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If I link to website that are relevant to a subject,
do i loose or gain relevancy myself?
It helps as the anchor text gives your page a special value but it depends on to whom you are linking, we generally link to gov sites for state laws etc. Donot link to any bad site, be very very careful.
Your website should not be a dead end without outgoing links.
So in theory, what happens if you linked
to the top 5 search results on google
for a term you want to be relevant to?
It depends on how many other pages link to those top 5 (they're top 5 for a reason). If they're well-linked, you won't get above them, unless you're very well-linked yourself. If they're not, and you're not, you may or may not. If they're not and you are, you will.
Oh, it also depends on _their_ outbound links, of course :-)
(a) increase your competitiors ranking more then your own so you have a disadvantage?
(b) increase your own as google thinks: "It knows even the top 5 resources so it must be a good website!"
I got your question Jason but sometimes we are left with no accurate answers, may be it will do more good to you in terms of ranking and more good to them it terms of customers. With all those(more than 100) ranking paramaters , these paramaters are left with very low weights.
Get Good links with proper risk analysis is the real mantra.