Rating: 
Summary: A must read for 'Dogs of the Dow' investors.
Review: "Beating The Dow With Bonds" by Michael O'Higgins is an interesting read and certainly worth the time for 'Dogs of the Dow' investors. Like many books of this type, the critical information can be condensed into a few pages and in O'Higgins book, I highly recommend chapters 9 and 10.On page 150, O'Higgins provides the results of his new Beating the Dow Asset Allocation Strategy. Here are his results over the past twenty-eight years. "Almost twenty times the cumulative return (new system's 47,886 percent versus the DJIA's 2,640 percent) and almost four times the cumulative return (new system's 47,886 percent versus Beating the Dow Five-Stock's 12,377 percent) - with less risk- may sound like results that are too good to be true. But they aren't." With a Barron's in hand, I was able to run the numbers in about ten minutes. Most of the time was spent finding the values in Barron's. It is a very simple method to follow and calculate. The question remains, is this just another data mining scheme or is it for real? What surprised me most was that O'Higgins was in 1-year T-Bills or high yielding U.S. Government Zero Coupon Bonds since 1981. That's right, he was not invested in stocks during the greatest bull market in recent memory. Take a serious look at this book.
Rating: 
Summary: Corrections to "17 Simple Steps to Super Returns"
Review: 1.) Determine your investment fund (same as in book) 2.) Open a brokerage account (same as in book) 3.) Prepare an Asset Allocation Worksheet (same as in book) Figure 10.1. Beating The Dow With Bonds Asset Allocation Worksheet 1.) S&P Industrial Index Earning Yield ______% 2.) 10-Year Gov't T-Bond Yield to Maturity ______% 3.) AAA Corporate / Gov't Spread + 0.30 % 4.) Estimated 10-Year AAA Corporate Bond Yield ______ 5.) Last week Gold Price Per Troy Ounce ______ 6.) Year-Ago Gold Price Per Troy Ounce ______ 7.) One-Year Change in Gold Price (Plus or Minus) ______ 4.) Begin Your Research On or about January first, buy the latest issue of Barron's, the tabloid-sized business and financial newspaper published weekly by Dow Jones & Company; it's available at any large newsstand for $3. 5.) Locate P/Es and Yields Turn to the pullout section titled "Market Week" located in the center of the newspaper and find the index to the week's statistics at the bottom of the page; under the column headed "The Indexes," look up the page number for "P/Es and Yields," then turn to that page. 6.) List Latest Standard & Poor's Industrial Index Earnings Yield Referring to the column of statistics in the top left-hand corner of the page, locate the box in the column dealing with Standard & Poor's Industrial Index; identify last week's S&P Industrial Index "Earnings Yield %," and list that number in space 1 on your Asset Allocation Worksheet. 7.) Locate T-bond Price and Yield Quotes Refer back to the "Market Week" index to the week's statistics; under the column at the bottom of the page headlined "The Markets," locate the page for "Bonds," which contains the latest U.S. Government Treasury bond price quotations, then turn to that section. 8.) List Latest Long-Term T-bond Yield In the box marked "U.S. Notes and Bonds," locate, under the column labeled "Mo/Yr," the most recently issued U.S. Government Treasury bond scheduled to mature in ten years, and list the identified yield to maturity in space 2 of your Asset Allocation Worksheet. 9.) Estimate Long-Term AAA Corporate Bond Yield In space 3 of your Asset Allocation Worksheet, add 0.30 percent (30 basis points) to the 10-year U.S. Government Treasury bond's yield to maturity so that you will arrive at an estimated average yield to maturity for 10-year AAA-rated corporate bonds. 10.) Calculate the Difference in Yield Compare the S&P earnings yield listed in space 1 of your Asset Allocation Worksheet to the estimated 10-year AAA-rated corporate bond yield shown in space 4 of your worksheet. 