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Winning with the Dow's Losers
Beat the Market with Underdog Stocks

By Charles B. Carlson, CFA

From Macro Economics 101:
1) In the long term, the market generally rises, and
2) don't risk money you can't afford to lose.

     Mr. Carlson's approach is in concert with these fundamentals. He stresses that taking advantage of mean reversion and contrarian investing is a micro-strategy and should be a component of a "diversified, balanced and varied approach to investing," perhaps up to 30% of a 65% stock-weighted portfolio for long term investors at age 50 (19.5% total).

     The hook, on the back cover and in early chapters, says that you can "start with as little as $1000". This equates to a balanced portfolio of approximately $5000 (page 170). The fallacy lies in equating "starting the strategy" with "starting a portfolio", something a novice investor may not understand until after buying the book. Initial investment between $5000 and $10,000 (portfolios between $25,000 and $50,000) is encouraged. Thus it appears there is a conundrum in the publication and marketing of the book. According to Mr. Carlson's asset allocation advice, if you only have $1000 to invest, this is not the best way to do it, and if you have $5000-$50,000, what is the likelihood that are you consulting a $14.95 paperback for investment planning?

     "Winning with the Dow's Losers" is educational. Over 25% of the text is devoted to explaining what the Dow Jones Industrial Average is, who are the members, why it is significant, how it is calculated or manipulated, and how it is used to analyze overall market trends. This was clearly presented, and I enjoyed the way it brought this uninformed individual into the light. This and the Dow Component Performance tables make the book worth keeping in my library.

The Book


January 1, 2005
Business & Investing
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The Reviewer

Beth McKenzie
Reviewed 2005
© 2005