Personal-finance

I agree with much of what has already been said as far as the amount of filler and the editorial glitches. And can anyone figure out the last chart -- table 11.1? These numbers make no sense and don't even correspond with the info on table 9.1. I began the book with some excitement but ended up feeling very uncertain about the method.

I think the ideas in this book are absolutely crucial to investors, but I'm dissappointed by its inconsistencies & omissions. There is no concrete demonstration of how O'Higgins arrived at such spectacular returns, for example, in a particular year, by investing in zero-coupon bonds. 24% annual return is awesome, but it would be nice to see an example of how this would happen in a particular year, some hard data for the novice investor to see (not just total annual returns, year by year). Especially someone (like me) who knows virtually nothing about bonds are finds it hard to beleive that this "safe" investment could provide an 80% return in _one year_. He does not go through even one example to illustrate the process of allocation of his portfolio, so there are some details that I have not figured out after several readings. He also suggests in his section about stocks that he will later explain how to invest in small-caps, since they outperform blue-chips over time, but he never does, at least not in _this_ book! (Maybe this book was pieced together from sections of his old book, Beating the Dow?) I am deeply suspicious that no one edited this book as a whole work, that it was a cut-and-paste job with some new chapters on bonds.

Some information he provides like pieces of a puzzle and later uses, expecting the reader to put the pieces together. An example is the use of the change in the price of gold as an indicator of inflation, about which one of the earlier reviews complained.

Rather than taking on faith many of his derivations, I think I'm going to have to do some more research before I follow this strategy. That's my main gripe -- there is still work for me to do after reading this book, to confirm the annual percentages and cumulative returns that he claims. I am, however, convinced by this book of the value of bonds in an investment portfolio, and of the importance of contrarianism when it comes to investing.

This is one of the few stock market books from the 1990s that will be read and appreciated many years from now. While silly stuff like "Dow 36,000" & Harry Dent quickly withers away, O'Higgins advice gains credibility every day in this apparently multi-year bear market. Several web sites (beartopia dot com & others) mention this book. Perhaps the book's title should have substituted "zero coupon bonds" for the word "bonds." Do look up the authors corrected list of investment steps here at Amazon, however, do not let the slightly sloppy editing deter you from learning this powerful investment advice. The more knowledgable one is of the market, the more one appreciates O'Higgins and his two works. This book's advice works in bull and bear markets.

"Beating The Dow" by Michael O'Higgins offers the following simple investment strategy. You simply buy the ten highest dividend paying stocks among the Dow Industrial Averages. The Philosophy is that as the value of the stocks increase, via stock price lagging or falling below the market, the dividend yield will tend to rise. (i.e. the assumption is that dividend yield is a proxy for value. One problem is that not all Dow stocks pay out the same level of earnings, so some stocks will tend to have higher dividends.)

While I tend to be skeptical of any investment strategy that is too simple, if you must use such a simple strategy, then you could do far worse selecting the highest dividend paying stocks from the Dow. Of course, the other option is just to index your money in a mutual fund that buys the entire stock market. Vanguard Funds is the leader in such index funds. But, I like dividends.

The difficulty with simple investment strategies is that they tend to be arrived at via data mining. The proponent of the investment method asks "What worked in the past?" and then tries to draw up a canned investment method. Almost always, the proposed method then starts to lag behind in the present and future stock market performance. (the recent performance of this strategy is discussed in another person's great book review. See that.) This is not due to market efficiency or that the method is becoming well known. It just means that the method wasn't entirely valid as a predictive method.

There is the old joke about the "X investment strategy." When a computer was asked to vigorously evaluate the stock market and look for predictors of future investment success, the computer spit back the answer, "Invest in stocks whose name begins with an 'X' and whose name ends with an 'X.' " Xerox was the top performing stock over the period.

"Beating The Dow" is one of those books, if read all by itself, might mislead a new investor into an over-simplified investment strategy. Yet, you might enjoy reading it. And, as stated, you could do worse than holding the ten highest dividend-paying Dow stocks.

"Beating The Dow" also mentions what Michael O'Higgins calls the "Penulatimate Profit Prospect (PPP)" which involves buying just one stock. The Stock with the second lowest price among the ten highest yielding stocks. I consider that Penidiotic. We conservative investors do love our stock dividends, and the focus on dividend yield gets "Beating The Dow" a solid honorable mention.

Peter Hupalo, Author of "Becoming An Investor: Building Wealth By Investing In Stocks, Bonds, And Mutual Funds."