11.) Select Your Asset Class If the estimated 10-year AAA-rated corporate bond yield in space 4 exceeds the S&P earnings yield in space 1, go to Step 12. But if the S&P earnings yield exceeds the 10-year AAA yield, this indicates that stocks are the asset class of choice, in which case proceed directly to Chapter 11 and follow my basic Five-Stock Strategy for beating the Dow. 12.) Locate Market Indicators Go back to the "Market Week" page again; at the bottom of the page under the column marked "The Indicators," locate the page containing the prices of gold and silver, then turn to that section which bears the general headline, "Market Laboratory - Economic Indicators." 13.) List Latest Gold Price Locate the box entitled "Gold & Silver Prices"; under the first boldface heading in the box marked HANDY & HARMAN, note last week's price of gold per troy ounce, which appears in the first column, and list that price in space 5 of your Asset Allocation Worksheet. 14.) List Year-Ago Gold Price Again under HANDY & HARMAN, locate the price of gold per troy ounce of a year ago appearing in the far right column, and list that price in space 6 of your Asset Allocation Worksheet. 15.) Compare Gold Prices Calculate whether the latest price of gold per troy ounce is higher or lower than the year-ago price, then list the one-year change in price, plus or minus, in space 7 of your Asset Allocation Worksheet. 16.) Select Your Portfolio and Place Your Order If the gold price has risen in the past year, put 100 percent into 1 year Treasury Bills. If gold has dropped in price, put everything into 20 + year U.S. Treasury Zeros. 17.) Take Stock and Revamp Sit back, relax, and do nothing but watch your returns come on for the next twelve months. Then, on or about January first of next year, go out and buy Barron's again, and revisit your investment strategy by repeating Steps 3 through 17, making any changes in your portfolio deemed necessary by your latest research and calculations. Follow the same procedure every year thereafter. And that's all there is, folks, to my new Beating the Dow with Bonds strategy. Told you I kept it simple! Figure 10.2. Beating the Dow with Bonds Asset Allocation Worksheet (Barron's 1/4/99) 1.) S&P Industrial Index Earnings Yield 2.65% 2.) 10-Year U.S. Gov't T-bond Yield to Maturity 4.66% 3.) AAA Corporate / Gov't Spread +0.30% 4.) Estimated 10-Year AAA Corporate Bond Yield 4.96% 5.) Last Week Gold Price Per Troy Ounce 289.20 6.) Year-Ago Gold Price Per Troy Ounce 289.90 7.) One-Year Change in Gold Price (Plus or Minus) -0.70 Going through the January 4, 1999 Barron's and the Seventeen Simple Steps to Super Returns, I came up with the following conclusions: 1.) The S+P Industrial Index earnings yield is 2.65% 2.) The estimated 10-year AAA Corporate bond yield is 4.96% (4 ¾ Nov 08 at 4.66% + 0.30%) 3.) The current price of gold was $228.70 4.) The year-ago price of gold was $288.00 Therefore, bonds are more attractive than stocks and long zeros are the bond of choice because the price of gold declined.
Rating:
Summary: Definitely valuable reading - simple and quick reading
Review: Although I found some holes that provide the reader an extraordinary systematic arbitrage, I found the book quite explanatory with time-tested fact. Not another "go sit in the mall and see where the shoppers are going" type book. You'll deal with investment products that will provide the ultimate in safe-haven. Recommended for anyone looking for a safer way to make more money. Who said that low cost can't equal high quality?
Rating: 
Summary: superficial
Review: Although O'Higgins' point about stocks being over-valued is well taken, he does not go nearly far enough to prove his thesis. His new method is not back-tested before the late '70s, and he provides none of the source data that would enable an interested party to verify his returns or extend the method.
Rating:
Summary: An alternative to stocks in todays market...
Review: Although there are some holes, they do not ruin the basic info provided. I think that in trying to keep it simple, O'higgins might have made it too simple. In the end he shows that this is a strategy that doesnt take alot of complicated research to use and that is the true beauty. It is especially relevant in todays stock market.
Rating:
Summary: Check this investment method carefully.
