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Author: tecmo Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3296  
Subject: Re: Drop PE-3 HOW TO. Date: 11/21/1999 12:50 PM
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Michael

1. How do we apply it? What exactly is the DROP PE-3 formula?


Step 1: Get a list of the S&P 60 Stocks, you will need the following columns (Symbol Yield PE)
Step 2: Sort the list by Yield
Step 3: Pick the Lowest Yielding 10
Step 4: Sort the new list by PE
Step 5: Buy stocks 2,3,4


2.And, based on Don's very informative post, my understanding is that we sell or adjust or holdings every year. Is this correct? Is there a preferred month that such adjustment should be made?


You hold your stocks for 1 year, December is the best starting month.


3.Also, how do we actually find the Drop PE-3 drop stocks on the TSE (35 and 60) (there are a lot of stocks listed there). For a beginner, where do we look?


There are several ways, the easiest is to go to www.ndir.com


4. What percentage of one's portfolio should be dedicated to the mechanical stocks?


Only you can answer this question. Keep in mind that the DPE-3 will be picking "value" companies not growth companies, and that you will only be holding 3 stocks. I for one wouldn't want 3 stocks to make up more than 25% of my portfolio.


5. Who are the PE-3 DROP candidates for this year? (ok I am lazy and not good at math)


Here are the top 10 Yielders

Ticker PE Yield
TRP 18.72 6.64
TA 13.68 5.72
EBC.A 14.44 5.26
W 11.34 5.18
BTS 35.90 4.69
NOR 60.32 4.38
NA 10.03 4.05
ENB 16.79 3.99
DFS 10.71 3.92
CM 14.82 3.52

Now sorted by PE

Ticker PE Yield
NA 10.03 4.05
DFS 10.71 3.92
W 11.34 5.18
TA 13.68 5.72
EBC.A 14.44 5.26
CM 14.82 3.52
ENB 16.79 3.99
TRP 18.72 6.64
BTS 35.90 4.69
NOR 60.32 4.38

So you would purchase DFS, W, and TA.


brant
...
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