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Jason,

This post should answer the remainder of your questions you posed previously.

Drawdowns
I looked through my data from Quicken and parsed out the drawdowns that were greater than 10% and come up with the following table.

Number Drawdown Recovery Peak Date Valley Date
1 13.4% 6 months 02-Feb-06 31-Jul-06
2 51.1% 25 30-Jun-07 28-Feb-09
3 13.6% 6 30-Apr-10 30-Jun-10
4 18.6% 5 31-May-11 30-Sep-11
5 10.9% 8 31-Mar-12 31-May-12
6 13.6% 28 28-Feb-14 31-Mar-14

Comments for drawdowns. In order to generate this table I exported my Quicken returns subtotaled monthly. I positively know these number are not exactly correct for the percentages because the total annualized return doesn’t match the ‘sum’ of the simple monthly returns. On a one year timeframe they seem reasonably close, but longer timeframes result in a greater error. I’m not quite sure what Quicken is showing for the monthly returns on an annualized return basis. As stated previously, stock prices are updated only on the final day of each month – actual peaks and valleys will likely be different.
Drawdown #3 falls within the recovery timeframe of drawdown #2. I think I’ve mentioned in the past that the strategy returns have been pretty flat starting around 2014 and that is reflected in the time it took to get back to ‘even’ from drawdown #6.

4. In your MFI Data plan, that has yielded 5.32% IRR vs your 10.45% at last posting, was this one that just used the top 25 blind picks in from the MFI site each quarter, just picking everything including Chinese stocks? Or was it the one that used ROA and PE from different screens? Details please?

The MFI portfolio is a Marketocracy ‘fund’ using completely blind picks from the website: https://www.magicformulainvesting.com/ . If I recall, the website originally gave the top 25 picks. Currently the top 30 stocks are selected with a market capitalization greater than 250 million. All stocks are included that are on the list the day I pull the screen, regardless of company’s industry, country of origin, or anything else. If it is on the list it goes in the portfolio. If a stock in the new screen is already owned the amount is adjusted so that all the new 30 stocks start with the same dollar amount. Money is taken out to cover ‘fund expenses’ by the website. Please note this is a tracking portfolio only – not real money. This portfolio was only rebalanced annually around the end of March (all 30 stocks at the same time).

The MG1 portfolio came from the top 40 picks from the blog: https://justadrone.blogspot.com/ when the Magic Formula Top 200 was posted near the end of the calendar year, plus or minus a month or two. I just blindly pick the top 40 stocks on that list and equal weight the invested amount in each stock each year. I’ve seen market capitalization as low as 100 million.

The ROA + PE funds didn’t work out to well for whatever reason with some of the details in a previous post. The last update for those portfolios was end of Q1 in 2016. I am not currently tracking or updating these.

5. Your real money plan that yielded 10.45% return? I think you mentioned that part of this was mixed with a portfolio where you allowed Formulainvesting.com to invest for you. Now had you said that the whole thing was invested in your own method, 40 stocks 10 randomly picked each quarter, it seems reasonable to assume, if I did the same thing, I would get similar results 10%. But would you say that your IRR from your method, was similar, better or worse than the results from the portion that formulainvesting.com got for you? Appreciate your help here because the fact that you recorded your results for 10 years is like a verified backtest and gives encouragement to others, but if we don’t know how much the results were skewed by formulainvesting.com influence and how similar their results would have been to your own had you only done your own 10 picks per quarter.

The returns from my personal money were similar to the returns generated by FormulaInvesting when I review the returns during the time period I had a FormulaInvesting account. My FormulaInvesting account was opened 22-Mar-2010 and was closed out roughly 15-Apr-2014. I say roughly closed out because the stocks were sold or transferred on 17-Mar-2014 and the last month was just a small stream of dividend payments. In order to compare the accounts ‘exactly’ over the same time period when they both have data I’ll show the results from 31-Mar-2010 through 28-Feb-2014. Results for the Russell 3000 and 2000 over the same time frame are shown for comparison.

Portfolio IRR .
Personal plan +20.65
FormulaInvesting +21.92
R3000 +15.39
R2000 +16.55

If I let Quicken calculate from the actual FormulaInvesting account start of 22-Mar-2010 to the end at 15-Apr-2014 then I get an IRR of my personal plan of 17.42% versus the FormulaInvesting return of 15.26%. Note that I had a greater than 10% drawdown during March 2014 which is likely the reason of the difference.

Please let me know if there are still additional details that I have not answered fully to your satisfaction and I’ll do my best to elaborate a bit more.

cheers,
j
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