What the experts say

The Dow’s new dogs

A strategy known as “Dogs of the Dow” enjoyed a brief period of popularity in the early 1990s, said Jonathan Laing in Barron’s. It calls for buying the Dow’s 10 highest-yielding stocks early each year, holding them for a year, and then “starting the process anew.” In doing so, the theory goes, investors can buy “solid blue-chip stocks” at a discount—after all, the dogs’ yields wouldn’t be so fat if the stocks weren’t so beaten down in value.” The strategy wouldn’t have worked out so well over the past couple years, when Dow dogs such as American International Group and General Motors actually went from bad to worse. But now “the collapse of once-venerable Dow names has receded somewhat,” and today’s dogs—including such high-dividend stocks as Wal-Mart, Chevron, Verizon, and Kraft—seem “poised to perform like Westminster Kennel Club show dogs, rather than a bunch of mutts.”

HMOs: Healthy prospects

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Due to all the “ruckus” over health-care reform, investors have been avoiding managed-care companies like the plague, said Elizabeth O’Brien in SmartMoney. That makes this an excellent opportunity to buy insurers’ stock at “some of their lowest valuations in nearly 20 years.” Say what you will about them, but managed-care companies are “very profitable.” The largest, UnitedHealth Group, saw its profits

for the first three quarters of 2009 increase 22 percent over the year before. “And many of the companies are sitting on lots of cash.” WellPoint boasts $1.8 billion in cash, even after spending as much buying back shares in 2009.

To invest better, ante up

If you want to improve your investing, play a little poker, said Bob Frick in Kiplinger’s Personal Finance. The psychological errors made in gambling—such as suffering overconfidence or throwing good money after bad—are “identical” to those made in investing. The key to good returns in both arenas is learning how to control your emotions. You can do this the hard way—gambling with your retirement—or the easy way—poker night. “Just a few hours of playing poker will take you through literally dozens of financial decisions.” Chief among them: knowing when to throw in a bad hand.