Foolish 4
The Foolish Four strategy is a strategy popularized on the investing website The Motley Fool. This strategy dictates that the investor take the 30 Dow Jones Industrial stocks and divide the dividend yield of each one by the square root of the stock price.
Dividend Yield รท Stock Price.5
Take the 5 stocks with the highest ratio and drop the stock with the highest ratio. The investor is then to invest in the last 4 stocks called the "Foolish Four". This strategy has returned 24.5% annually from 1975 to 1999 which would make $10,000 into $2.4 million.
The foolish Four was almost certainly a result of Data Mining. From the time of its discovery onward, it has been famously unreliable in its returns, and even its original creators have since disowned it.
Read more about this topic: High-yield Stocks
Famous quotes containing the word foolish:
“Only be admonished by what you already see, not to strike leagues of friendship with cheap persons, where no friendship can be. Our impatience betrays us into rash and foolish alliances which no God attends.”
—Ralph Waldo Emerson (1803–1882)