Magic Formula Mutual Fund

Thu, Jan 21, 2010

Magic Formula Mutual Fund

Last Updated: January 20, 2010

I’m a big fan of testing different strategies within a strategy. For almost 2 years now, I have set up a website tracking the results of a simulated magic formula fund. It’s a nice way to see how it competes against other investors and to see what and why it works and whether certain stocks work better than others. This will not be the only magic formula fund I will be running but it will be the only magic formula fund I will talk about publicly. Why be so discrete? mainly because I know the magic formula works and the other funds are to test certain strategies out. As the other funds get older and the study becomes more apparent of whether they work or not, I will make them public.

Magic Formula Fund Strategy

Nothing spectacular here. I will screen the magic formula every 3 months and do minor security analysis and choose 5 stocks. The only downside about this is the large amount of cash the fund will be holding which might skew the results a bit but i’m more interested in the long term performance of the fund (10+ years). I will report on the performance and holdings of the fund like a typical mutual fund, every three months. I will also keep tabs on the stocks on this page, I will show a “Last Updated On” at the top of the page so everyone who comes to this specific page will have an idea of what’s going on when we mention the magic formula fund.

Finally, the fund will be simulated at Marketocracy.com and will compete against 80,000+ individual investors that believe they can outperform the market consistently. To visit the public page of the fund in any given day, click on this URL http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=GlBmAhBhElDmOcBaMaKiAbDd

Magic Formula Fund Inception Date: December 31,2009

Company| Ticker| Purchase Date |Sold Out Date

KHD Humboldt Wedag International Ltd |KHD | 1/04/2010
The Corporate Executive Board |EXBD| 1/04/2010
Endo Pharmaceuticals Holdings Inc |ENDP| 1/04/2010
ValueClick, Inc. |VCLK| 1/04/2010
j2 Global Communications, Inc. |JCOM| 1/04/2010