Cutting Edge Investment Strategy

I’m always seeing expert advice about how to make money in the stock market.

Some experts suggest looking for ‘value’ stocks. I was going to try that approach until I realized that it was not an approach at all. What else would you be looking for?

Stocks that pay a high dividend sounded attractive, but then that expert warned to avoid companies that might cut their dividend in the future. He did not reveal which companies would be cutting their dividends.

Another expert said to look for stocks with a low P/E (that is the ratio of the price of a share to the earnings per share). A low P/E, she claimed, was an indication that the stock was underpriced – cheap relative to shares of similar companies. But that sort of worried me. I don’t like to buy cheap oranges or cheap shoes. Frequently, those things are cheap because they are not as good. Couldn’t low P/E stocks be cheap for a similar reason?

A respected expert from Fidelity suggested buying shares of “rising blue chips — midsize companies that dominate their industries and have a global reach. They’re smaller than IBM …, but they’re blue chips in a lot of ways,” she says. I guess I’m getting this insider blue chip information before everyone else, so I can go ahead and buy some shares before all those other folks find out about this and the price increases. But wait; her recommendation is dated June 1 and it’s already June 12, so I’m too late.

I’m working hard these days not to get discouraged. So instead of despairing about finding a good stock picking strategy I can believe in, I decided to make up my own. I think it will work better with a catchy name so I call it *E (pronounced *E) investing.

Invest in companies that have stock symbols two letters long, ending in ’E’.

Before you say that is really dumb, think about it. One letter symbols are too insubstantial, and besides if a company has a one letter symbol it is probably already old and stodgy. Remember, we’re trying to make money here. Two letter symbols are easy to say, easy to remember, to include in investment columns, and in general have more panache. Once you are into three and four character symbols you’re lost in a symbol forest; there are just too many combinations for a scheme like mine to work with 3 or 4 characters. As for the ‘E’ requirement, that is a bit arbitrary, but anything ending in E sounds good.

So here is the list:

  • AE – Adams Resources and Energy Inc. – $29.00
  • CE – Celanese Corp – $37.96
  • DE – Deere and Co – $73.84
  • EE – El Paso Electric Co – $31.82
  • FE – FirstEnergy Corp – $47.62
  • GE – General Electric Company – $19.44
  • HE – Hawaiian Electric Industries Inc. – $28.22
  • JE – Just Energy Group Inc. – $11.04
  • NE – Noble Corp – $31.49
  • RE – Everest Re Group Ltd – $102.94
  • SE – Spectra Energy Corp – $27.98
  • TE – TECO Energy – $17.83
  • VE – Veolia Environment – $11.07

I’m going to sell my old ‘sinking blue chips’ (like IBM) and invest $10,000 in each of these *E companies. You can do the same, or check back later to see if you missed the boat.

(The writer is in no way qualified to provide investment advice. The contents of this blog post can not in any way be considered sound advice.)

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