What Carlson fails to tell investors, or at least does not emphasize, is that commissions, taxes, bid/ask spread, and market impact will more than use up that 1.22% advantage. Therefore one is significantly better off to purchase an index of the DOW 30, sit back and do nothing. This is an investment book where you can save your money and invest in an index. You will be further ahead seventy years from now.
For the uninitiated, Carlson provides the historical basis of the DJIA and devotes an entire chapter to the DJIA components, developments, and changes in the index. At least one page is devoted to each stock in the index with complete information on its historical significance and business. Another chapter is devoted to counterpoint arguments against the naysayers of his strategy.
Carlson's strategy does not use dividend yield as his selection criteria, but instead focuses on those stock(s) that have the worst yearly percentage price performance. He simply buys the DJIA stock(s) with the worst annual performance at the end of the year and holds it for one year, then he selects that year's worst performer and buys it, etc. In addition to the one stock portfolio, Carlson also shows the comparative results using the worst performing 3-stock, 5-stock and 10-stock portfolios. The 5- and 10-stock portfolios show the most consistent performance and have less risk than a one stock portfolio.
The book focuses on the performance of the worst 1-, 3-, 5- and 10-stock DJIA portfolios, and provides statistical information showing how these different stock strategies compared to the DJIA annually since 1931 (using back-testing) on a dollar-term, percentage, annual return, and percentage difference from its 200 day moving average basis. He also provided comparative results for last 30 year, 20 year, 10 year and 5 year periods. In addition, there is as 37-page appendix containing the performance of each DJIA stock since 1931 as far as annual performance change, the DJIA annual change, and the performance of each of his stock strategies in each of the years.
In a separate chapter, he even compares his strategies with the Dogs of the Dow and indicates their superiority over the DoD since 1999. The performance before that time showed mixed results depending upon which of Carlson's strategies are used.
Overall, the author presents a credible case for considering his DJIA strategies. He warns investors that they should only invest a portion of their money in any of these strategies, and to be sure to have a diversified portfolio overall to be successful. This book offers investors a mechanical stock selection process that takes the emotion out the investment equation. In that respect it has much to offer.