Ask Colin

With respect to the 3 fundamental filters of your Fundamental Value Scan: P/E ratio of 10 or less: For good or ill, there are less and less companies that pass that first filter at the present time (Late December 2001). This means that there are less and less companies that one can choose from to trade in. I wonder if perhaps your notes may have been written at an earlier time, when companies exhibiting this filter were more numerous. Or do you still stick with this filter? Dividend yield 5% or more: Much the same comments apply to this filter as well. You are happy to continue with this value?

When you run the value scan and there are very few companies that come out of it, it simply means that the market is relatively over-valued. This is not a time to be adopting the value method. If you are involved in this market at all, it should only be as a trader with a shorter-term growth or momentum approach.

There is no point in changing the values for the scan, because it would defeat the whole purpose. In effect, what you would be doing is falling into the trap that people fall into in bull markets where brokers keep changing upward the profit projections to justify higher and higher prices. The real benefit of the value scan is that it provides a reality check on market valuations.

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