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Realtraders-
A man by the name of Michael B. O'Higgins has written an intersting book titled, Beating the Dow with Bonds. This book deals with an asset class allocation method that directs you to stocks (and in particlar which ones), fixed income securities or money market accounts. Since 1969, according to the author, his method has returned 23.77% handily beating the S&P 500. The method goes like this....
1. If the current price of gold is higher than a year ago, allocate all funds to a money market account.
2. If the yield on a 10-year Treasury + .30 is greater than the earnings yield (earnings per share divided by by price) on the S&P 500, invest in fixed income securities. He especially likes zero coupon bonds.
3. If #2 above is not true, invest in stocks. His stock picking method is a version of the Dow Dogs approach. First start with the 10 highest yielding stocks of the Dow Jones 30 Industrials. From the ten, buy the 5 with the lowest price per share.
Before you rush out for the latest issue of Barron's let me pass along the info. The price of gold is down from a year ago (whew..
who wants to be in money markets>) and the 10-year bond yield is higher than the S&P 500 earnings yield. Zeroes anyone?
Steve
www.cyberramp.net/~steve
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