If there is one thing I am crossing my fingers for in the first 3 quarters of 2010 is a flat or down market. The magic formula fund was and will be loaded with cash through the first 3 quarters of inception as it makes its first three rounds of purchases. For example, the first quarter, the magic formula fund was carrying 75% cash. With an anchor like that, you need to do REALLY well with the stock picks to make the needle tick. I’m hoping not too fall too far behind as it will really skew the results more than they currently are. But nevertheless, I know my stock picking and the magic formula will outperform in the long run by a wide margin.
Magic Formula Fund Purchases In Q1 2010
- The Corporate Executive Board Company (EXBD)
- j2 Global Communications, Inc. (JCOM)
- ValueClick, Inc. (VCLK)
- Terra Nova Royalty Corp (TTT)
- Endo Pharmaceuticals Holdings Inc. (ENDP)
Going forward I will be talking a bit about why I choose the stocks that I do. I don’t use technical analysis and do not read or listen to a company’s conference call. Management can be misleading and give investors false hopes. I truly believe by sticking to the numbers one could find undervalued companies. Going forward I will also write about earnings and other events that might occur during the quarter. This will help keep the blog updated on a consistent basis. Finally, I will also be talking about stocks that are moving in and out of the screen. For the most part, I have been sticking to a philosophical point of view and writing more about theory rather than practice.
Magic Formula Fund Performance
As you can see above, things aren’t looking too good. And they won’t as long as the market keeps rising, the large cash on hand will continue to act as an anchor.
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27. June 2010 at 12:25 am
Its amazing to me how many ways one might go about investing your money. I’ve found for me that best solution is both risky and low risk stocks. I often times put about 1/2 my investments into low risk mutual funds that grow over time and the other half in high risk high gain stocks. I recently got into day trading and I found that software stock picks are more reliable as they can automate a process that I cant do quickly enough. The fellows over at PrometheusFinancials.Com have a terrific system. You should check them out!
19. April 2011 at 11:03 am
Investing isn’t easy and that is why I think following a system is great. Especially for a newbie just starting out. The only concern I has is that the trading costs will eat up most of the profits unless you’re able to invest larger sums. Maybe that isn’t true but that is what I have heard every time I have spoken to a stockbroker.
/Mikael