Have the Dogs of the Dow Lost Their Bite?

Abstract

Investors are always trying to "beat the market." One theory, which purports to beat the market, is the "Dow Dog" theory. The theory states that an investor should pick a day, a birthday, some anniversary, or the end of the calendar year, and purchase a portfolio consisting of the ten highest yielding stocks listed in the Dow Jones Industrial Average. One year later the portfolio would be restructured by selling the stocks that are no longer in the high yield group and replace them with stocks that are. This paper is an effort to determine if investing in the Dogs of the Dow is a successful investment strategy.