Index of the underdog

I was at popular yesterday after lunch with a friend and I picked up a book, called shares.
Erm, its not really a book...like not exactly something you can read.
Its like a weekly issue magazine which looks like a book.
Kind of like the kind you see horse gamblers read, just that its about shares.
Alot of people were looking at us taking that book.
Its not like its FHM or Maxim. But they're probably thinking, "kids these days, so young learn to gamble."

Anyway, an idea struck me just now, what if I create an index based on 10 of the most undervalued companies based on its discount to NAV and monitor its progress over the year. This would be a nice experiment.

So I flip to a page called "discount to NAV" and there was a list of companies which are sold below its NAV, The names of the company is listed according to the amount of discount.
Here are the list of 10 companies chosen. Prices are taken as of 24th Dec 2009, since 25th which is a Friday is Christmas.

Surface Mount Technology
Last close: 0.11
NAV: 0.524
Discount: 79%

MacarthurCook Industrial REIT
Last close: 0.21
NAV: 0.94
Discount: 79.0

United Food
Last close: 0.07
NAV: 0.311
Discount: 77.5

China Powerplus
Last close: 0.05
NAV: 0.216
Discount: 76.9

New Wave Hldings
Last close: 0.01
NAV: 0.0341
Discount: 76.8

China Sky Chemical Fibre
Last close: 0.175
NAV: 0.733
Discount: 76.1

Eucon Hldings
Last close: 0.03
NAV: 0.1248
Discount: 76.0

Sunright
Last close: 0.13
NAV: 0.532
Discount: 75.6

Ipco Int'l
Last close: 0.02
NAV: 0.08
Discount: 75.0

MacarthurCook Ppty Securities Fund
Last close: 0.125
NAV: 0.484
Discount: 74.2

I'll be using a composite index.
The index will not take into account reinvesting dividends.
If any of you need help on building an index, try the link below
http://http://www.cftech.com/BrainBank/FINANCE/SandPIndexCalc.html

I think I probably need some practice in this...maybe I need to find someone with statistics background.

Anyway, I already created in index on Microsoft Excel.
The index is set at 100 initially.
I'll get the numbers for the index next month and monitor the progress of these stocks after a month.

Erm, just a side note. These companies listed above have a NA PE, implying they are not earning, AKA loss. You might not want to get them, unless you have excess cash and nothing else better to do.

I'm against getting stock which have no PE because personally, I believe that you do not need to subject yourself to such unncessary risk. But this index is just an experiment, so its just for fun.