Roger Nusbaum submits:The other day I put up a post in response to a reader question about what parts of the market might weather a U.S. collapse better than others. In that post I specifically mentioned U.S. stocks with high dividends might not offer much shelter. That post drew a comment from Seeking Alpha contributor Geoff Considine that said he thinks Coca-Cola Co. (NYSE:KO) would be an example of a good place to hide because it has a high yield and by his work a 0.36 correlation to the S&P 500 -- so he is taking the other side of my point. Fair enough, this makes for a good debate.
I am a fan of looking at correlations to assemble portfolios but I think it is easy to get too wrapped up in the data. Sometimes a real world check is better than data.
This chart compares KO to the S&P 500 from July 1, 2000 to December 31, 2002. You can see for yourself how KO did. To repeat a thought from before, how much solace is a 3% dividend (or whatever KO paid back then) in the face of a 25% decline?
The context of the original question was trying to avoid a collapse, I don't think this holds up but you should decide for yourself. You can link through to the SA post to read Geoff's full question and then his reply to my reply and even read his article he referenced in both of his comments.