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The “Prudent Portfolio’s” 2006 Performance
By JLP | January 2, 2007
The Prudent Portfolio did pretty well last year. Check out this graphic to see for yourself:
The “previous dividends” were the dividends received on the portfolio before January 1, 2006. I started this portfolio on June 13, 2005, using the Yahoo! Stock Screener with following criteria:
Dividend Yield greater than or equal to 1.50%
Current Price/Earnings Ratio of less than or equal to 10
Forward Price/Earnings Ratio of less than or equal to 15
Market Capitalization (price per share X number of shares outstanding = market cap) of at least $1 billion
Price-to-Book ratio of less than or equal to 5
Member of the S&P 500
There are drawbacks to this method as it is a “value” model. There are lots of good companies that will not be picked because they don’t meet the criteria, which is pretty strict and biased towards bigger, industrial-related companies. However, I did this by design because I wanted to find stocks that looked undervalued.
I ran this value screen again over the past weekend to find stocks for a 2007 portfolio. I didn’t like the output. It was too heavily weighted in oil & gas, property & casualty insurance, and home builders. Not a lot of diversification there. So, I’m going to concentrate my efforts on the exchange-traded portfolios I have been writing about.
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