Review: Are you interested in spending thirty minutes per year in order to trounce the Dow Jones Industrial 30 stocks by a factor of eighteen over a 29-year period? Michael O'Higgins, in his recent book, "Beating The Dow With Bonds", lays out a seventeen step method for doing just that, beating the Dow using a nearly risk free method. All the necessary information to follow O'Higgins new strategy is available in Barron's Market Week, and it will not take more than 20 - 30 minutes per year to make the calculations. What really grabs the reader is the stellar performance of this investment approach. Table 9.1 on page 150 contains all the data needed for analyzing O'Higgins new tactics. The cumulative return with this new system is 47,886 percent versus the DJIA's return of 2,640 over the same twenty-nine year time period. O'Higgins is well known as the co-author of "Beating the Dow". In BTDWB, he compares this new strategy with his former Dogs of the Dow approach. The results are impressive, as the new strategy will generate, as mentioned above, a 47,886 percent return versus 12,377 percent for a Beating the Dow Five-Stock's. Another advantage for this new investment scheme is, this can all be accomplished with less risk. O'Higgins asks the question, "Are these results too good to be true"? He claims they are not. On closer examination, these results are too go to be true. The strategy necessary to accomplish such outstanding returns requires one to look up some easy to find data in Barron's. First, identify the S&P Earnings Yield % and compare this value with the 10-Year U.S. Government T-bond Yield to Maturity after making a minor adjustment of adding 0.30% to the T-bond Yield. If the S&P Earnings exceed the adjusted bond yield, then it is time to select the five Dogs of the Dow (DOD) stocks. O'Higgins reviews the DOD process he originally laid out in his first book. If the adjusted bond yield is higher than the S&P 500 yield, then it is time to look up information on the 'Gold Indicator'. If the one-year change in the price of gold is higher than it was one year ago, then invest 100 percent of your portfolio in U.S. Treasure bills due to mature a year from now. If the one-year change is lower than the price of gold one year ago, then invest 100 percent of your portfolio in the highest yielding U.S. government zero coupon bonds available that are due to mature in twenty years or more. O'Higgins lays out all seventeen steps (there are actually about eleven or twelve critical steps) in great detail. The above description is only to explain the bare bones approach of his recent thesis. Note that the 0.3% correction is a "soft" number. Reading O'Higgins one might accept this as a rigid value. One becomes suspicious of this strategy when O'Higgins moves investors out of the stock market beginning in 1981 and keeps them in either bonds or T-bills right through the greatest bull market of the century. How can this be so? It all comes down to uncommonly outstanding performance in two of the 29 years; his 30-year zero coupon bonds yielded 156.12% and 106.90% in 1982 and 1985, respectively. If one returns those stellar bond years to the DJIA return of 25.79% (1982) and 32.78% (1985), according to O'Higgins figures, then the DJI and BTD 5 Stocks both will out-perform O'Higgins new strategy. To build an overall investment philosophy where two years of outstanding performance is the key kicker is truly data mining. Following O'Higgins BTDWB method, I ran the numbers for two consecutive weeks late in 1998. One week I was in 30-year Zero Coupon Bonds; the next week I was in stocks. Where you will have 100% of your portfolio positioned depends on the week you make your assessment. O'Higgins BTDWB strategy is simple and purports to generate excellent returns, both enticing to the novice investor. Nevertheless, it is a flawed system. With interest rates where they are today, it is highly improbable followers of this system will see future returns match the high historical returns. In addition to the fundamental flaws of this investment strategy, BTDWB needed a keener eye when it came to editing the book. Examples of this showed up on page 48, where the Price to Sales Ratio is given as: "To get the price to sales ratio, divide the sales per share figure by the stock's current market price". Price to Sales is the reciprocal of what is stated. Graphs are consistently lacking in fundamental information. On page 50, no units are provided for the y-axis and one of the graph lines is missing as there is a Small Cap value of $4,495.99 floating in space at the northeast corner of the graph. In Chapter 4, a brief case is made for investing in small cap stocks. O'Higgins tells us he will address, in the final chapter, when to be in small cap stocks. He never follows through with this information. The graph on page 106 does not contain any identifying information on the y-axis. Chapter 11 is nothing but filler. These are examples of numerous errors in the book. Overall, "Beating the Dow with Bonds" is an interesting but flawed read. Both the novice and experienced investor would do well to go back to the fundamental analysis and hard work involved in investing. Forget the quick and simple methods espoused in the popular press. Lowell Herr
Rating:
Summary: Check this investment method carefully.