Michael O'Higgin's investing classic holds up as well in the New Millenium as it did when it first hit book stands 10 years ago.

He maintains that it is still possible to beat the DOW by buying the 10 highest yielding stocks and tweaking your holdings each year, with correspondingly greater rates of return with a two- or five-stock selection from the group. O'Higgin's admits in the new eidtion that the strategy has been muddied by a drop in the relative importance of dividends as a part of total yield of the DOW. Dividends and payouts have lost lost out to stock buybacks, in part because dividends are taxed at a higher rate than long-term capital gains from stock sales. Changes in the DOW have also reduced the overall dividend payout. Of the most recent additions, Microsoft pays no dividend and Intel and Home Depot have nominal payouts. O'Higgin's strategy may also be less effective because it's simplicity and past returns attracted the attention of Wall Street money managers and of many, many individual investors. There is at least one web site devoted to the Dogs of the Dow and a number of similar investment strategies were profiled for several years on the Motley Fool website.

Nor is the most valuable part of O'Higgin's book his thumbnail sketches of other value strategies for beating the market with a basket of DOW stocks. Several seem downright ridiculous. I remain skeptical that investing based on presidential election cycles or end-of-year asset sales by fund managers can yield meaningful, long-term results for individual investors.

The value of this book is O'Higgin's championing of value investing in general and his highlighting of the resilience of the DOW stocks in markets bull and bear. Most people aren't professional investors and lack the time and resources to profit from a strategy of active trading. If the efficient markets guys are right, then buying all 30 DOW stocks and holding on long-term will beat returns of most professionally baskets of stocks, with less risk and less payouts for taxes and trading costs to boot. Or maybe buying the highest yielders in any given year and holding. Anyway, you get the picture.

Regardless of whether you think the high-yield 10 is still capable of outgaining the overall DOW, O'Higgin's book is, to me, as valuable in 2001 as it was when I first read it in 1993.

Some people might laugh at this book specially the brokers who make living by sucking the commision out of an average investor. What had happened in the NASDAQ in 1999 before the correction was absolutely mind blowing and this book might have looked like a bad joke i.e. advocating to invest in companies like International Paper! but now that the dotcoms are down the drain, the valuations are somewhat back on earth, the margin-debt bitten people are done crying, maybe it is time that us i.e. average investors read this book.

This book as the name says is all about investing in Dow companies, the giants of the US and global economy. The companies which I truly believe that world could come to an end but GE would still be there. The book covers all the Dow components individually along with their historical financial performance, weaknesses, strenghts and their power to stay in business by being profitable over years and years. There are many different 'low risk' investment strategies covered in this book such as 'High Yielding 5'. These are the 5 Dow stock that you pick annually based on the criteria described, HOLD it for 1 year, redo the math (barely any)and pick your 5 stocks again. You also sell some at this point that didn;t meet your criteria and pick the new ones to fill their spot.

Sounds simple, yes! and that's the way it should be. Not only you can ride out the swings of the stock market in this way but also save a ton on commisions, taxes and most importantly be less stressed.

If you read the Motley Fool, you'll notice some of their strategies are derived from O'Higgin's methods.

A must read for all investors, specially younger people like myself who want to start building the nest yesterday!

Helps consumers make the best choices for long-term care, from protecting assets to understanding Medicare, Medicaid and other benefit programs.

Just read "Beat the Millenium Crash." It's clear, concise, and contains numerous strategies for protecting your assets. Excellent discussions of stock market reactions to previous panics and interest rate trends and the patterns which affect most major markets. Downplays alarmist expectations while explaining what the average individual can do to both protect assets and profit in the event of a Y2K panic. Highly readable.

After reading Beat the Millennium Crash : How to Profit from the Coming Financial Crisis by Jake Bernstein, investors can begin to see the potential for gain rather than focusing on the problems associated with the Y2K bug. I agree with Mr. Bernstein in that we are due for a cyclical bottom in interest rates in the near future, and that a panic top in the stock market is certainly a possibility. The fear of investors losing access to their (online) investments, and thus their unrealized wealth for a period following the start of the new Millennium will certainly add fuel to this fire. This does not have to be a negative for investors willing to invest in long term gold stocks as Jake points out in this new text. Thanks Jake for breaking the mold of "Doom" and "Gloom" others seem to be so trapped in.

Extremely thorough on the subject matter. Easy reading but full of a wealth, (no pun intended), of information. A must "read" for everyone, even "non-investors". This cleared up any misconceptions and filled the cracks of all the "rhetoric". Thanks Jake - Todd