Place an equal amount of money, not an equal number of shares, into each stock.

John Dorfman produces a new list each year. In the following year, sell the previous stocks and buy the new ones. If a stock appears in both lists, adjust the number of shares so that all of the second-year stocks have equal value.

In any event, hold the stocks for at least a year and a day. If you miss the extra day, you'll pay short-term capital gains taxes at high ordinary-income rates. Because of the heavy cost from a non-essential detail, I can only assume that the IRS enjoys practical jokes.

Usually, low-PE stocks have potential problems that cause investors to stay away in droves. But investors tend to magnify problems. Solutions are often found sooner than expected, causing the stock prices to emerge upward from a cloud of pessimism.

If the economy suffers a serious decline, the problems would probably worsen, possibly causing bankruptcy. But these ten companies have modest low debt, which helps. I also expect the entire world to enjoy favorable economic growth for many years.

From 1999 to 2003, inclusive, the Robot Portfolios, not counting trading costs or taxes, gained at the astounding compound rate of 36 percent per year. During the same period, the S&P 500 Index compounded at only 4 percent per year. In 2002, the Robots lost 3 percent, but the S&P 500 in that year lost 22 percent. Nothing's perfect.

Here's the Robot Portfolio for 2004:

• First American Corp (FAF) $30
• Fidelity National Financial (FNF) $38
• LandAmerica Financial Group (LFG) $52
• Stewart Information Services (STC) $42
• Beazer Homes USA (BZH) $94
• USG Corp (USG) $18
• AT&T (T) $21
• Devon Energy (DVN) $59
• HealthSouth Corp (HLSH) $5
• InVision Technologies (INVN) $38

The first four are title insurance companies. Beazer is a homebuilder, and USG supplies homebuilding products (and also has asbestis lawsuits pending against it). The prices of all six of these stocks are low because most investors expect interest rates to rise, affecting homeowners adversely.

"What!" you might proclaim, "60 percent of the portfolio in one industry! Doesn't this violate the requirement of diversification?"

You're right, it does. Don't put all of your money into the Robot Portfolio. But in predicting economic trends, I like being in the minority. I also expect improving productivity and better economic policies to bring interest rates down.

Besides, the fear of higher rates has already driven the prices of these ten stocks down. Even if interest rates rise, the damage might not be as bad as investors expect, causing the stocks to go up, not down. And if the rates do fall, you can bet your bottom dollar that these stocks would rise substantially.

Low PEs. I love the concept.