One strategy that would have worked well over the last few years would have been to buy the worst-performing stock in the Dow at the end of each year and hold for the next 12 months. For example:

• The worst-performing stock in the Dow in 1997 was Eastman Kodak, down more than 24%. So how did Eastman Kodak perform in 1998? The stock posted a not-too-shabby 19% gain.
• In 1998, the worst-performing Dow stock was Boeing. The aerospace concern fell 33% during the year. However, things were much different for Boeing in 1999, as the stock soared 27%.
• In 1999, the worst-performing Dow stock was Philip Morris. The stock coughed up a 57% loss for shareholders. However, in 2000, Philip Morris went from worst to first by posting the best performance of any Dow stock, rising 91%.

To be sure, this trend doesn't hold up every year. Nevertheless, it is not uncommon to see Dow dogs one year become tigers the next.

When attempting to explain this trend, the reason I usually come back to is the concept of "mean reversion." In other words, stock prices in any given year can move to extremes, either to the upside or the downside. But over time, stock prices tend to revert toward their long-run averages. Thus, a stock that performs especially poorly in one year may be a stock experiencing selling extremes. As more normal trading develops in the following year, the stock tends to rise in order to return to its more traditional trading range.

Understand, however, that what we're talking about here are high-quality, blue-chip stocks with seasoned track records and strong industry positions. Dow stocks, by and large, have stood the test of time and have the financial wherewithal to stay in the game. Playing the rebound game in Dow stocks is much different than betting on a third-tier Internet company that got bombed in one year to rebound the next. Such speculative companies don't have the staying power and finances required to hang in there until the stock price reverts.

So if the previous year's Dow losers represent a decent trolling ground for the next year's winners, what Dow stock should bargain hunters be watching now? Well, the worst-performing stock in the Dow in 2000 was AT&T (down 66%).

Gentlemen/Ladies . . . place your bets?