THE DOW'S DOGS WON'T HUNT

A POPULAR INVESTMENT THEORY HAS RUN ITS COURSE

Seven years ago, Michael O'Higgins, a successful if inconspicuous money manager, thrilled the investment world with a simple formula for generating superior returns: Buy the dogs. He discovered that if you buy the 10 stocks among the Dow 30 with the highest yields (dividend divided by price) and updated the portfolio once a year, the returns would triple those posted by the Dow Jones industrial average over the previous two decades. O'Higgins' 1991 book, Beating the Dow, was an instant hit and spawned a cultlike following. There are two Websites, three mutual funds, dozens of Unit Investment Trusts (UITs) and untold...

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