Well, I've received several e-mails over the last week asking if I quit after ALDA tanked or simply asking for me to update this. Frankly, I have been doing some soul searching career-wise. I'm bored with my role at the bank and am exploring options outside of my current expertise; this move will come with a paycut and a commitment. I'm far from making a decision but starting very soon I will start studying for the 2007 CFA exam using the older material until the new ones are released. Anyway, I'm sure no-one really care about what is on my mind outside of the Magic Formula even then you probably on care to keep yourself entertained. I though you deserved some explanation...Looking at my results you may feel discouraged; however, I would caution you from making any conclusions as to the success of the model. First, this is a long term methodology and as such we need to wait 3-5yrs before we determine whether we have been successful or not. Please realize that my last 6 MFI purchases, though on the MF list, were a deviation from MFI as Greenblatt intended. Please also realize though my deviation was very profitable immediately (TGIS up 86%) it became a large net loss (as TGIS went back down and ALDA dropped 40%). Despite my futzing with the formula I am not losing money...until you account for inflation. Give it time!
On a much more positive note take a look at my friends MFI picks:
Pretty impressive unfortunately (or fortunately) he has made no further MFI purchases, but he is happy with the results. FYI IVII popped 30% yesterday!Till you harass me for update,
Nick
2 comments:
I just discovered your blog this afternoon and spent the last hour or so reading it. I've read o few other blogs but I enjoy yours because you have jumped in and made trades and are very honest and concrete about it.
I am about to jump into making some trades myself using the MFI approach. I have traded for a few years now so it will be a test of will power to follow the simple instructions and not second guess the method.
Look forward to reading more of your posts. Keep 'em coming!
Kevin
Nick,
I've been MFIing almost exactly as long as you. On a $150K investment I've made $12.5K so far. One thing I've noticed from your blog is that you are NOT following the directions!
I know that is harsh but I'm trying to help you. You're supposed to buy 5-7 stocks, wait 3 months or so and buy another 5-7 stocks, etc. etc. until you have 25-30 DIFFERENT stocks. I try to buy my "blocks" all on the same day. I never rebuy a stock...ever! I'm going to buy another 7 stocks for 50K in November all on the same day. Also, somewhere in the book or on the website is the phrase "no further analysis of the selected picks is necessary" HEELLLLOOOOO! You're working too hard at this....it was meant to be a brain dead process. You might as well take the list of the top whatever and throw darts at it to pick 'em. I love investing this way because it's about one step above playing in a sandbox. Try to keep it that way :)
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