One successful way of outperforming the Stock Market

Stock Market Investment for Contractors
Stock Market Investment for IT Contractors

Professor Higgins

Have you ever heard of the Michael O‘Higgins method of picking shares?

It‘s pretty simple but, it seems, very effective and it outperforms the market by an average of 5% each year.

What he recommends is to pick the 10 shares in the Dow Jones Industrial Average that have the highest Dividend Yields.

Then select the 5 with the lowest share prices (not market capitalisation) and stick with those till the end of the year.

Then repeat the process the next year.

Works Well

It works especially well when the average yield on shares is above the average long bond yield, which rarely happens, but is happening now.

It seems that it also works if you buy just one share as long as you make that the share with the 2nd lowest price (presumably the lowest one is too risky).

The equivalent in the UK is the FTSE 30.

UK Shares

I presume the logic here is that you are picking the most bombed out shares where the negative sentiment has been overdone.

Also, you‘ve got the cushion of great yields on the shares if they bounce back.

We‘ll keep an eye on this and see if it can beat the average by 5% or more this year.