Is Now the Right Time to Buy Dow Stocks?

The AARP Bulletin recently published an article making the case that now may be the time to buy stocks featured in the Dow Jones Industrial Average. For the most part, these are considered large cap stocks. The case for buying is supported in part by the cyclical performance of the different equity markets in the past.

< Mrs. P and I never left the market, even when it was crashing around us. We did begin to reduce our equity exposure by diverting new money to TIPS. We also simplified our allocation to fewer index funds and EFTs.

If you left the market altogether and have stayed out (can’t really blame you), the question now is whether you have missed most of the rally. After all, the Dow gained 23% in 2009 and another 10% in 2010, if you include dividends. On the other hand, the average PEs of the Dow stocks are below their historical averages, suggesting that there is still some “catching up” to do.

If you believe in market cycles and indicators of undervalue, re-entering the market using a Dow index fund could be a reasonable strategy.

Here is the link to the complete article:  History suggests time is right to buy Dow stocks


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