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Originally Posted by Texas Proud
As I remember readinng a long time ago.... it is not hard to 'beat' an index such as the DOW...
look at all 30 stocks... rank them in order of the best to worst... don't buy the worst one or two stocks and weight the rest of your portfolio a bit higher...
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Not that simple. The "best" stocks (usually high growth) will have higher prices, whereas the "worst" stocks will have low prices (in general). You may be paying too much for the best and too little for the worst. The only long term strategy that seems to beat the index (by fractions - ref Dreman) is to buy what are called "value" stocks which are mostly the beat up stocks disregarded by the market. This value effect is causing a lot of theoretical head scratching at the moment to try and figure out why it might be so.
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