Many thanks to Gailen Hite, Geoff Lysaught, Vern Richardson, the editor and an anonymous referee for helpful suggestions on an earlier draft.
The “Dogs of the Dow” Myth
Article first published online: 9 MAR 2005
Volume 35, Issue 2, pages 1–16, May 2000
How to Cite
Hirschey, M. (2000), The “Dogs of the Dow” Myth. Financial Review, 35: 1–16. doi: 10.1111/j.1540-6288.2000.tb01411.x
- Issue published online: 9 MAR 2005
- Article first published online: 9 MAR 2005
- Dow Dogs;
- market efficiency;
- value effect;
The “Dogs of the Dow” (or “Dow Dog”) investment strategy, is a popular investment approach that promises huge abnormal returns for investors in the ten top yielding stocks from the Dow Jones Industrial Average (DJIA). However, periods of evident outperformance are balanced by periods of conspicuous underperformance. When strategy returns are adjusted for taxes and rebalancing costs, Dow Dogs perform in line with the DJIA over the 1961–1998 period. As a result, there is no robust evidence of an average return anomaly tied to Dow Dogs.