Take a High-Yield Backtest

As long as I'm in the mood to torture data and mangle spreadsheets, I decided to run one more backtest before moving on to my regular activities. One of the more pressing needs for investors is the need to gain income from their investments. But yield-chasing can be dangerous, so I decided to test some income investing ideas that focus on unconventional higher-yielding stocks to see if I could find any helpful information and potential answers.

The first discovery is that uninformed yield-chasing is extraordinarily dangerous. Simply buying stock with high double-digit yields can be disastrous for your portfolio. After factoring in dividends, however, the strategy basically breaks even over the past 25 years, but the loss years are dramatic. There are several periods with losses in excess of 20%. There are two occasions where losses topped 50% for the year. Many high-yielding stocks are dangerous, and the data reinforce this fact. Buying the highest-yielding securities is a bad idea and it will cost you enormous amounts of money....421 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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