Many people, including my own parents and friends, have bought stocks using the 52-week high/low indicator. But how useful is the indicator in determining your future returns? Based on the modified "Dogs of the Dow" method, it seems that there is some degree of success but by no means is a guarantee based on my views.

For momentum investors, the 52-week high/low can spot a useful uptrend or downtrend indicator. This method of investing where the river flows show bullishness in the trend until a reversal indicator takes place. Unless you are an experienced investor who knows how to read technical charts, you will usually ended up not better than before.

On the opposite side, we have another group of investors, including my parents and friends who know the "buy low sell high" methodology of investing. So based on the 52-week high/low, they filtered out stocks which has hit its (Read more...)