, the valuations are somewhat back on earth, the margin-debt bitten people are done crying, maybe it is time that us i.e. average investors read this book.

This book as the name says is all about investing in Dow companies, the giants of the US and global economy. The companies which I truly believe that world could come to an end but GE would still be there. The book covers all the Dow components individually along with their historical financial performance, weaknesses, strenghts and their power to stay in business by being profitable over years and years. There are many different 'low risk' investment strategies covered in this book such as 'High Yielding 5'. These are the 5 Dow stock that you pick annually based on the criteria described, HOLD it for 1 year, redo the math (barely any)and pick your 5 stocks again. You also sell some at this point that didn;t meet your criteria and pick the new ones to fill their spot.

Sounds simple, yes! and that's the way it should be. Not only you can ride out the swings of the stock market in this way but also save a ton on commisions, taxes and most importantly be less stressed.

If you read the Motley Fool, you'll notice some of their strategies are derived from O'Higgin's methods.

A must read for all investors, specially younger people like myself who want to start building the nest yesterday!