Buy Aspen Insurance (AHL)

On July 20, 2005, I recommended that investors sell Google (GOOG) and buy St. Paul Travelers (STA). Since then Google has dropped by over $10 per share and St. Paul’s has increased by over $3. I have three new recommendations:
1) If you are shorting Google, get out of your short position. I see a significant potential for Google to rise significantly in price in the months ahead even though its forward (based on next year’s earnings) price/earnings ratio is an acceptably high 44. However, momentum investors are buying Google—so don’t get in their path by shorting Google. (price is up over $3 today).
2) I still see St. Paul Travelers, with a forward price/earnings ratio of 9.4, as a great buy. I own the stock and will not sell until the price goes north of $50.
3) My third recommend is that you add Aspen Insurance (AHL) to your portfolio. Unfortunately for me, I do not own the stock. It currently has a forward price/earnings of 7.1 and pays a yearly dividend of $0.39. Thus, Aspen’s rate-of-return, including dividends, is over 14 percent.
My own dilemma is; should I sell my low performing Pfizer (PFE) to buy Aspen? I must say that the sell decision is very difficult for me and, for that matter, most investors. However if I am truly objective, Pfizer is very likely to provide only modest returns with significant legal risks.

EPG