Monday, November 24, 2008

New Investments

I bought 4 positions on Friday 11/21/08. I figured with the large drop in the market on Thursday 11/20 it was time to start buying. The general market had a large rise in the afternoon but I bought these stocks in the morning.

I used 2 basic criteria to make these decisions.
1. Low Price to Earnings Ratio.
2. High Dividend Yield.

My 4 stock picks are:
1. Harley Davidson (HOG)
2. General Electric (GE)
3. Dow Chemical (DOW)
4. Alcoa (AA)

All 4 of these companies have PE rates below 10 using average earnings over the last 10 years (although with the current share price for GE the PE rate rose above 10). All 4 companies have dividend yields over 8% (again with the current price for Alcoa the yield dropped below 8%). As long as these companies stay below these 2 criteria I would say they are priced right.

My thinking on these picks comes from The Intelligent Investor by Benjamin Graham. Paying a low price for established succesful companies and diversification.

Any thoughts?

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