Review: Are you interested in spending thirty minutes per year in order to trounce the Dow Jones Industrial 30 stocks by a factor of eighteen over a 29-year period? Michael O'Higgins, in his recent book, "Beating The Dow With Bonds", lays out a seventeen step method for doing just that, beating the Dow using a nearly risk free method. All the necessary information to follow O'Higgins new strategy is available in Barron's Market Week, and it will not take more than 20 - 30 minutes per year to make the calculations. What really grabs the reader is the stellar performance of this investment approach. Table 9.1 on page 150 contains all the data needed for analyzing O'Higgins new tactics. The cumulative return with this new system is 47,886 percent versus the DJIA's return of 2,640 over the same twenty-nine year time period. O'Higgins is well known as the co-author of "Beating the Dow". In BTDWB, he compares this new strategy with his former Dogs of the Dow approach. The results are impressive, as the new strategy will generate, as mentioned above, a 47,886 percent return versus 12,377 percent for a Beating the Dow Five-Stock's. Another advantage for this new investment scheme is, this can all be accomplished with less risk. O'Higgins asks the question, "Are these results too good to be true"? He claims they are not. On closer examination, these results are too go to be true. The strategy necessary to accomplish such outstanding returns requires one to look up some easy to find data in Barron's. First, identify the S&P Earnings Yield % and compare this value with the 10-Year U.S. Government T-bond Yield to Maturity after making a minor adjustment of adding 0.30% to the T-bond Yield. If the S&P Earnings exceed the adjusted bond yield, then it is time to select the five Dogs of the Dow (DOD) stocks. O'Higgins reviews the DOD process he originally laid out in his first book. If the adjusted bond yield is higher than the S&P 500 yield, then it is time to look up information on the 'Gold Indicator'. If the one-year change in the price of gold is higher than it was one year ago, then invest 100 percent of your portfolio in U.S. Treasure bills due to mature a year from now. If the one-year change is lower than the price of gold one year ago, then invest 100 percent of your portfolio in the highest yielding U.S. government zero coupon bonds available that are due to mature in twenty years or more. O'Higgins lays out all seventeen steps (there are actually about eleven or twelve critical steps) in great detail. The above description is only to explain the bare bones approach of his recent thesis. Note that the 0.3% correction is a "soft" number. Reading O'Higgins one might accept this as a rigid value. One becomes suspicious of this strategy when O'Higgins moves investors out of the stock market beginning in 1981 and keeps them in either bonds or T-bills right through the greatest bull market of the century. How can this be so? It all comes down to uncommonly outstanding performance in two of the 29 years; his 30-year zero coupon bonds yielded 156.12% and 106.90% in 1982 and 1985, respectively. If one returns those stellar bond years to the DJIA return of 25.79% (1982) and 32.78% (1985), according to O'Higgins figures, then the DJI and BTD 5 Stocks both will out-perform O'Higgins new strategy. To build an overall investment philosophy where two years of outstanding performance is the key kicker is truly data mining. Following O'Higgins BTDWB method, I ran the numbers for two consecutive weeks late in 1998. One week I was in 30-year Zero Coupon Bonds; the next week I was in stocks. Where you will have 100% of your portfolio positioned depends on the week you make your assessment. O'Higgins BTDWB strategy is simple and purports to generate excellent returns, both enticing to the novice investor. Nevertheless, it is a flawed system. With interest rates where they are today, it is highly improbable followers of this system will see future returns match the high historical returns. In addition to the fundamental flaws of this investment strategy, BTDWB needed a keener eye when it came to editing the book. Examples of this showed up on page 48, where the Price to Sales Ratio is given as: "To get the price to sales ratio, divide the sales per share figure by the stock's current market price". Price to Sales is the reciprocal of what is stated. Graphs are consistently lacking in fundamental information. On page 50, no units are provided for the y-axis and one of the graph lines is missing as there is a Small Cap value of $4,495.99 floating in space at the northeast corner of the graph. In Chapter 4, a brief case is made for investing in small cap stocks. O'Higgins tells us he will address, in the final chapter, when to be in small cap stocks. He never follows through with this information. The graph on page 106 does not contain any identifying information on the y-axis. Chapter 11 is nothing but filler. These are examples of numerous errors in the book. Overall, "Beating the Dow with Bonds" is an interesting but flawed read. Both the novice and experienced investor would do well to go back to the fundamental analysis and hard work involved in investing. Forget the quick and simple methods espoused in the popular press. Lowell Herr
