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New "Buy America" Investment Theme Emerging?

The United States has been through a difficult economic time.  In fact, one of the most difficult in history.  Our financial system nearly crumbled, thousands of jobs have been lost, the housing market collapsed with commercial real estate following suit, and the Government bailout has literally cost us trillions.  Many people, including Wall Street gurus and investment professionals, have given up on America.  They say we will never be the super power that we once were and we will no longer hold our place at the top.  In fact, the dollar is at an all-time low and some say it will never recover!

Certainly emerging markets such as India and China will grow at a faster pace than the United States as our nation is more developed.  But should we be throwing in the towel on America?  Emerging markets have had an incredible run and for only the third time in history are valued more richly than the U.S. markets!  In fact, one trends predictor believes there will soon be a "Buy American Anti-China backlash"!  In addition, some believe that the dollar is still the world's safehaven currency.  The dollar has been showing new signs of strength after all.

Contrary to popular opinion that America is no longer the place to invest, I believe we may see a renewed spirit of optimism and hope in the United States.  With that, we may see a resurgence of investment in high quality, large-cap, domestic names that have been beaten down.  Some of these stocks may even raise their dividends as they have raised cash, restructured and reduced debt.  Are the Dogs of the Dow set for a comeback?  A recent Barron's article suggests that this out-of-favor investment theme might be returning.  The Dogs of the Dow Theory is essentially where one would purchase the top ten highest yielding Dow stocks and hold for one year.

I am a big fan of using an ETF as your investment vehicle versus trying to pick individual stocks.  The costs are low, and they are very flexible.  I am surprised to find that there really are no ETF's that specifically cover the "Dogs of the Dow" strategy...yet.  However, I'm sure we will see some appear soon.  In the meantime, here is a comprehensive list of U.S. Dividend ETF's to choose from.

I suspect that we will see the dust come off of this outdated investment theme, and it will continue to gain traction over the coming months.



Disclosure: No positions