The Dogs of the Dow have, of late, become, on average, very high in price. In other words, the per-share price of the stocks in this group has become higher, generally, than I am comfortable paying for a stock for my accounts (which are not really huge, by the way). If someone has a large account, then it wouldn't really matter if the stocks in that account are above $100 a share. But in a smaller account, to maintain it by the AIM rules, it makes it difficult to manage it, because of the rules involved. I like to have all the stocks around the same total value. Since the average number of stocks in the ideal AIM account should be 5 or so, it makes it easier to manage a smaller account if the per-share price of each stock is a little lower. Now, I will always check the Dogs of the Dow group for stocks to use in my AIM account, since they meet the criteria that works well, generally. But lately, since the per-share prices of the Dogs are so high, for my accounts, I have been backing away from using those stocks.
Right now, there are only 3 stocks in the Dogs that are under $100, and the lowest price one is Verizon. The other two are Coke and Merck, neither of which appear, in my opinion, to be bargains right now. When I look for candidates for my accounts, I look at volatility, quality of company, and where they are in their general trading range. Right now, only VZ fits those descriptions, so except for VZ, all of the stocks in my account are either former Dogs or non-Dogs.
One of the nice things about using DOTD stocks is that they inherently have nice dividends, so they are always adding to my cash. So when I have to go outside the Dogs to look for stocks, I still make sure the company pays at least a reasonable dividend. I stay away from companies that pay too high of dividend, because I understand that those companies may have a higher risk than I am willing to take.
Lichello, in his book, doesn't talk about Dogs of the Dow. That was my idea. His description of a good stock candidate, to my recollection (I honestly haven't read the book in a while) says that if you recognize the name just from general day-to-day dealings, it's probably worth looking at. As he puts it, if you are drowning in the ocean, and somebody throws you 2 lifesavers, and you recognize the brand of one and not the other, grab the one you recognize. Now, I'm not sure I would take the time, if I was drowning, to read the brand names of lifesavers, but he was just trying to make a stock-picking point.
I really didn't talk about the way the market is right now, because it hasn't changed too much from last post. I'm a little surprised that it's coming back the way it is after it's major double-top (I'm a bit of a technically guy - I pay attention to charts) but the S&P just made a new high yesterday. The Dow has a little work to do to get to it's next high.
Current stocks in my account - INTC, VZ, NKE, DINO, DOW