Rating: 
Summary: A Book One Cannot Invest Without
Review: As a longtime follower of the stock "Dogs of the Dow" stock selection method first propounded in Mr. O'Higgins' first book, Beating The Dow (HarperCollins, 1991), I was anxious to read his latest book not only because of the success which I had with the Dogs strategy but also because I was uncomfortable with the sky-high levels of today's stock market. I found Beating The Dow With Bonds extremely educational about the whole bond arena, an investment alternative about which I knew very little prior to reading this book. Not only does it give an easy-to-understand explanation of the different types of bonds and how they work, but it also gives you plenty of bond market history with which to place the current stock and bond markets into perspective. I never knew, for example, how advantageous it was to be in bonds during the Crash of 1929-32 or in the difficult market environment of 1968-74. In my opinion, every stock investor, especially anyone with the bulk of his retirement savings invested in stocks, would benefit from reading this book.
Rating: 
Summary: Not a very good strategy, more like a scare tactic.
Review: Avoid this one at all costs! Historically speaking, for growth, stocks are pretty much always a better investment. As an investor, you must weather the downturn in stocks, not fear them and run for the bonds.
Rating:
Summary: The Author's Point Of View
Review: Beating the Dow with Bonds offers average investors a reliable, easy-to-understand way to assess the wisdom of owning stocks versus T-bonds and T-bills and when. It is based on a very simple principle: Get the most value with the least amount of risk for your investment dollar -- a principle that has been all but forgotten by today's stocks-only crowd who continue to rush madly to pay higher and higher prices for less and less reward at greater risk in a stock market that has become excessively, even dangerously, overvalued. Parts One and Two of the book explain the intricacies of the T-bond, T-bill, and Stock markets, and the whys of moving your investment portfolio among all three to beat the Dow in all market conditions. These sections are essential reading for average investors, many of whom may, at best, have only a rudimentary knowledge of the financial markets -- markets which today are almost completely dominated by mutual funds serving these small, inexperienced, average investors who are basing their investment preference not on whether stocks offer good value, or whether the earnings of the underlying companies are growing rapidly, but almost exclusively on the theory that stocks go up because they've always gone up. Part Three of the book pulls everything together to show how and when to make your investment choices using my new Beating the Dow with T-bonds, T-bills, and Stocks Asset Allocation System. In a series of easy-to-follow steps requiring less than a half hour research a year, it shows you how to compare the relative attractiveness of each asset class in terms of my "buy cheap, sell dear" philosophy so that you can determine whether you want to be in stocks or Treasury Securities -- then, if bonds are indicated, how to use my bond market indicator revealed for the first time in this book to determine whether you want to be in T-bonds or T-bills. If stocks are the choice, the book shows you how to construct a value-laden portfolio of beaten-down blue chip DJIA components (my pet "Dow Dogs"). My new strategy for beating the Dow doesn't replace the championship stock-picking system of my first book (Beating the Dow, HarperCollins, 1991). What it does do is give investors two more investment options, T-bonds and T-bills, so that they no longer have to worry about bear markets, and can continue to beat the Dow over longer periods of time with more consistency, lower transaction costs, and much less risk. It's a system that requires a bit more work -3 minutes a year more, to be precise- than my Beating the Dow stocks-only strategy, but I've kept it just simple -- and will likely make it simpler yet in future editions of Beating the Dow with Bonds. Don't worry about having to spring for another copy; just drop me a line at MOH@ohiggins.com, and I'll provide you with any modifications I decide to make to my winning strategy -- a strategy which would have directed you to stocks in just seven of the past twenty-nine years. In spite of that, you would have done twenty times as well as the Dow and S&P 500, almost four times better than you would have done using my stocks-only strategy, and outperformed most money managers.
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