| AUG 1995
Dividend Yield Buy-and-Hold Meter by Elliott Middleton
V.13:08 (329-331): Dividend Yield Buy-and-Hold Meter by Elliott Middleton Here's a comparison of the historical dividend yield of the S&P 500 on a monthly basis and what the 10-year total return for the S&P was after each observation of the dividend yield. How many times have you heard this: ""Over any 10-year period, you'll do fine in the stock market. Just buy and hold, don't try to time the market. Everyone knows you can't time the market."" Wrong. While generations of finance professors have been taught - and in turn have taught their students - that the stock market follows a random walk†, a new wave of research, much of it coming from the same universities that originated the random walk theory, has challenged the status quo. The relationship between dividend yield on the broad market and succeeding long period returns is one that practitioners have been aware of for decades. The stock market exhibits long-term autocorrelations - that is, decades of exceptionally good returns tend to be followed by decades of exceptionally bad returns. This pattern is consistent with a commonly seen story in the stock market that stresses the tendency of participants to overreact; they become too bullish on the way up, and too bearish on the way down. Gustave LeBon wrote about such tendencies a century ago in The Crowd .
by Elliott Middleton
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.