I am familiar with the "Dogs of the Dow" but find two potential faults with it.
First, the investable universe is rather small. There are many high quality small and mid cap companies with spectacular finances that are not in the Dow. I always mention REITs and BDCs and none of these are present in the index.
I am familiar with the "Dogs of the Dow" but find two potential faults with it.
First, the investable universe is rather small. There are many high quality small and mid cap companies with spectacular finances that are not in the Dow. I always mention REITs and BDCs and none of these are present in the index.
Second, rebalancing will most likely create a taxable event. The article mentions that even taking taxes into account the DOD approach will still do well. Everyone's taxes are very unique though. I would be careful here. Maybe an ETF or some other kind of fun would be better to own.
On the positive side, the approach is super simple, isn't it? And if something is simple then it becomes doable and repeatable. That can enable a lot of people who would otherwise be turned off from investing.
The smaller investable universe is one constraint the strategy puts into place to achieve the simplicity you mentioned. That simplicity is one of the bigger advantages to following the "Dogs of the Dow". There is some more detail on the strategy in Saturday's article.
You're also correct on taxes - they're unique to each individual, and investors should consider their effects as they choose a strategy.
I am familiar with the "Dogs of the Dow" but find two potential faults with it.
First, the investable universe is rather small. There are many high quality small and mid cap companies with spectacular finances that are not in the Dow. I always mention REITs and BDCs and none of these are present in the index.
Second, rebalancing will most likely create a taxable event. The article mentions that even taking taxes into account the DOD approach will still do well. Everyone's taxes are very unique though. I would be careful here. Maybe an ETF or some other kind of fun would be better to own.
On the positive side, the approach is super simple, isn't it? And if something is simple then it becomes doable and repeatable. That can enable a lot of people who would otherwise be turned off from investing.
Always appreciate the insightful comments Boris!
The smaller investable universe is one constraint the strategy puts into place to achieve the simplicity you mentioned. That simplicity is one of the bigger advantages to following the "Dogs of the Dow". There is some more detail on the strategy in Saturday's article.
You're also correct on taxes - they're unique to each individual, and investors should consider their effects as they choose a strategy.