If you have been reading this blog for a while, you know I am a magic formula investor. I believed in the system from the beginning and have stuck with it even as there were rough patches on along the way. My biggest mistake was not being 100% in the system. The contrarian in me couldn’t resist picking up certain companies that weren’t in the magic formula , Wells Fargo (WFC), General Growth Properties (OTC:GGWPQ), etc.. I bring this up because the graphs and numbers aren’t real (this post was inspired by George to post my marketocracy results). If I post my investment record +financials+ microcraps, there would be a bit better due to the recent run-up in General Growth Properties. A couple things in mind when looking at these numbers
- Still short term results
- I pick stocks part time, doing basic security analysis by using a 3 step-30 second approach which will be outlined in my premium site. I do not care whether its May. I do not care who is going to win the super bowl. I do not care what the economy will do. All I care is purchasing 1$ for 50 cents. It could be a 50 million market cap, it could be a 100 billion market cap. The principle is the name, purchasing dollars for 50 cents makes sense.
- These portfolios are 100% magic formula investing stock
- I do not look at beta. I do not look at sharpe ratios. I do not look at Z-Scores.
Finally, for those who are going to e-mail me bashing me that this is fake money. It is. The point in this post is to show you the results that can be obtained by the magic formula. Financials are not part of the magic formula. My premium website ( $10 freakin bucks a month C’MON!!) will verify my portfolio through Covestor.com.
Concentrated Portfolio
Magic Formula Stocks using ONLY 3 step-30 Second Approach
Magic Formula 30 second- 3 step approach+ Basic Security Analysis
How about some TECH+Magic Formula
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1$ for 50 cents, not 50 cents for a dollar.
good catch
what is magic formula + tech? picking tech companies that come up in magic formula?
that would be correct
Interesting returns. The one with basic security analysis is just annihilating everything.
Hey Jae,
Yes, and the crazy thing is I don’t use no fuzzy math, greek letters, anything like that.
p.s. leave your site the way it is
I’ve found that going after the simple ideas have always worked the best. The more you need to think about it, the further away you should get from it.
Some just stick out so easily that as you mentioned, doesn’t require any math. I can just look at it and realise it is cheap.
The only additional things I do is try to get a feel for management and how it compares with competitors. I dont fiddle with the math too much as well.
“Some just stick out so easily that as you mentioned, doesn’t require any math. I can just look at it and realise it is cheap.”
Ding, Ding, Sing or if you’re into Microsoft BING BING BING
I usually just look at ValueLine. It pretty much tells me everything. I will look at 10-Ks and stuff to see if anything fishy is going on but I don’t analyze every SINGLE things.
I can’t complain about the results….
You’re damn right it works. I came across some money from my wedding, ($15,000 to be precise) in May 2008. I thought I should put it away for my kids. I chanced upon Mr. Greenblatt’s book and he makes total sense to me. I followed the book’s recommendations exactly, and invested in 30 stocks randomly, from May ‘08 to Jan ‘09 (all through the horrible collapse) at one point my investments were worth one-third, but today Magic Formula has returned 30.2% vs. S&P’s -26.8% (over the period
May 22,2008 to Sept 11,2009) . The list of the issues bought were:
May 22, 2008 Vaalco Energy
May 22, 2008 American Software
May 22, 2008 American Eagle Outfitters
Jul 2, 2008 Lam Research
Jul 2, 2008 Chinacast Education
Jul 14, 2008 Biovail Corp
Jul 14, 2008 Kla-Tenor
Aug 12, 2008 Rocky Mountain Chocolate Ftry
Aug 4, 2008 Lorillard Inc
Aug 4, 2008 Microsoft Corp
Sep 4, 2008 Bare Escentuals
Sep 4, 2008 BP Prudhoe Bay
Sep 24, 2008 Nucor Corp
Sep 24, 2008 Darling Intl Corp
Nov 5, 2008 Graham Corp
Nov 5, 2008 CF Industries Holdings
Nov 5, 2008 Radioshack Corp
Nov 5, 2008 Chart Industries
Dec 10, 2008 Mosiac Co
Dec 10, 2008 CTC Media
Dec 10, 2008 KHD Humboldt Wedag
Dec 17, 2008 Manitowoc Inc
Dec 17, 2008 Boeing Co
Dec 17, 2008 Terra Industries
Dec 17, 2008 Pediatrix Med
Dec 17, 2008 Accenture Ltd
Dec 17, 2008 National Oilwell Varco
Jan 2, 2009 Mesabi Trust
Jan 9, 2009 Broadvision
Jan 9, 2009 Allied Healthcare
I sold them as recommended by the book and bought some others that I dont have records kept, but will furnish them if needed.
Thanks to Mr. Greenblatt for sharing his knowledge…such generosity I have not heard of.
Wonder if you or anyone else have tried to screen for magic formula stock using value line. I want to at least experiment with this because the one shortcoming I sense in the magicformula.com screener is that the stocks aren’t ranked according to the formula in the book. They are simply presented in alphabetic order. If I can’t buy all 30, I would think I would want to buy the highest ranked first. Thoughts?