Why Buying the “Dogs of the Dow” Could Pay Off in 2020

Time to Look at the Laggards This Year for Big Gains

In 2019, the stock market was dominated by the momentum stocks, particularly the brand-name technology stocks. But this doesn’t mean value stocks were left out of the action; the Dow Jones Industrial Average returned a healthy 22.3% in 2019, compared to 35.2% for the Nasdaq.

I don’t expect the same sizzling results this year, but you would never know that based on what has happened so far in January.

Simply look at what momentum stocks like Apple Inc. (NASDAQ:AAPL) and Tesla Inc (NASDAQ:TSLA) have done already this year, up 6.3% and 14.7%, respectively.

Many stock-market pundits are emphasizing the need to pull back on chasing momentum stocks this year and focus on defensive value stocks. There is nothing wrong with this strategy, given the gains in 2019.


While it could be a good idea to be more prudent about overloading on momentum and technology stocks, it could still be a good idea to have decent exposure in the area.

There is clearly money chasing the gains in the stock market, but be careful because bad news could lead to big declines for these stocks.

Why 2020 May Be Great for the Dogs of the Dow

Let’s take a step back and look at alternative trading strategies that have paid off in the past.

For value in mega-cap stocks, you can play the Dow Jones Industrial Average, which comprises 30 blue-chip stocks and is supposed to represent the U.S. and global economies.

But there is another straightforward option to buying the Dow that has actually performed better in seven of the past 10 years. It’s called the “Dogs of the Dow” investment strategy.

This stock-market strategy is as follows. At the start of the year, you invest

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