5 ms·

So a viable strategy would be to only buy the best 7 stocks? Like the Dogs of the Dow, but reversed? (The Gods of the Dow?)

by blue1 10mo ago

killingtime74 10mo ago
It's only a "strategy" because you know what happened to the share price. If you can tell the future why not buy the lottery instead.
Ekaros 10mo ago
It works until it doesn't. And it can stop working very fast. Which is the scary part. But then it also depends on entry point. If you entered early even going down say 40% or 60% might not make you go red.
tybit 10mo ago
Yeah, investing in the top companies leads to higher returns for most periods when looking short term. Over longer periods, the top companies by market cap tend to change though. https://www.investmentnews.com/equities/only-one-of-the-worlds-biggest-firms-of-2000-is-still-in-the-top-10-today/243474 https://www.investmentnews.com/equities/only-one-of-the-worl... So if you want to invest in the top companies, you either need to think they won’t change anymore, or you need to find when to buy and sell. Index funds solve this problem for you, albeit with slightly lower returns in the short term.
deleted 10mo ago
[deleted]
throw0101a 10mo ago
> So a viable strategy would be to only buy the best 7 stocks? Like the Dogs of the Dow, but reversed? (The Gods of the Dow?) Or go with a NASDAQ 100 index: you'll generally get higher returns than the S&P 500 or Russell 3000, but you'll also get higher volatility. How well would you sleep at night with drops of -20% more often? * https://www.investopedia.com/nasdaq-100-or-s-and-p-500-the-better-long-term-investment-might-surprise-you-11796258 https://www.investopedia.com/nasdaq-100-or-s-and-p-500-the-b... Reminder that US stocks can do badly (and the only thing that could save US domestic investors is bonds): * https://www.forbes.com/sites/investor/2010/12/17/the-lost-decade-was-a-golden-age-if-you-rebalanced/ https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...
toast0 10mo ago
Yes. If you know which stocks will do best over the next year (or other time period), only buy those.
- blue1 10mo ago
  I was basically thinking about investing in the “S&P7”. No forecasting.
barchar 10mo ago
This is probably ok if you consistently sell stuff that exits the top7 and buy stuff that enters, but I kinda doubt it's all that much better. Same as the s&p500 and the Russell 5000 have really similar returns. You'll be more exposed to screwing things up when companies enter/leave.

So a viable strategy would be to only buy the best 7 stocks? Like the Dogs of the Dow, but reversed? (The Gods of the Dow?)

by blue1 10mo ago

So a viable strategy would be to only buy the best 7 stocks? Like the Dogs of the Dow, but reversed? (The Gods of the Dow?)

killingtime74 10mo ago

It's only a "strategy" because you know what happened to the share price. If you can tell the future why not buy the lottery instead.

Ekaros 10mo ago

It works until it doesn't. And it can stop working very fast. Which is the scary part. But then it also depends on entry point. If you entered early even going down say 40% or 60% might not make you go red.

tybit 10mo ago

Yeah, investing in the top companies leads to higher returns for most periods when looking short term. Over longer periods, the top companies by market cap tend to change though. https://www.investmentnews.com/equities/only-one-of-the-worlds-biggest-firms-of-2000-is-still-in-the-top-10-today/243474 https://www.investmentnews.com/equities/only-one-of-the-worl... So if you want to invest in the top companies, you either need to think they won’t change anymore, or you need to find when to buy and sell. Index funds solve this problem for you, albeit with slightly lower returns in the short term.

deleted 10mo ago

[deleted]

throw0101a 10mo ago

> So a viable strategy would be to only buy the best 7 stocks? Like the Dogs of the Dow, but reversed? (The Gods of the Dow?) Or go with a NASDAQ 100 index: you'll generally get higher returns than the S&P 500 or Russell 3000, but you'll also get higher volatility. How well would you sleep at night with drops of -20% more often? * https://www.investopedia.com/nasdaq-100-or-s-and-p-500-the-better-long-term-investment-might-surprise-you-11796258 https://www.investopedia.com/nasdaq-100-or-s-and-p-500-the-b... Reminder that US stocks can do badly (and the only thing that could save US domestic investors is bonds): * https://www.forbes.com/sites/investor/2010/12/17/the-lost-decade-was-a-golden-age-if-you-rebalanced/ https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...

toast0 10mo ago

Yes. If you know which stocks will do best over the next year (or other time period), only buy those.

blue1 10mo ago
I was basically thinking about investing in the “S&P7”. No forecasting.

barchar 10mo ago

This is probably ok if you consistently sell stuff that exits the top7 and buy stuff that enters, but I kinda doubt it's all that much better. Same as the s&p500 and the Russell 5000 have really similar returns. You'll be more exposed to screwing things up when companies enter/leave.