Replies to post #1295 on Advanced Automatic Investor

[aptus]

Hi Neko,

I've found there are some serious issues with just using low PE to find undervalued stocks.

The criteria I used are detailed in the Pragmatic Investor book (http://www.amazon.com/exec/obidos/ASIN/B002ACXX64/automaticinvesto ). Basically it is a combination of VSS-like fundamentals, valuation, dividend yield and then managed by the Value Trading Algorithm with a 3% trigger).

On the fundamentals side, you can get a good idea of how I evaluated the CDN banks from here --> http://valuestockselector.com/HowToInvest.html

There were some times when I also ignored the Value Trading Algorithm recommendations if the price difference was close to the trigger value and I wanted to catch dividends in a target bank (so, for example, if I held CM and the price difference was, say, 2% wrt BNS, then there were times I'd make the switch to BNS from CM in order to capture the BNS dividend even if the target price difference of 3% wasn't hit).

This might not be a valid strategy right now, but during 2008/2009, some banks (BMO and CM) had dividend yields above 10% while BNS, RY and TD were into 8% territory -- so capturing those dividends was attractive. Furthermore, they didn't always seem to drop by the dividend amount on the ex-div date (which I found strange, but profitable)

Yes, PI 3.0 will have a trial version so you can run it through its paces to see if it's right for your investing style.

If you have any other questions, please feel free to let me know.