An Analysis of Portfolio Accumulation Strategies Employing Low-Priced Common Stocks

Abstract

The recent studies of Fisher and Lorie [10 and 11], Brigham and Pappas [2], and others have contributed significantly to our knowledge about overall rates of returns on common stocks. There is, in addition, a growing body of empirical evidence investigating the performance of alternative portfolio maintenance strategies [4, 8, 9, and 13]. However, to date, this evidence for rates of return under alternative portfolio strategies has been obtained for a “one-time” investment decision (with allowances for reinvestment of dividends and possible intraportfolio reallocation). In this paper the effects of alternative portfolio accumulation strategies on subsequent portfolio rates of returns are examined.