The American Spectator

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Bruce started asking Reed to run various tests on the IBD 100, particularly to reveal price-earnings ratios (PE). "Anything you wanted him to figure or manipulate on Excel, he'd have it back in about two minutes."

Bruce, 58, an investment adviser who runs the site Poormans.com, began a study with Reed, testing the performance of IBD 100 stocks with high PEs (above 23) versus low ones for 10 weeks. It is an article of faith in the CAN SLIM system that price-earnings ratio doesn't make any difference in historic stock performance. "I thought we'd challenge that," Bruce says in his mild country accent.

Bruce and Reed ran the test for 10 weeks, November through December last year, and published the results week by week on Investors.com. The low PE stocks beat the high ones by a ratio of about three to one. IBD took notice, and published a breakout of the IBD 100 themselves, featuring low PE stocks.

That comparison won't always play out, as Bruce concedes. "When the market gets crazy, with a lot of emotional buying, the low PE stocks don't do so well."

Reed Floren will go to college soon, he's not sure where. Maybe the University of Minnesota, maybe hometown college Gustavus Adolphus, maybe one of the Ivies, if his tests are good enough.

I'd say there are few limits to where Reed can go. His website is actually pulling in advertising.

topics:
Economics, Business