10 ways to make real money

If a stock is cheap enough, it doesn't take much good news to spark a rally. That's the philosophy driving the managers of Sound Shore, who have beaten 90% of their peers over the past 15 years. Though Sound Shore has lagged in 2010, its disciplined, numbers-oriented approach is well suited to today's uncertain market

How they invest: Sound Shore's managers start by looking for the 250 large and medium-size companies with the lowest P/Es relative to the market and their historical norms. Then they screen for potential earnings growth, identifying companies they think can beat expectations, and for firms that generate a lot of cash. The process has led to big stakes in stocks like Genzyme and Microsoft. More than half the portfolio is in three sectors: energy, financials and tech.

What could go wrong: The fund has just 40 stocks, vs. 115 for the average value fund. A stumble by one or two picks could drag down the whole portfolio. Still, Sound Shore has beaten the S&P 500 by more than five percentage points a year over the past decade.

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